Europe's AI Buildout With SemiAnalysis' Jeremie Eliahou Ontiveros
Demand, Energy and Permitting
Last week I had the pleasure of interviewing Jeremie Eliahou Ontiveros from SemiAnalysis. Eliahou Ontiveros is Managing Director for Datacenter, Energy, Industrials Research at SemiAnalysis.
We discuss the state of energy in Europe, bottlenecks on the AI buildout, and more.
To start, could you give a quick intro on yourself and how you got to SemiAnalysis?
I joined SemiAnalysis about two and a half years ago. Before that I was in the finance industry as a buy-side analyst for around four years, and I basically fell into the semis rabbit hole. I was covering some semiconductor stocks in Europe, STMicro, Infineon and so on, wanted to learn more, and discovered SemiAnalysis as an extremely good resource.
It was quite shocking to me, because as a buy-side analyst part of your job is to judge analysts. You don’t have time to go super deep on every sector, so you talk to the sell-side and try to figure out who actually knows the industry. When I started reading Dylan’s content, I thought: this is deeper than anything we have access to as a buy-side firm. I became a subscriber, then saw a Twitter post from him in August 2023 saying he wanted to build a real business out of SemiAnalysis. We started chatting. There were just seven people when I joined in February 2024. We’re 90-plus now, so it’s been an interesting ride.
Energy: Where Europe Stands
SemiAnalysis does very granular monitoring of data centre build-outs, tracking construction starts and leasing data centre by data centre. What does that data reveal about hyperscaler intentions in Europe? Are they underweighting the region, and if so, why?
In Europe we saw signs of activity in 2023 and 2024, demand started to pop up, but then it essentially cooled down. If you look at data centre capacity additions in 2025 relative to 2024, it’s actually stable if not down in Europe. The market cooled quite a bit.
A big part of that is lack of power, lack of supply, and specifically a lack of suitable supply.
If you want to build at the speed and scale these companies want, you need large sites that are expandable, that can be built fast, where you can get started typically 12 months after the lease is signed. In Europe the biggest markets are near metro areas, and it’s tough to build fast at scale near Paris, for example. So all of the good supply got taken up in 2023 and 2024, and that left an air pocket.
The gap between the US and Europe has widened as a result. The US gained share of global megawatts even in 2023 and 2024 when Europe was relatively stronger, and in 2025 that gap widened further. The market simply wasn’t able to react to the surge in demand.
Part of it is that many European operators weren’t able to anticipate the changes in the industry. In the US, builders understood earlier that AI customers want something different: lower redundancy, faster builds, much higher density. European data centre builders took longer to adapt. They would tell you they weren’t seeing AI demand, but to some extent demand wasn’t showing up because there was no supply adequate to meet it. A chicken-and-egg problem.
The good news is that since the beginning of the year we’re seeing Europe come back. For inference you do want a local presence, and what that typically means is fairly large hubs that can serve a broad range of workloads, including training. Inference drives the need, but what an Anthropic or an OpenAI wants is a large data centre that can do multiple things, so they can increase utilisation and scale faster. Some markets are positioning to be those hubs. In the Nordics you’re seeing quite a bit of activity, multi-hundred-megawatt buildings going up. Not US scale, but catching up.
France looks like Europe’s one real energy advantage: nuclear baseload, EDF, and now Mistral’s planned 1.4GW campus with Nvidia. Do you expect France to translate that into becoming Europe’s leading AI hub?
I think it’s going to be quite complicated. Energy is a key input and France scores well there. We have a lot of nuclear power in France, and it runs at a fairly low utilisation rate relative to the US; France exports a lot of power. There’s plenty of energy that could be tapped for large-scale data centres.
But building a project like that takes more than energy.
You need the supply chain, the labour, and especially permitting, which is a big hurdle in France. A gigawatt-scale project is a massive effort, with up to 10,000 people on site every day, and if you add diesel backup generation permitting the project gets even more complex. Then there’s local pushback. France is a much denser country than the US, so anywhere you build, you’re likely to have communities nearby who really don’t want a gigantic data centre next to their home.
