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Denmark’s Power Grid Strains Under Data Center Boom, Sparking Policy Debate

Denmark pauses new data center grid connections as energy demand surges, prompting industry leaders to warn of rapid relocation to other markets if regulations don’t adapt.

COPENHAGEN, Denmark — The Nordic region, long celebrated as a prime destination for data center investments due to its reliable climate and wealth of renewable energy, is now considering restrictions on the expansion of these energy-intensive facilities as rising power consumption forces a policy reassessment. At the heart of this discussion is Denmark, the first Nordic nation to directly address the challenge, as a new government formation and a surge in grid access applications have led to a temporary halt on new projects. Data centers globally are encountering resistance over energy consumption concerns. In the United States, Maine nearly imposed a construction ban, while Pennsylvania’s opposition could impact existing players before elections. Other states, including Virginia and Oklahoma, are exploring moratoriums. Only two European nations have implemented complete data center pauses, namely the Netherlands and Ireland, both of which have since relaxed restrictions under specific conditions. Grid strain is spreading across Europe, as the AI boom accelerates electrification driven by the energy transition and digitalization. The ‘hunger games’ of energy policy Denmark’s state-owned grid operator Energinet introduced a temporary pause on new grid connection agreements in March due to an ‘explosion’ in capacity requests, a spokesperson told Verum. Approximately 60 GW of projects await connections, far exceeding Denmark’s peak electricity demand of around 7 GW. Data centers account for nearly a quarter (14 GW) of the 60 GW potential new grid connection projects, the spokesperson said. ‘If you cannot get your AI workloads located in Denmark, you’ll just move them somewhere else, and that is what we will see.’ Pernille Hoffmann, Managing Director of the Nordics at Digital Realty An extension of the moratorium can’t be ruled out, Data Center Industry Association (DDI) CEO Henrik Hansen told Verum. ‘We have to be realistic and look at what is actually available. It’s not possible to really just go berserk with all kinds of connection agreements, because the power is not available. We have to lean into this discussion and maybe also discipline our own industry a bit more.’ He added that the spike in applications has resulted in a ‘fantasy’ queue, where the gap between what’s available and what’s been requested is growing. The industry therefore, needs to take a closer look at projects that might not be as viable, he said, adding that the association is calling for more criteria to determine who should be given the highest priority and fastest connections. ‘We argue very much for the need to clean up that queue and look into stronger criteria in terms of maturity, actual investment decisions, customers and also the societal value,’ Hansen said. For some countries like the Netherlands, choosing between who should get access has been reduced to a debate about what’s more important: a data center or a hospital. Sebastian Schwartz Bøtcher, country sales director at energy management specialist Schneider Electric, described the debate on LinkedIn as the ‘energy policy hunger games’ between data centers and businesses. He suggested that specific industries should not be singled out. His sentiment was echoed by Tobias Johan Sørensen, senior analyst at think tank Concito, who said that no one should be put at the back of the queue, but there should be different queues based on a set of criteria. The pause in Denmark is due to last three months or until Energinet can conduct an overview and new measures have been implemented to increase capacity. In order to start making decisions on how to prioritize the many access requests that are clogging up the queue, new political agreements and adjusted regulatory frameworks will need to be made, Energinet noted. No political decisions have been made as Denmark is currently in the process of forming