The inability to guarantee sufficient electrical power in Andalusia has slowed Merlin Properties’ plans to develop data centers in the region, despite the real estate firm’s growing commitment to the business throughout Spain.

The problem is not isolated or exclusive to southern Spain, but in Andalusia it takes on a particularly relevant dimension due to the region’s potential to host new digital and industrial projects linked to renewables, green hydrogen, and logistics.

Without a clear guarantee of firm long-term power, Merlin has for now ruled out moving forward with data center developments in this region.

Ismael Clemente, CEO of Merlin Properties, has acknowledged that the company “cannot build data centers in Andalusia” because, at present, it does not have firm guarantees of electricity supply for this type of high-demand infrastructure.

The company, which in recent years has positioned itself as one of the most active players in requests for network access for data centers, is facing the same bottleneck that already affects other large developers: network saturation and lack of available capacity at key nodes.

The withdrawal from Andalusia does not imply a shift in Merlin’s overall strategy for data centers, which remains one of the growth areas identified by the company for the coming years.

Its strategic plan envisages reaching up to 274MW of capacity in five locations, with a total investment of more than €2 billion ($2.38bn) in several phases.

The company already operates and develops assets in locations such as Madrid, the Basque Country, and Lisbon. Clemente’s message about Andalusia reinforces the idea that the execution of the data center plan depends not only on the willingness to invest, but also on a regulatory and network framework capable of supporting such a rollout.

The case of Merlin in Andalusia adds to the warnings that various players in the sector have been issuing about the saturation of the Spanish electricity grid and its effects on new investments in data centers, industry, and housing.

Access requests for data centers and large electricity consumers have reportedly already exceeded the 100GW threshold, putting unprecedented pressure on an infrastructure that has not grown at the same pace as digital demand.

In this context, securing a firm connection point with long-term visibility has become a scarce resource that determines the location of projects and the very geography of the data economy in Spain. Until the bottleneck in network investment and planning is resolved, cases such as Merlin in Andalusia will continue to illustrate how the limitations of the electricity system are holding back initiatives that, on paper, have capital, demand, and available sites.

For Andalusia, the inability to attract large-scale data center projects such as Merlin’s means losing, at least temporarily, part of the investment wave that is reaching other territories. The region has land, renewable resources, and a strategic position for international connectivity, but the lack of available electrical capacity for new intensive consumers acts as a brake.

Resolving this blockage will depend on investment decisions in new transport and distribution infrastructure, as well as reforms that prioritize projects with greater industrial and technological impact. Until then, operators such as Merlin will continue to focus their efforts on locations where the power-term-visibility equation is more favorable for the development of data centers.

Merlin, a major real estate firm, first announced plans to move into the data center space in 2021 in partnership with Edged, the then-new data center venture from Aligned founder Jakob Carnemark. Merlin has since raised more than $1 billion for further data center development.

The companies are developing data centers across Spain and Portugal in Bilbao Arasur (x2), Madrid-Getafe, Barcelona, and Lisbon that could total around 60MW at the end of the first phase and eventually total more than 200MW. Meta is reportedly the main customer for the first three live Merlin data centers in Spain.

Merlin is also targeting two sites in Extremadura in Navalmoral de la Mata in Cáceres Province, and Valdecaballeros in Badajoz Province.

This piece was automatically translated from DCD’s Spanish site and edited by a member of DCD staff.