The IT and digital services arm of the Schwarz Group said it will invest €11 billion (US$12 billion) in the construction of a large data centre campus in Lübbenau, in the German state of Brandenburg.

The project will be developed by Schwarz Digits, the group’s digital division, on a 13-hectare site formerly occupied by a thermal power plant.

In its initial phase, the campus is designed to support a 200-megawatt installation, with capacity for up to 100,000 graphics processing units (GPUs), the company said.

Schwarz Digits said the facility will serve internal operations across the group’s retail businesses, including logistics, payments and customer data processing for Lidl and Kaufland.

In addition, the group intends to offer storage and computing services to external customers.

Construction of the first phase is scheduled to be completed by the end of 2027.

The campus is expected to operate entirely on renewable energy.

Schwarz Digits said the initiative is intended to strengthen Europe’s independent digital infrastructure, with a focus on control, security and data sovereignty.

The company has positioned the project as part of a broader effort to reduce reliance on non-European technology providers for critical digital services.

Although the investment sits within the technology sector, the scale of the infrastructure has implications for the retail industry.

As one of Europe’s largest grocery and consumer goods operators, the Schwarz Group is expanding its capabilities in logistics, supply chain technology and digital services as data volumes, personalisation, artificial intelligence and omnichannel retail models become increasingly central to large-scale retail operations.

The Lübbenau project follows reports earlier in December that the Schwarz Group is in advanced discussions with Deutsche Telekom (ETR: DTE) regarding a potential joint bid for European Union-financed artificial intelligence data centres.

According to a report by Handelsblatt, six people familiar with the matter said the talks relate to the development of large-scale AI computing facilities, often described as AI Gigafactories.

Three of the sources said negotiations had progressed significantly, although no binding agreement has been reached.

The same individuals said discussions were initiated by Deutsche Telekom chief executive Timotheus Höttges and Schwarz Group chief executive Gerd Chrzanowski. Canadian investment firm Brookfield is reportedly considering backing the venture as a financial investor.

None of the companies involved has formally confirmed the talks.

A spokesperson for Deutsche Telekom said the company is “interested in building up the EU AI Gigafactory in a leading position for Germany as a location”, but did not confirm any cooperation with the Schwarz Group.