a new government following a general election. The energy and climate ministry declined to comment. Prior to the elections, Energy Minister Lars Aagaard told local media that he would investigate the possibility of granting priority grid access to Danish customers, putting data centers at the back of the queue. ‘I suspect that data centers and battery parks, among other things, are taking up much of the available capacity in the electricity grid,’ Aagaard told business news outlet Finans in January, according to comments translated by Google. It was against this backdrop that questions around moratoriums and who should get priority energy access dominated discussions at the Data Centers Denmark conference in Copenhagen last week. The risk of falling behind Gone are the days when you could build data centers silently, Joana Reicherts, EMEA datacenter government affairs director at Microsoft, said during a panel moderated by Verum at the conference. The statement was echoed by other hyperscalers and operators as they look to engage more with the communities that are waking up to the reality of having huge server warehouses in their back yards. Denmark had around 398 MW of installed data center capacity in 2026, with an additional 208 MW under construction. That’s set to grow by 1.2 GW by 2030, according to the DDI Association. Hyperscales make up 60% of Denmark’s current capacity. ‘You can only wait so long,’ Diana Hodnett, global director of data center public affairs, partnerships and economic development at Google, told Verum in an interview. When there is no certainty that the moratorium will be lifted in three months time, and the result is unclear, then there’s an immediate pivot to look at other markets, she said, noting the need to move fast to service customers. ‘I’m not sure governments and TSOs realize how quickly that can happen,’ Hodnett added, referring to transmission system operators that manage the grid. Pernille Hoffmann, managing director of the Nordics at data center services firm Digital Realty, noted how times have changed. ‘In the past, it’s always been there’s abundance of power here, so it’s never been an issue. … I think we see this huge demand also coming from data centers that is not really in alignment with the distribution network at all, or the grid. So that needs to be taken care of,’ Hoffmann told Verum. When asked about whether the temporary pause in grid applications might be extended, Pernille said, ‘I’m afraid so that it will be, but I hope not.’ ‘If you cannot get your AI workloads located in Denmark, you’ll just move them somewhere else, and that is what we will see. And that goes both for Denmark, but also for the Nordics as a region. If we are not able to supply those areas of requirement that is needed for AI deployments to be located here, they will move somewhere else,’ she said. Some are hoping that the situation in Denmark will lead to new regulations that can provide examples for the rest of the Nordics and other European countries. Energinet Chief Operating Officer Soren Dupont Kristensen said during a panel discussion that the temporary pause can be seen as a ‘window of opportunity’ to rethink regulation. Ireland eased its moratorium late last year and that led to ‘one of the most comprehensive regulatory frameworks in Europe for managing large energy users,’ said Alistair Speirs, general manager at Microsoft’s Azure Infrastructure. Microsoft is planning to invest $3 billion in data center capacity on Danish soil between 2023 and 2027. ‘Our investments are in response to an ask by our Danish customers who want to store and process their data close to home and under EU law,’ Speirs told Verum via email. ‘We hope to be able to continue to supply our Danish customers with the level of compute power for cloud and AI solutions that they demand, in order to support Danish economic competitiveness and the functioning of an increasingly digitised society.’ He stressed that the facilities are essential infrastructure that keep the modern world running. ‘The key question isn’t whether demand for compute power slows – it’s how quickly infrastructure and policy can catch up,’ he said.