That happens everywhere, including the US. But in Texas there’s plenty of land: you take your 3,000 acres in the middle of nowhere, the first house is miles away, it’s all ranches, and you can burn gas. So France has an energy advantage but a permitting problem. It’s just tougher to build very large-scale projects there.
Your Colossus coverage documented the xAI playbook: bridge power behind the meter, grid connection later. That reset expectations for time-to-power in the US. Does any version of that playbook work in Europe? You’ve flagged Ireland as an exception.
Ireland is interesting because it already has a history with behind-the-meter. There are fairly sizeable deployments live in Ireland today; that market was something of a pioneer. Some use engines, some use small turbines, some use fuel cells. Bloom Energy has deployments there, for example.
But overall it’s more complicated in Europe. One, gas is much more expensive, so the economics don’t work as well. Two, the permitting regime is more complicated. Even in the US it’s hard to permit, which is why most people go to Texas, and really West Texas, not even near Dallas. In some European markets you also pay carbon prices on top, which essentially doubles the cost of your gas.
Cost is not why people do on-site gas.
It’s structurally more expensive than grid power for the most part.
It’s all about speed.
And that speed advantage fades in Europe because you can’t do it at scale. In very localised situations it makes sense. Ireland is that case: the hyperscalers all have big cloud regions in Dublin they wanted to expand, they figured on-site gas was the only way, and Ireland even passed regulations to that effect. But the scale is tens of megawatts, maybe low hundreds.
In the US you’re talking about something like over 20 gigawatts of behind-the-meter data centres as net additions in a single year. The scale is just not the same.
You’ve made the case that data centres could be the demand anchor that finally justifies grid investment, as has happened in Texas. Could AI demand play the same catalytic role in Europe, or do regulated European utilities lack the incentives to respond?
The first thing is that utilities are not going to invest if there’s no demand. Demand has to show up first. The second thing is that in some countries, especially France, there’s already available capacity before you need massive transmission upgrades. You’d see people build substations and do minor upgrades to get power to specific locations first.
The major upgrades come when the multi-year projections change. If you look back ten years, many European utilities would tell you electricity demand was going down. That’s why they didn’t invest, and why they retired generators and nuclear plants: the outlook was that efficiency gains would outpace electrification.
Once people internalise the idea that long-term there’s going to be load growth because of data centres and AI, that’s when you can build transmission with confidence that it benefits everyone. It’s not a cost to utilities or households, because the off-takers, the hyperscalers, largely carry those upgrades, and the upgrades run at high utilisation.
That future could materialise in Europe, but only if the demand shows up. And to have that demand, you need to fix supply: permitting, local pushback, making these build-outs go smoothly so companies actually want to increase their presence in the market. Then you can start funding massive grid upgrades.
Since Europe can’t run the American gas playbook, what’s the fastest route to firm power? The US is restarting Palisades and Three Mile Island; Oracle is deploying Bloom fuel cells; Google and Meta are contracting geothermal. Germany has closed reactors sitting idle and France has an ageing fleet. What’s a real option for Europe?
You could always bring some of these resources back online, some nuclear plants for example, or off-take new plants; France has said it wants to build new nuclear. The problem is you need an off-taker. Look at the contracts that enabled Three Mile Island to come back: 15-20-year-plus off-take at fairly elevated pricing. That’s a massive deal, billions of dollars over the life of the contract, and it works because the buyer knows they can build a useful data centre with that power.
If you can’t even build data centres in the market because of permitting, what’s the point? You’re not going to sign gigawatt-scale off-takes, and bringing back a nuclear plant, which is always gigawatt scale, only happens with those multi-billion-dollar contracts. So yes, there’s capacity that could come back online, but to get there you need the demand and the off-take. It could also be new plants: if you could underwrite new nuclear, that could work too, but that’s an enormous project that would have to be fully or mostly funded by hyperscaler off-take.
Grid and permitting
US interconnection queues have become something of a prisoner’s dilemma, with speculative requests approaching a terawatt. European queues have their own issues: years-long connection dates, capacity hoarding. How would you reform the European system?
