Portugal is preparing new environmental regulations requiring data centres to use renewable electricity and adopt cooling technologies that do not place additional pressure on public water supplies, as the country seeks to accommodate rapid growth in artificial intelligence infrastructure.
Environment and Energy Minister Maria da Graça Carvalho outlined the proposals during a parliamentary hearing on Tuesday, 3 November, confirming that the government was finalising legislation to regulate large-scale data-centre development.
Portugal currently has more than 2.6 gigawatts of planned data-centre capacity, including the 1.2-gigawatt Start Campus development in Sines.
The investment pipeline reflects growing demand for computing facilities supporting cloud services, digital infrastructure and AI applications.
However, the expansion is also creating questions about electricity availability, water consumption and the economic benefits delivered to local communities.
Renewable energy becomes a regulatory requirement
Under the proposed legislation, data centres would be required to operate using renewable electricity.
Operators would not necessarily need to construct their own renewable generation facilities.
Instead, they could purchase electricity from utilities, provided appropriate renewable supplies were available.
Portugal has substantial solar, wind and hydroelectric resources, which have helped make the country an increasingly attractive destination for energy-intensive digital infrastructure.
Nevertheless, renewable electricity availability does not automatically guarantee sufficient transmission and distribution capacity.
Data centres require substantial, continuous power supplies, while renewable generation can fluctuate according to weather conditions.
The government must therefore balance new digital infrastructure investment with the electricity requirements of existing industries, businesses and households.
Carvalho has indicated that industrial projects will receive priority over data centres when competing for certain electricity grid connections.
This distinction reflects concerns about the economic value generated by different types of large electricity consumers.
Water consumption becomes a central consideration
Cooling systems represent another important element of the proposed regulations.
Data centres generate considerable heat through the operation of servers and associated electrical equipment.
Removing that heat is essential for reliability and performance, but some cooling technologies require substantial quantities of water.
The Portuguese government intends to require operators either to install technologies that do not depend on fresh water or to establish alternative supply arrangements that do not compete with households and other economic activities.
Carvalho said the regulations would involve stringent requirements concerning water consumption and environmental assessments.
The proposed approach is relevant to Portugal’s exposure to drought conditions and regional differences in water availability.
Start Campus in Sines has already adopted a seawater cooling system, demonstrating one possible alternative to conventional freshwater-based cooling.
However, cooling technologies differ in their electricity requirements, operating costs and suitability for particular locations.
Companies developing new facilities will need to assess these trade-offs during project planning.
Investment continues at scale
Portugal’s government has identified data-centre development as part of its strategy for attracting international technology investment.
The country’s National Data Centre Plan, approved earlier in 2026, establishes 15 initiatives covering regulation, infrastructure, market development and territorial planning.
The programme seeks to simplify licensing, improve coordination between government agencies and provide greater certainty for investors.
It also aims to attract companies developing large computing facilities while ensuring that projects contribute to employment, innovation and economic development.
The Sines development illustrates the scale of investment being pursued.
Start Campus plans six major data-centre buildings, one of which is already operational.
The project is associated with major technology investment, including Microsoft’s growing commitment to AI infrastructure.
Portugal’s Atlantic location and international submarine cable connections provide additional commercial advantages for data-centre operators serving European and overseas markets.
Europe faces a wider electricity infrastructure challenge
Portugal’s proposals arrive amid growing concern over the electricity requirements of AI infrastructure.
The European Commission’s assessment of data-centre energy performance identifies rapidly rising electricity consumption as a challenge for both energy systems and environmental policy.
The Commission has proposed an EU-wide rating scheme intended to improve transparency over data-centre energy and water consumption.
It is also examining potential minimum performance standards, with further legislative proposals expected in 2027.
In Portugal, the European Union Agency for the Cooperation of Energy Regulators has already examined the implications of increasing electricity demand.
Its September 2026 assessment identified potential supply adequacy risks under certain national planning assumptions.
However, the agency also cautioned that the Portuguese analysis might overstate future shortages by insufficiently accounting for possible investment in generation, storage and demand management.
The findings illustrate why data-centre planning requires consideration of both projected demand and the electricity system’s capacity to respond.
Implications for technology investors
Portugal’s proposed rules could alter the financial assumptions underlying major data-centre projects.
Developers may need to invest more in cooling equipment, renewable electricity contracts, environmental assessments and grid connections.
These additional requirements could increase initial project costs.
At the same time, clearer regulation may help investors evaluate long-term obligations before committing capital.
For technology companies, uncertainty surrounding electricity access and water use can create substantial financial risks, particularly where large facilities require lengthy construction periods.
Corporate communications also have an important role.
Businesses proposing data-centre developments must explain their expected resource consumption, local economic contribution and environmental safeguards to regulators, investors and surrounding communities.
As QuestComms recently reported in its examination of Britain’s proposed AI megacentre, the availability of suitable infrastructure is becoming an important factor in determining where AI investment can proceed.
Portugal’s approach reflects the same commercial challenge.
The country wants to attract international computing infrastructure while limiting its effects on electricity supply, water resources and other economic activities.
The precise requirements will not be established until the decree is finalised and adopted.
For investors, the immediate priority is to examine whether proposed facilities can satisfy the expected energy, environmental and infrastructure conditions.
Portugal’s experience may also influence the debate in other European countries seeking to expand AI computing capacity without compromising existing industrial and public infrastructure requirements.
