By Pietro Lombardi and Corina Pons
VILLANUEVA DE GALLEGO, Spain, Oct 6 (Reuters) – Aragon, a sparsely populated region of northeast Spain, has become one of Europe’s fastest-growing digital infrastructure hubs due to what tech companies hail as its agile local permitting laws and swift decision making.
Located at the crossroads of major international cable connections, Aragon offers abundant renewable energy and land, and is set to see more than €60 billion ($67.55 billion) of investment in data centres and digital infrastructure in the next decade.
A dozen company officials, experts and campaigners told Reuters that the most decisive factor drawing investment to the region is its data centre–friendly governance.
Big tech companies believe Aragon could serve as a model for a European Union seeking to triple its data centre capacity within seven years, and narrow the AI infrastructure gap with the US and China.
However, global concerns over data centres’ resource consumption, environmental impact and burden on local communities are growing, and Spain’s national government is seeking to impose new resource requirements.
STREAMLINING A COMPLEX PROCESS
In Aragon, the regional government defends its strategy.
“Are we overlooking any requirements for the sake of speed? The answer is no,” said Eva Valle, Aragon’s economy minister. “We’re simply streamlining a process that can be very complex. It’s surprising how much time can be saved simply by bringing a little order to it.”
Aragon offers qualifying projects a “Project of General Interest of Aragon”, or PIGA status, which brings swift planning decisions, facilitates land expropriations and local tax breaks. The region is also unique in providing a one-stop investor service that supports applications and gives companies weekly progress updates on their projects.
PIGA status can cut approval times from years to under 12 months.
AMAZON A HUGE INVESTOR IN ARAGON
On the outskirts of Villanueva de Gallego, a small Aragonese town north of Zaragoza, hundreds of workers have been constructing Amazon Web Services’ new facilities. The company is investing a total of €33.7 billion ($38.4 billion) in the region in cloud services and AI infrastructure, its largest investment of this kind outside the US.
The new facilities moved through most of the permitting procedure in around a year, lightning speed for Europe’s often glacial pace of infrastructure licensing.
Aragon has fast-tracked over a dozen large data centre projects also for Microsoft and others, regional data shows.
TOO FAST?
Critics of the scheme say the fast-track process undermines public and environmental accountability.
By reducing administrative procedures such as public consultation requirements, “it becomes very difficult to conduct genuine scrutiny,” said Manuel Garcia, a researcher at the state-run science and technology centre CSIC.
The public had just 23 days at the end of 2024 to review about 25,000 pages of Amazon project documentation and submit objections if they wished, a feat Garcia called “physiologically impossible”.
Environmental group Ecologistas en Accion has challenged Aragon over the fast track granted to Amazon in what is believed to be Spain’s first lawsuit targeting a major data centre development. But experts say any court ruling could take years, by which time many facilities would be operational.
The European Commission recently proposed new rules for data centres, including faster permitting, and received submissions from Amazon and Microsoft praising Aragon.
“Based on our experience, the PIGA process in Aragon, Spain, has been successful to reduce the administrative burden on companies and most importantly the handling time, while ensuring a high compliance standard with applicable regulations,” Amazon said in its submission.
Microsoft pointed to Aragon as an example of a European region giving data centres “prioritized and streamlined permit application review… while still ensuring full compliance with local laws.”
Spanish property company Merlin Properties’ €1.2 billion project is among those being fast-tracked, and its CEO Ismael Clemente said the region has “managed to be very quick.”
MADRID’S NEW RULES SPARK BACKLASH
The push in Aragon, run by Spain’s conservative opposition People’s Party, coincides with growing opposition around the world to data centres due to land use, power costs and water resources.
The central government, facing surging energy demands from the sector and still grappling with consequences of last year’s catastrophic blackout, has drafted tougher water and electricity rules for data centres. These have been criticised by the industry and energy companies, as well as by Aragon’s authorities, who say the measures would put multi-billion-euro investments at risk.
A snap election called for November 29 looms over the draft rules, adding a layer of uncertainty.
“If the proposed decree is approved, many of the projects will surely be re-evaluated,” said Alberto Nadal, People’s Party deputy secretary for the economy, blaming Madrid for failing to expand the power grid.
Amazon’s AWS and Microsoft said their plans in the region remain unaltered. A spokesperson for AWS urged Spain to protect long-term investment by aligning data centre regulation with emerging EU frameworks. AWS has also said it will spend €30 million on local community programmes in education and sustainability for example, in areas where it is present.
A spokesperson for Microsoft, which plans to invest up to €10 billion in Aragon, underlined the importance of “legal certainty, predictability and conditions” for continued long-term investment in Spain. The company also has community programmes.
Judith Arnal, a senior research fellow at think tank Fedea, said data centre investment must be balanced with regional economic benefits. “We need to roll out the red carpet for data centres … but we also need to try to extract as much economic value as possible.”
($1 = 0.8780 euros)
(Reporting by Pietro Lombardi and Corina Pons, editing by Andrei Khalip, Alexandra Hudson)
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