The heat was never the hard part
Nearly every watt that reaches a server ends up as heat. Cooling then spends more electricity moving that heat out of the room. Germany’s fight was the low-grade warmth leaving the racks, and whether a town or a greenhouse would buy it. Chips getting warm was a given.
The Energy Efficiency Act of 2023 tried to turn that leftover heat into a civic asset. New data centers would have to reuse a portion of it, ideally in a nearby municipal heating system. Builders said the law was handing them a product and a customer they do not control. In June 2026, a month before the rule was due to take effect, the federal cabinet stepped back.
A cabinet decision, not a statute
The EU’s binding 2030 climate target is a cut of at least 55 percent in greenhouse gas emissions, compared with 1990. Rules written toward that goal are now running into a separate political project: more computing capacity on European soil, especially for artificial intelligence.
WIRED reported that earlier in 2026 the German government set its own 2030 aim: double the scale of the country’s data center fleet and quadruple the compute available for AI models, so it could rely less on the United States and support a faltering economy.
According to that reporting, the June amendment drops the hard part of the 2023 heat rule. Operators would no longer have to reuse waste heat. They would have to assess whether reuse is economically and technically feasible, and they would be exempt if it is not. The amended bill was still due in parliament. The Ministry for Economic Affairs and Energy did not respond to WIRED’s request for comment. The line on record came from federal minister Katherina Reiche, writing when the cabinet approved the change:
With practical rules for data centers, we are creating the conditions for digital sovereignty and economic growth.
That is a cabinet decision. As of WIRED’s October 2026 account, it was not law. A headline is not a permitting basis.
A heat exchanger is not a customer
The German Data Center Association had already called an early version of the efficiency bill a “data center prevention act.” The phrase is lobbying. It also describes the risk the industry thought it was looking at: a rule that stops construction rather than merely regulating it.
The objection was a missing invoice, not the thermodynamics. An operator could be required to reuse heat with no one on the other end of the pipe. No municipal network. No industrial user such as a greenhouse. Barbara Smitten, associate director for critical systems at Cundall, told WIRED: “Some of the things they had to comply with were outside of their control.” In her account, the burden sat on the data center. Easing the rule, she said, lessens the risk of people not seeing the German market as attractive.
Patrick Graichen, a former senior official at the economic affairs ministry when the 2023 act was adopted, does not accept that framing. He told WIRED:
We need clean heat, and data centers are a source of clean heat.
His advice to the industry was shorter: “Stop complaining.” He wants a heat customer treated as a default test when a site is chosen, not as a hope after the concrete is poured. “Clean, ” in that sentence, is a policy claim. Captured waste heat can displace heat from a boiler. It does not show that the electricity feeding the hall is renewable.
John Booth, managing director of Carbon3IT, helped devise EU-wide energy efficiency targets for data centers. His point is narrower than a slogan, and it is the one that matters:
There is no technical reason why a data center cannot use its waste heat. The technologies and concepts are well known.
He added that there is “absolutely no reason except the will of the organization to do it.” That applies when a heat user is actually available. Known equipment does not create a winter load or a district-heating contract.
Technical feasibility and economic offtake are different problems. The reported amendment refuses to collapse them. It asks for a study, then allows an exemption. It does not require a heat customer, and it does not require developers to pick sites that have one.
What the canceled projects actually show
In the 18 months before WIRED’s report, two German projects came off the board. Stack Infrastructure canceled a $3 billion facility in Hesse. State-owned Komm.ONE withdrew from a project in Baden-Württemberg and pointed to burdens under the Energy Efficiency Act.
Only the second is a stated causal claim, and it is the developer’s account. The reporting itself says the precise cause of a cancellation is rarely clear. Power, permits, cost, and demand can end a scheme that also disliked a heat rule. Stack’s exit should not be assigned to one clause.
Local consent is a separate veto. In February 2026, a small-town council blocked a $2.5 billion data center, partly over climate concerns. A softer national rule does not override that kind of vote.
