Echelon Data Centres and Iberdrola have formalised a strategic joint venture to build and operate large-scale data centre facilities across Europe, beginning with a flagship site in Spain.

The partnership, known as Echelon Iberdrola Digital Infra, involves planned investments exceeding €2 billion (US$2.19 billion), marking what the companies describe as the largest European collaboration between a data centre developer and an energy utility.

Originally announced in July 2025, the joint venture secured regulatory clearance from the European Commission in October.

The new entity will focus on providing data centre capacity for hyperscale and artificial intelligence customers, sectors driving substantial demand for power-intensive digital infrastructure.

The first development will be a 160,000 sq m campus known as Madrid Sur, for which a 230MW grid connection has already been secured, according to the parties.

Energy for the facility will be sourced from an on-site solar photovoltaic installation and additional clean-energy capacity supplied by Iberdrola, with the venture stating that the campus’s electricity needs will be met entirely through renewable sources.

The project is expected to generate around 1,500 direct and indirect jobs.

Under the terms of the partnership, Echelon will manage planning, design, commercialisation and operational activities.

Iberdrola will identify and secure sites with grid availability and will provide a continuous 24/7 supply of renewable electricity.

Echelon will hold an 80% stake in the joint enterprise, with Iberdrola retaining 20% through its subsidiary CPD4Green.

The companies said the model addresses key sector challenges, including constraints on land availability, access to grid capacity and long delivery timelines. By integrating utility-led site and power development with operator-led design and construction, the parties aim to reduce execution risk and provide investors with more predictable delivery schedules.

Iberdrola has already secured more than 700MW of additional electricity connections in areas around Madrid that may support further projects.

The companies indicated that potential expansion in these locations could represent a further €6 billion (US$6.57 billion) in investment.

David Smith, Deputy CEO at Echelon Data Centres, said: “Entering the Spanish data centre market has been a strategic goal for Echelon due to the clear benefits for our customers: access to large-scale renewable energy and exceptional construction and operational capacity.

“Partnering with Iberdrola to create Echelon Iberdrola Digital Infra allows us to create a new model for the development of scale data centre infrastructure across Europe – one that brings certainty in key areas that affect data centre decision-making and ensures the timely delivery of world-class data processing infrastructure.”

David Mesonero Molina, Corporate Development Director of Iberdrola, said: “Our joint venture reinforces Iberdrola’s strategy of facilitating the development of data centres, which are a key vector for growth in electricity demand. Echelon’s participation allow us to add significant value to our portfolio of sites.

“They have access to power connection and safe, clean and competitive energy 24 hours a day, 365 days a year, and the scale data infrastructure planned for the sites will be delivered by experts and innovators in the field.”

Echelon currently has a portfolio of more than 2GW in Tier 1 markets such as Dublin, London and Milan.