From Noise to Signal #1: Why a new framework is needed for assessing the viability of data centre projects

Over the past three years, Europe has announced more data centre projects than at any previous point in history. The market is constantly getting noisier. Amidst all the noise, it’s hard for investors to distinguish between genuinely deliverable projects and those that look compelling on paper but would face significant obstacles during implementation.

In this two-part series on data centre projects, you'll learn how investors can cut through the noise and identify the signals pointing to viable projects.

This article will focus on:

  • why demonstrably viable projects are so important in today’s context;
  • the reasons why a new framework is needed for assessing the viability of data centre projects; and
  • what a wise approach might look like.

Why is it crucial to test the viability of data centre projects?

The demand for computing capacity in Europe is high, and it rewards credibility over scale. Consolidation has already started, and the $250-300 billion of investment Europe needs by 2030 will go to the projects that can satisfy institutional due diligence.

Though there's plenty of incentive to prove credibility, many projects are unable to do so. Three deadlines are closing in at once: regulations on EED, CSRD, and the use of waste heat. And these things take time – it can take twelve to eighteen months to build a credible ESG record, and organising a connection to the grid can take years after that.

What is more, concerning gaps are widening between projects being announced and projects being delivered:

  1. The connection gap

Connection requests have now outrun what Europe’s transmission operators can offer. The IEA counts a project pipeline worth 130% of the capacity installed today, against a realistic addition of around 70% by 2030 once congestion and local constraints are considered.1 Waiting times in the main FLAP-D hubs run to seven or ten years.

Within these queues, the European Commission has documented projects holding their place without hitting a single verifiable milestone. This is tying up capacity that could go to projects that are ready to build.

In response, Ofgem opened a consultation in February 2026 on reforming demand connections in Great Britain, with the explicit objective of improving queue management and prioritising viable projects.2 At EU level, the European Commission is encouraging connection procedures that take greater account of project maturity and make more efficient use of scarce grid capacity.3

As these reforms develop, it's going to get harder to maintain a position in the connection queue without demonstrating tangible progress. Investors must therefore evaluate whether the projects they're considering will be able to hit milestones.

  1. The demand gap

This gap is harder to see but just as serious. Goldman Sachs estimates that only around 25% to 50% of announced European data-centre projects may ultimately be built.4

For example, Sightline Climate has tracked 777 large projects announced since 2024. Of the capacity expected in 2025, 26% slipped, and a further 10% moved commercial operation dates without warning.5

AI-related demand assumptions can widen this gap further because they are based on aggregate market forecasts rather than contracted demand from identifiable anchor tenants.

Investors must therefore test whether the projects they're considering can prove that their demand is realistic, otherwise they run the risk of delays or project failures.

Why do we need a new framework for assessing data centre projects?

The risk of not assessing projects properly is high

As detailed in the section above, the gap is widening between announced projects and delivered ones. This gap has practical consequences for investors. With such a high percentage of capacity being taken up in today’s market, large financial risk is associated with committing capital without first doing rigorous analysis.

Previous methods are no longer sufficient

Historically, investors could evaluate data centre opportunities using a relatively small number of indicators, such as location, announced capacity, and the financial strength of sponsors.

While these factors remain important, they are no longer sufficient to determine whether a project can realistically be delivered. This is because projects with an attractive site, significant announced capacity, and apparently robust financial assumptions might also have:

  • an unallocated grid connection;
  • a position several years deep in the connection queue; and
  • demand supported primarily by forecasts rather than contracted anchor tenants.

Projects like this seem to work on paper but cannot be delivered as advertised.

What is BIP.Verco’s suggested framework for assessing the viability of data centre projects?

BIP.Verco’s suggested framework is built on the premise that readiness is systemic rather than modular.

Three key dimensions affect project readiness:

  1. Technical foundations

  2. Market anchoring

  3. ESG and disclosure maturity

Clearly, a project can be excellent in one dimension but badly exposed in another.

Therefore, our framework follows ‘weakest-link’ logic: the three dimensions must be assessed together, because a material weakness in any one of them can undermine the readiness of the entire project.

Let one fall below the point of readiness – whether that is a connection that never arrives or demand that never gets signed – and the project is worth close to nothing, no matter how well the other two dimensions perform. For example:

  • strong engineering does not compensate for speculative demand; and
  • mature ESG governance does not produce a grid connection.

With this in mind, we encourage investors to evaluate project attributes as a system rather than treating them as independent factors.

It’s worth noting that our framework does not replace conventional financial due diligence. Sponsor strength, funding capacity, and capital structure remain baseline conditions. However, our added criteria test whether the underlying project itself is technically deliverable, commercially anchored, and capable of standing up to disclosure scrutiny.

We’d be happy to chat if you’d like to learn more about the framework discussed in this article or how to put it into practice.

Contact us

Keep an eye out for the next article in this series, which will delve into each of the dimensions in detail.

How can BIP.Verco help investors make the right decisions?

We provide green data centre services

As part of BIP.Verco's Digital Sustainability offering, we can support you with various green data centre services, including:

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