What a heat-rule edit does not touch
Reiche’s “digital sovereignty” line was not invented for this rollback. An April 2026 analysis from Morgan Lewis, written before the cabinet decision, describes Germany’s National Data Center Strategy as intentions more than binding measures. The sovereignty aim is domestic capacity for AI, cloud, edge, and high-performance computing. It is not a synonym for more generic halls.
The same analysis lists constraints a heat clause cannot fix. Grid connections are limited. Electricity prices are high. Approvals are slow, and earlier laws meant to speed them had limited effect. Germany’s position between Western and Eastern Europe is still a reason developers look at the map when the rules look workable. Location does not energize a substation. For AI workloads, the date the megawatts arrive is still what a contract has to survive.
Berlin can waive the pipe. Brussels is still scoring the building.
In March 2026, before the reported German reversal, the European Commission published a draft Delegated Regulation for a common EU data-center rating scheme, according to Morgan Lewis. The draft covers efficiency classes, labels, and indicators that include power usage effectiveness and water usage effectiveness. The firm expects the scheme to matter for compliance, investment, and ESG reporting, and says Germany will push harmonized EU sustainability standards. The draft’s final legal status is not settled.
The definitions are worth getting right before anyone puts them in a board paper. PUE is total facility energy divided by IT energy. A PUE of 1.2 means the site draws 20 percent more energy than the computing load itself. That extra covers cooling, power distribution, and the rest of the overhead. WUE is water consumed per unit of IT energy, typically liters per kilowatt-hour.
A German exemption from heat reuse would not switch off that kind of scorecard. Most companies will buy this capacity from a colocation operator, not build a hall. As of the April Morgan Lewis note, efficiency rules for those operators were still unclear at national level. A sharper European label and a fuzzier national heat rule can land in the same contract. A missing municipal customer does not erase the energy and water figures a label will still show.
Questions worth settling before you commit capital
- Has Germany actually dropped the waste-heat mandate? Not in a form you can cite. WIRED reported a June 2026 cabinet reversal, with an amended bill still headed to parliament as of October 2026. Under that text, operators assess reuse and are exempt if it is not economically and technically feasible. Until a statute is published, a cabinet announcement is not a permitting basis.
- Is reusing data center heat technically unrealistic? No, not when someone can take the heat. The equipment and the concepts are well known. The dispute is mandatory reuse without an offtake the developer controls. A study cannot invent that customer.
- Did the 2023 efficiency law kill the big canceled projects? Only Komm.ONE is reported as citing the Act, for its withdrawal in Baden-Württemberg. Stack’s $3 billion cancellation in Hesse has no demonstrated single cause. Treat both exits as signs of a difficult market, not as a verdict on one clause.
- Will a softer rule deliver the computing capacity Berlin has talked about? Not by itself. Grid access, power price, and slow approvals sit outside a heat clause. Loosening reuse leaves those in place.
- What does “digital sovereignty” mean here, practically? In the national strategy it means domestic capacity for AI, cloud, edge, and high-performance computing, not merely more server space. Much of that remains intention. Waiving a heat rule does not fund it, permit it, or connect it.
- What should you ask a colocation provider if national heat rules stay fuzzy? Ask how the hall will be scored on PUE, WUE, and any EU efficiency class or label, and whether those figures are contractual or marketing. Ask when the grid connection is real, what the power will cost, and whether a heat customer is close enough to be a design choice rather than a press line.
Price the site as a power project
If the board wants AI workloads on European soil, the hall is the easy part of the slide. The questions that decide the investment are older than the model: when the connection is real, what the electricity costs, and whether a heat customer is near enough to be chosen rather than announced.
Then ask how the building will look on a European label that scores energy and water, even if Berlin no longer forces the heat into a municipal pipe. A feasibility study records whether reuse could work. It does not build the offtake, reinforce the grid, or win the council vote.
Europe can want the compute and keep the climate commitment. It will not get either by editing only the clause the industry disliked most.