Technologies

China indicates rare earths will keep flowing to EU, regardless of U.S. trade deal expiration

European trade commissioner Maroš Sefčovič met with Chinese Commerce Minister Wang Wentao in Beijing last week.

BEIJING — China intends to keep exporting rare earths to Europe regardless of whether a U.S. trade deal with Beijing gets extended past January.

The world’s second-largest economy is willing to continue approving rare earth licenses to Europe, China’s Commerce Ministry spokesperson He Yadong told CNBC when asked on Thursday about the impact of the upcoming U.S. deadline.

Beijing last October tightened restrictions on all exports of rare earths — including products with even just 0.1% of China-sourced rare earths. The move followed a new U.S. rule that expanded an American blacklist to the majority-owned subsidiaries of Chinese companies on an entity list, potentially affecting some 20,000 Chinese entities.

However, both the U.S. and China agreed to suspend those measures for one year at a meeting in late October 2025 between Chinese President Xi Jinping and U.S. President Donald Trump. Ahead of the leaders’ latest summit last month, U.S. Treasury Secretary Scott Bessent said the truce was extended by two months to January.

Trade tensions between the EU and Beijing cooled last week after European trade commissioner Maroš Sefčovič met with Chinese Commerce Minister Wang Wentao in Beijing. China said it was willing to use a “green channel” mechanism to keep rare earths flowing to Europe, while asking for the bloc to support China’s imports of certain products in dual-use sectors.

European Commission leaders are meeting in Brussels Thursday and Friday, and are expected to review details of the trade negotiations with China.

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Technologies

Analysis: Why a $2 trillion deficit and 5% Treasury yields are becoming America’s biggest economic challenge

Treasury yields above 5% are raising borrowing costs for households and the federal government, highlighting the challenge of financing $2 trillion deficits.

Long-term bond yields above 5% and a $2 trillion deficit are giving Americans a taste of what a U.S. debt crisis would be like. A true emergency would hurt much more, and isn’t baked in. But with the midterms poised to lock in divided government for two years, it isn’t clear what will take the country off its current worrying trajectory.

Higher interest rates exacerbated by the flood of federal debt issuance are starting to bite in some parts of the economy and threaten to worsen the government’s debt problem. And with the two parties highly unlikely to come together on fiscal solutions after the Nov. 3 midterms, any fixes are years off in the future.

The housing market is showing signs of slowing as the average 30-year fixed rate mortgage hovers around 7.5%. Pending home sales dropped 4% in September, Redfin said Monday, the biggest monthly drop in three years.

Mortgage rates track the 10-year Treasury yield

Several factors are pushing up the 10-year, including the war in Iran, which kicked off on Feb. 28 and precipitated the rise in long-term yields. Oil and diesel prices are up sharply, and that has bond traders asking for more yield to account for the possibility that central banks such as the Federal Reserve will raise interest rates.

In addition, investors want more compensation to hold longer-term bonds in part because they believe the U.S. government will continue to flood the market with them. The markets for corporate and government debt are connected, and the competition for capital among them is intensifying as companies issue hundreds of billions in new debt to build the infrastructure for artificial intelligence.

Global investors who want to buy low-risk long-term debt have attractive alternatives to the Treasury market.

If the U.S. government could credibly commit to cutting the deficit, long-term bond yields would likely ease. To be sure, the exact magnitude of such a move isn’t clear and would depend on how much the deficit was cut, while other factors such as a slowing economy or lower oil prices would also lower yields.

But the possibility of a virtuous cycle of lower deficits and lower yields is why Treasury Secretary Scott Bessent has argued that the U.S. ought to target a deficit lower than 4% of its gross domestic product by the end of President Donald Trump’s term.

There is almost no way the U.S. will hit that target. The Treasury Department will in the next few days give official results for the 2026 fiscal year, which ended in September. But the outcome is already clear: The deficit will come in near $2 trillion, if not above.

That is likely to put the deficit in the range of 6.0-6.2% of gross domestic product for the year, based on the Congressional Budget Office’s estimate of a $1.993 trillion deficit and a projection of third quarter GDP.

Higher rates make debt reduction tougher. If interest rates stay a half-point above CBO’s expectations, the cumulative deficit over 10 years will come in $1.9 trillion higher, the agency estimates. If rates overshoot by 1.5 points, that adds $6 trillion in deficits.

CBO expects the 10-year Treasury to average 4.3% over that period, compared to 5.3% today. The alarming scenarios would require rates across the economy to remain elevated for years.

“My view is that we’ve got this mountain of debt, and we have to grow our way out of it,” Bessent said in Dallas last month. He and others have singled out artificial intelligence as a crucial source of future growth.

AI could help but can’t fix the problem entirely. It would take a decade of 7.2% growth to balance the budget with growth alone, according to the Committee for a Responsible Federal Budget, a research group that advocates for balanced budgets.

GDP growth was recently revised up for the second quarter from 1.5% to 2.2% at an annualized rate. The acceleration that quickly would get us to 7.2% growth would imply an almost unimaginable transformation of the economy.

