The deadline to finalise the conditional agreement for a major data centre in Business Park Falster has been pushed back by three months. The reason is the situation at Energinet, where new grid connections were first put on hold and where large projects must now wait until the autumn for final clarification.
The due diligence period, during which Garbe Data Centers is reviewing the remaining technical, legal and financial conditions of the transaction, now runs until 11 September, according to Guldborgsund Municipality.
The project is being developed by Garbe Data Centers, which plans to buy 35 hectares of commercial land in Business Park Falster. The project is expected to trigger an investment of up to DKK 20 billion, making it one of the largest business investments on Lolland-Falster.
The extension of the due diligence deadline follows Energinet’s first announcement that new grid connections would be paused for three months. The pause was introduced while the state-owned transmission system operator assessed grid capacity and the sharp increase in demand from large electricity consumers.
Constructive dialogue
Power supply is a separate prerequisite for the project. A data centre of this size cannot be established without access to large amounts of electricity, and Garbe DC has therefore submitted applications for grid connection. According to Guldborgsund Municipality, the company is in constructive dialogue with Energinet, but the applications cannot receive final clarification before the autumn.
“Garbe DC is in constructive dialogue with Energinet, and it is of course unfortunate that the submitted applications cannot receive final clarification before the autumn,” says Christian Smith, head of business and development at Guldborgsund Municipality.
For the data centre project on northern Falster, power is a central issue. The project requires a grid connection of up to 350 MW. That is almost seven times the current peak load of the entire Guldborgsund Municipality, which Energinet has previously estimated at around 55 MW.
Guldborgsund Municipality does not believe the basic premise of the project has changed.
“As such, nothing has changed. It is, of course, still a prerequisite for establishing a data centre on northern Falster that power can be supplied,” says Christian Smith.
Since the initial pause, Energinet has announced that no new connection agreements for large electricity consumers will be signed before the autumn. At the same time, the company is changing the process for major connections, meaning projects will in future be grouped and assessed based on criteria including maturity, progress and grid-friendliness.
Unpredictability and uncertainty
Energinet’s new process does not in itself mean that the data centre project on Falster is under threat. But it makes the clarification process more complex, because the investor’s decision depends on a grid connection that is not expected to receive final clarification until the autumn.
Henrik Hansen, CEO of the Danish Data Center Industry, says the consequences of Energinet’s latest announcement are still unclear.
“We do not yet know exactly what it means, but there will be no commitments on connections before the autumn,” says Henrik Hansen.
He says major data centre investments require clear frameworks for timing, power supply and costs. For potential investors, uncertainty itself is a problem.
“This creates unpredictability and uncertainty with such an announcement from Energinet. That is the worst thing for potential investors,” he says.
Henrik Hansen nevertheless assesses that the data centre project on Falster appears to fit within the framework Energinet has indicated it will prioritise. The project has a specific location, has gone through a municipal tender process and is now in a phase where the buyer is reviewing the conditions for carrying out the investment.
