European Utilities: Sizing the data centre demand upside case

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European Utilities: Sizing the data centre demand upside case

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European Utilities Equities

Europe including UKSizing the data centre demand upside case

Utilities

Mark Freshney

AI/DC projections important for power demand and the sector Analyst

Power demand in Europe is not yet showing signs of sharp data centre-led growth, and mark.freshney@ubs.com

is still lagging that of the US. Power demand is one of the most-important underlying +44-20-7568 3989

drivers for the sector. After outperforming the sector in H2 2025 by 18%, our basket of Christabel Kelly

six AI/DC-exposed European utilities has underperformed c5% YTD. Some companies Analyst

are optimistic on the rhetoric, but we believe shares need tangible evidence before christabel.kelly@ubs.com

pricing anything more positive. In this note, we update our proprietary DC demand +44-20-7568 2358

model and retain our assumption that power demand grows by c1.3% across the Gonzalo Sanchez-Bordona

EU27+UK. In the event our numbers for electricity demand are too conservative and Analyst

demand grows by similar amounts to the US, we show illustrative sensitivities, which gonzalo.sanchez-bordona@ubs.com

suggests Sell-rated Fortum and Drax have the most valuation and earnings upside. +34-91-745 4147

Wanda Serwinowska, CFA

Using our proprietary dataset to determine growth to 2030 and then 2035 Analyst

Using UBS Evidence Lab data (>Access Dataset), we forecast EU27+UK data centre wanda.serwinowska@ubs.com

+44-20-7568 3980

capacity to grow from c13GW in 2025A to c32GW in 2030, a c19% CAGR. The only

changes are to 2025 actual and to align efficiency assumptions in the UK with the EU27. Anna Webb

Our forecast is consistent with the European Capital Goods team's view.