Iberdrola and Echelon Data Centers have joined forces to develop and operate large-scale data centers across Spain.
The duo created a new joint venture called Echelon Iberdrola Digital Infra. With investments exceeding €2 billion ($2.3 billion), it becomes the largest European joint venture between an energy company and a data center developer to date.
The move signals Spain’s ambitions to become a central hub for Europe’s digital infrastructure and highlights accelerating demand for energy-intensive AI services.
A milestone for the European digital and energy sector
The transaction represents a significant convergence between clean energy generation and hyperscale computing capacity. Both sectors are expanding rapidly due to the growing adoption of AI, cloud services and high-density data processing. Executives involved in the deal have repeatedly emphasized that future data center growth will depend heavily on reliable access to clean and large-scale energy sources.
The new company will focus primarily on hyperscale technology firms and AI infrastructure providers. Increasingly, these clients require not only enormous computing power but also strict decarbonization permissions. With energy consumption central to their business models, operators are under increasing pressure – both regulatory and reputational – to secure long-term renewable supply contracts.
South of Madrid
The joint venture’s first project will be Madrid Sur, a 160,000 square meter data center complex designed to provide 144 MW of processing capacity. A 230 MW electrical connection has already been secured, giving the project one of the strongest network positions in the Spanish data center ecosystem. The facility is expected to create approximately 1,500 direct and indirect jobs.
The estimated annual electricity consumption at the site is around 1 TWh, which underlines the scope of modern hyperscale operations. To ensure that this consumption is fully renewable, the campus will include its own solar photovoltaic plant and source additional clean energy from Iberdrola’s wider portfolio of renewable sources. This dual supply approach reflects the industry’s growing emphasis on 24/7 carbon-free energy – matching renewable power to consumption on an hourly basis rather than relying on annual guarantees.
How does the alliance work?
Iberdrola will draw on its experience in renewable energy sources and energy infrastructure development. Its responsibilities include identifying suitable land near grid nodes, securing energy connections and ensuring uninterrupted supplies of clean energy.
Echelon will lead the permitting, design, marketing and day-to-day operations of the campuses. With a portfolio exceeding 2 GW in major European markets, it brings hyperscale-specific expertise in campus construction, customer acquisition and sustainability engineering.
Echelon will hold up to 80% of the joint venture, with Iberdrola retaining the remaining stake. Iberdrola has already secured more than 700 MW of grid connections around Madrid – an increasingly rare commodity in European markets – and is preparing further projects that could bring a total associated investment of around €6 billion.
For Iberdrola, the alliance strengthens its role as a major energy supplier for the global digital sector. The company already sells more than 11 TWh annually to technology and data center clients worldwide, and this new venture integrates it even deeper into the infrastructure behind Europe’s AI economy.
Background noise
Iberdrola is Europe’s largest power company by market value with more than 120 billion euros in capitalization. It serves more than 100 million people and employs more than 44,000 staff and has assets in excess of €160 billion in networks, renewables and storage. In 2024, the company reported almost 50 billion euros in sales and 5.6 billion euros in net profit and contributed around 10.3 billion euros in taxes in its markets.
Since 2001, Iberdrola has invested more than €175 billion in promoting electrification, renewables and modern network infrastructure. The company operates nearly 1.4 million kilometers of power grids in the US, UK, Brazil and Spain and manages 57,000 MW of generation capacity, of which more than 45,000 MW is renewable.
Founded in 2017 and headquartered in Dublin, Echelon develops, owns and operates large hypercampuses in European Tier-1 markets including Dublin, London and Milan. Its portfolio exceeds 2 GW of capacity. The company is known for designing campuses powered entirely by renewable energy sources and for its energy sharing initiatives that help national grids integrate more renewables.
In 2024, Starwood Capital Group acquired 50% of Echelon through an investment of €850 million, valuing the platform at around €2.5 billion and providing a financial basis for its further expansion.
Meanwhile, OpenAI tapped iPhone-making giant Foxconn to design and build AI data center components in the US.