TLDRs;
- Telekom and Schwarz advance talks on a major German AI gigafactory amid EU funding uncertainty.
- Companies aim to tap part of Europe’s €20 billion AI infrastructure investment program.
- EU funding rules remain unclear as 76 applications await review and approval in 2025.
- Germany’s new energy laws push data centers to integrate waste-heat reuse from day one.
Deutsche Telekom and Schwarz Group are accelerating discussions on a plan to jointly develop a large-scale AI data center in Germany, according to information reported by Handelsblatt.
While the two companies have not yet reached a formal agreement, sources suggest the project has advanced far enough to be considered one of the most ambitious AI infrastructure initiatives currently on the table in Europe.
The proposed facility described as an “AI gigafactory”, would be designed to meet rapidly expanding compute demands from enterprises adopting large-scale artificial intelligence models. Both companies see an opportunity to strengthen Germany’s role in Europe’s digital landscape, especially as industries shift toward AI-driven operations across retail, telecom, manufacturing, and public services.
EU Funding Race Intensifies
A key component of the project is its potential reliance on the European Union’s €20 billion AI infrastructure program, an initiative focusing on the development of massive data centers capable of supporting continent-wide AI workloads. Brussels opened the fund earlier this year, drawing 76 applications by the June 20, 2025 deadline.
However, the program remains shrouded in uncertainty. Important details, including the criteria for eligibility, the timeline for disbursement, and whether applicants will receive grants or loans are still not fully disclosed. The European Commission has partnered with the European Investment Bank and the European Investment Fund to evaluate bids, but stakeholders say the process lacks transparency.
This leaves Telekom and Schwarz in a strategic dilemma, secure private capital now, or wait for EU backing, which could reduce the financial burden but might slow the project’s rollout.
Their partnership, between a telecom powerhouse and one of Europe’s largest retail groups, also raises questions about whether the EU will consider the collaboration aligned with the program’s priority structure.
New Energy Rules Add Pressure
Germany’s Energy Efficiency Act is creating new challenges for data center developers, particularly those planning AI gigafactories. Starting in July 2026, new facilities will be required to reuse at least 10% of the waste heat they generate, with this threshold rising to 20% by 2028. At the same time, next-generation AI hardware, such as Nvidia’s GB300 Blackwell-era racks, is dramatically increasing power demands, with each rack consuming close to 120 kW,up from the 6–10 kW typical a decade ago.
This surge in energy usage makes efficient heat management a critical component of any large-scale AI deployment.
To meet these requirements, operators must establish partnerships for energy reuse early in the planning process. Germany already offers successful models of such collaborations. In Berlin’s Spandau district, NTT DATA channels 8 MW of waste heat through a 2-kilometer pipeline to supply warmth to more than 10,000 residents.
A Strategic Bet for Europe’s AI Future
If realized, the Telekom–Schwarz AI gigafactory would position Germany as a critical contributor to Europe’s digital sovereignty push, reducing reliance on hyperscalers from the U.S. and Asia.
The facility would likely serve both private-sector demand and sensitive public-sector workloads, aligning with the EU’s long-term vision for secure domestic compute capacity.
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