CUTTING GRID QUEUES

Similarly to many other locations, Denmark is struggling with the sheer number of data center projects that have applied for connections to the electricity grid. The country has around 400 MW of installed IT capacity, and at least 15 GW more capacity has been requested by data center developers. The total volume of connection requests in the queue, including other large loads, generation facilities and energy storage facilities, stands at around 60 GW.

To address this problem, the Danish government passed emergency legislation that will reorder the connection queue by ranking proposed projects from Category 1 (highest priority) to Category 4 (lowest priority) based on their importance to "societally critical functions." Most data centers will be designated as Category 4. Finland and Norway are considering similar approaches, but Denmark's plan will serve as the first test case for this type of framework.

Local operators, represented by the Danish Data Center Industry (DDI) association, argue that the framework is ill-suited to the realities of the data center industry, where workloads of different criticality are often housed in the same facilities.

Regulation in progress

In February 2026, Danish transmission system operator Energinet introduced new conditions for projects joining the grid connection queue. These include requiring developers to demonstrate project maturity by submitting planning permission, technical and commercial documentation, along with a DKK 500,000 ($77,000) deposit. Projects that are considered "grid-friendly" can climb further up the queue by adopting measures such as demand response or on-site energy generation. Yet the matter of the oversized grid connection queue remained to be addressed.

In June 2026, the Danish parliament introduced legislation (Bill L 23) that prioritizes large loads in the queue that are deemed important for the fundamental functioning of society. The bill is going through the Danish Parliament and is expected to come into force on October 12, 2026. Its details are taking shape through a series of draft executive orders subject to public consultation that concluded on September 22, 2026.

Under the current draft proposals, all large load applications will be divided into four categories:

1. Demand from existing customers, small businesses, new households and projects supporting critical societal functions.
2. Projects supporting electrification and the green transition, including transport, heating and hydrogen.
3. Energy system services, such as batteries.
4. Large energy consumers.

These categories are not handled sequentially: projects in lower categories can obtain grid connection if they can be accommodated within available capacity without displacing higher priority projects. Within each category, projects will be further prioritized by their "grid friendliness."

Applications are expected to be processed in batches at least twice a year, and some may be refused outright. Appeals against classification decisions are expected to be handled by the Danish Utility Regulator. Data centers are expected to be assigned Category 4 by default. Some data centers that support critical societal functions may be moved to Category 1.

The prioritization model will apply to projects that have applied for grid connection, unless they already have a binding grid connection agreement. There are indications that some projects with connection agreements may have their priority adjusted, creating delays, while others may have their connection rights expropriated and be offered compensation.

Response

DDI has warned that placement of all facilities in Category 4 by default would essentially serve as a moratorium on data centers. The association suggests that prioritization for societal value will require careful consideration, and must apply fairly to all large loads, not just data centers. Prioritization must recognize the differences between types of facilities (enterprise, colocation, hyperscale) and include a method to evaluate the level of societal benefit at colocation and cloud facilities that are shared by different types of customers.

Denmark's plan shares some elements with those emerging in other locations. Yet the assessment of societal value is distinctive (and problematic, as DDI points out). In some regions, such as the UK, data centers have been designated as critical national infrastructure (see Critical national infrastructure status: what does it mean?). The UK's current plan to decongest the queue requires developers to provide substantial financial security (between 2.5% and 7.5% of CapEx). This effectively uses capital commitment as an indicator of project maturity (see Cutting grid connection queues: the UK's pay-to-stay plan).

Regulators in Denmark are likely to slow down the development of large-scale, power-intensive facilities for cloud computing and AI, and this may be the intended effect. Draft legislation describes such data centers as "typically not geographically bound," implicitly suggesting they should be built elsewhere unless there is spare grid capacity.

Operators that wish to build facilities in Denmark will be forced to think differently about both their designs and their role in the community; the current shape of the framework rewards measures such as demand response, heat reuse and on-site power generation (permitted since 2023).

A separate national data center strategy is expected to be published in the beginning of 2027. The strategy is intended to address some of the concerns about the future of the industry in Denmark and outline a pathway for the grid updates needed to support capacity growth.

The following expert was consulted for this report:
Merima Dzanic, Chief Operating Officer, Danish Data Center Industry