Portugal: Europe's next digital powerhouse?

Portugal is emerging as a key digital and AI hub in Europe, with its data centre sector poised for significant growth by 2030.

Portugal is rapidly establishing itself as one of Europe’s prominent digital and AI-ready hubs. By fostering data center development, the country's digital transformation could significantly bolster its economy. According to a recent study by Start Campus and Copenhagen Economics, with favorable conditions, this sector could contribute up to €26 billion to the national GDP from 2025 to 2030, an average of €4.4 billion annually.

The study, titled Assessment of the Socio-Economic Benefits of the Data Centre Sector in Portugal, reveals that the industry could support up to 50,000 full-time jobs each year. This includes direct, indirect, and induced employment, contingent upon favorable investment and regulatory environments.

From 2022 to 2024, data centers have already added €311 million to Portugal’s GDP, sustaining around 1,700 jobs annually. They have attracted skilled professionals, bolstered regional cohesion, and unveiled new education pathways. The report emphasizes Portugal's skilled workforce, with around 230,000 ICT specialists and a high number of STEM graduates.

Forecasts indicate that by 2030, up to 70% of computing capacity will be dedicated to AI applications. This highlights the need for upgraded, resilient, and sustainable data center infrastructure. With predicted growth of 33% per year in demand for AI capacity, efficient data centers are crucial for companies adopting cloud computing, big data, and AI solutions.

Portugal's competitive electricity costs—which are about 30% below the European average—and reliance on renewable energy sources position the country favorably in the digital sector. The country's geographical advantages, including the Atlantic coast, facilitate resource-efficient cooling systems that reduce freshwater and energy consumption.

Also, approximately 25% of the world’s submarine cables pass through Portugal, supported by 92% fiber optic coverage, ranking it as the third-best network in the EU. These advantages underpin Portugal's potential as a key hub in Europe's digital and AI landscape.

To fully develop its data center sector, the report outlines policy actions to consider. These include ensuring access to the electrical grid, streamlining licensing processes, devising targeted investment measures, and promoting digitalisation across business sectors and public administration. Implementing these policies can ensure that Portugal's data centers drive both economic growth and territorial cohesion.

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