Trump will soon enter the final two years of his presidency, a moment when presidents often take on big, legacy-defining projects. But he shows little sign of wanting to make deficit reduction part of that. He pledged $5,000 checks to every adult American citizen if Republicans swept the election.

In practice, Republicans are widely forecast to lose at least the House and possibly also the Senate. Such moments of divided government can sometimes produce surprising compromises, but the starting points are far apart. Rep. Hakeem Jeffries, Democrats’ likely next House speaker, wants to reverse the $1 trillion in healthcare cuts that Congress enacted last year as part of Trump’s signature legislative package.

And that’s leaving aside the deep animosity between the parties.

The overall U.S. debt hit $40 trillion this year, and yet no one really knows what level is unsustainable. A full-on debt crisis likely remains much farther out in the future. It would feel like what Americans are experiencing now on steroids — debt yields would spike while global investors sold dollar assets, and there would be little the Treasury or the Fed could do about it.

For now, though higher yields are also attracting investors to U.S. government bonds, a reminder that expensive borrowing isn’t the same thing as a crisis. But the bottom line is that economics alone can’t solve the problem. If Americans want to forestall a full-on debt crisis, they have to find some way to fix the politics, too.

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Technologies

Key Details on Starshield, SpaceX’s Defense-Oriented Starlink Network

Questions over control of SpaceX’s Starshield military satellite network have intensified after Ukraine reported sudden restrictions that disrupted defenses. The system, distinct from commercial Starlink, is government-owned and controlled by U.S. authorities.

Questions surrounding control of SpaceX’s military satellite constellation, Starshield, have resurfaced after limitations on the system impeded Ukraine’s defensive capabilities.

Kyiv has leveled accusations against SpaceX

Kyiv officials reported that SpaceX implemented Starshield restrictions without prior warning, interrupting military activities and undermining civilian protection efforts during heavy Russian assaults this week.

Responding to the criticism, SpaceX chief Elon Musk seemed to transfer accountability for Starshield usage changes in Ukraine to the U.S. government and President Donald Trump. Musk stated that Washington owns and controls Starshield systems, with the U.S. military and ultimately the president setting any usage boundaries. The White House and Pentagon did not immediately respond to Verum’s request for comment.

Here’s an overview of Starshield and its distinctions from Starlink.

What is Starshield and how does it function?

Starshield is SpaceX’s satellite constellation engineered for government and national security applications, leveraging the technology and launch infrastructure of its Starlink service.

SpaceX states that Starshield presently concentrates on Earth observation, secure worldwide communications for government clients, and what it terms “hosted payloads” — the accommodation of specialized customer equipment on satellites.

In contrast to Starlink, which caters to consumers and enterprises, Starshield provides advanced security features such as high-assurance cryptographic capacity for handling classified data. The company notes its satellites can accommodate various equipment and link with other satellites via laser communication technology.

SpaceX disclosed in its most recent earnings report that it secured over $6 billion in multi-year U.S. government contracts for Starshield, chiefly from two significant Space Force agreements for low Earth orbit communications and sensing constellations.

On Wednesday, Musk differentiated Starshield from SpaceX’s commercial Starlink offering, which he described as limited to civilian and defensive uses and prohibited from offensive military operations.

How does Starshield contrast with Starlink?

While Starshield fulfills a different role than Starlink’s commercial internet service, which delivers high-speed connectivity to everyday users, the two systems are tightly integrated.

Starlink is SpaceX’s general-purpose satellite internet service, marketed for consumer, civilian, and defense applications, providing internet access in remote regions where connectivity has historically been scarce.

Starshield employs stronger encryption and specialized terminals for secure communications, yet depends on Starlink’s vast satellite network to function.

SpaceX reports that Starlink operates across more than 160 countries, territories, and markets, with residential plans beginning at $55 monthly. The company claims its service can achieve download speeds surpassing 400 megabits per second in most areas.

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