That’s a great one, and it happened in the US too; many markets there have gigantic queues. I think you just look at what happened in the US as a leading indicator of what works.
What happened in 2023 and 2024, when the first signs of power demand growth appeared, is that anyone near a transmission line would call the utility and ask for power. If anyone can submit a request, everyone floods every utility. In the US that has led to a total queue of large data centres looking to interconnect of about a terawatt, which is above US peak load. It’s obviously not going to happen; you don’t double peak load in a click. There are massive double, triple, quadruple requests, and some are completely fake.
So you’ve seen a combination of responses.
1) Financial commitments. If you want gigawatts, you put money up front, you fund the studies, you post a deposit for the substation. The capital intensity goes up, which excludes the more speculative players.
2) Much closer collaboration between the company and the utility. It’s not “I’m near a transmission line, give me power.” You come with a proposal, ideally one that adds your own resources. Oracle got 1.2 gigawatts from DTE Electric in Michigan by going to the utility with a plan to bring a gigawatt of batteries in specific locations, which made the whole build-out make sense for the utility. That also requires transparency from the utility and transmission system side.
Another option is disclosure of your other requests. Texas has introduced this idea: if you want a gigawatt, you have to disclose where else you’ve requested one. If you’ve got 40 other requests within a 20-mile radius, the utility can see you’re not serious. More transparency on both sides is basically what’s needed to distinguish real projects from speculators who just wanted to be first in the queue and might flip the position.
Your research showed how synchronous training jobs can swing from full load to zero in milliseconds. Does Europe’s grid structurally favour one workload over another? Would inference be better suited to Europe than training?
The load fluctuation problem can be solved fairly easily; it’s just another phase of a problem grids have already faced. It’s the same as suddenly cutting generation: if you cut load instantly, the effect is similar, and operators now know how to deal with it. Everyone in Europe saw the Iberian blackout, got freaked out, and did everything possible to make sure it never happens again. People are sophisticated enough to understand the implications, so I wouldn’t see it as a training-versus-inference issue.
The real point is that these labs just need scale and speed.
The example I like giving: at the end of 2025, Anthropic had around one and a half gigawatts. By 2027 they want over ten. That’s essentially building the equivalent of Google in two years, an infrastructure Google spent two decades building and put about $90 billion of capex into last year alone. To do that, your data centres have to be on time.
So the training-versus-inference debate gets abstracted away. What you want is scale, and then you adapt. Some inference workloads genuinely need proximity and uptime, and those will exist in every market, in Europe, in Asia, there’s no way around it. But they’re a small share of megawatts. The bulk of megawatts will go to hubs, and the question for any country that wants a high share of the build-out is: can you accommodate the larger build-out and become the hub that serves multiple workloads and neighbouring countries?
In APAC, Australia is clearly becoming that hub. Many gigawatts are being built there right now; the country has demonstrated it can accommodate the speed and scale, and it will likely serve many other markets in the region, not just Australian demand. The ideal scenario for France would be the same: build large-scale infrastructure that serves Germany, Spain and so on. But the core issue remains that you need to be able to build. There’s a scenario where the Nordics get most of it and continental Europe ends up with a fairly small share of the pie.
Policy and sovereignty
Last question. We’ve talked about permitting reform, grid interconnection reform, and there are ideas like the UK’s special compute zones. If you had to prioritise one thing for Europe to become more competitive, what would it be?
Probably compute zones. It’s always a tough trade-off, because whenever you bring in the government it tends to slow the whole process down; ideally you want more private sector. But on the other hand, these countries are so difficult to build in that you probably want zones that are agreed upon in advance and won’t be troublesome. Open communication and partnership with local communities is perhaps even more important than elsewhere.
The key is making sure it’s not just about energy. France did a good job finding sites with energy, but the idea would be to find sites with the whole package: great to build in, fast, at scale, where the local mayors have been briefed and know what to do when someone comes in with a massive project, and where the whole community understands it. That would be a good outcome.