European Commission Advances Data Center Sustainability Ratings and Consults on Minimum Performance Standards

Key Takeaways

What Happened

On September 21, 2026, the European Commission (Commission) announced two initiatives aimed at enhancing the sustainability of data centers in the European Union (EU):

• Proposed additions and amendments to the common EU rating scheme for data centers (applicable to data centers with installed IT power demand of at least 500 kW) under the Energy Efficiency Directive, and
• A public consultation on potential minimum performance standards (MPS) for data centers.

Timing

• The proposed delegated regulation amending the data center rating scheme is subject to a two-month scrutiny period by the European Parliament and the Council of the European Union before entering into force.
• The MPS consultation closes on December 14, 2026.

Who Is Impacted

• The rating scheme primarily affects operators of EU data centers with installed IT power demand of at least 500 kW that are already subject to the existing data center reporting scheme. Operators of data centers with demand less than 500 kW may participate voluntarily. Operators of data centers still under development can also voluntarily submit projections ahead of operational data.
• The separate MPS initiative could affect both new and existing data center facilities—the exact scope of obligated operators/facilities is not yet clear.

What Companies Should Consider Doing

• Data center operators should review reporting methodologies, measurement systems, and customer data arrangements to prepare for facility labels and public performance comparisons.
• Potentially affected businesses should consider participating in the MPS consultation and providing evidence on topics such as retrofit costs and implementation lead times to inform future mandatory performance requirements and appropriate transition periods.

Rating Scheme

Background

The rating scheme builds on Delegated Regulation (EU) 2024/1364, adopted pursuant to the recast EU Energy Efficiency Directive, which introduced a reporting scheme for the sustainability of data centers and defined key performance indicators for the rating scheme. It also introduced a European database on data centers to facilitate reporting and data verification. Delegated Regulation 2024/1364 covers data centers with installed IT power demand of at least 500 kW and requires annual submissions by May 15, generally covering the preceding calendar year.

With these proposed amendments, the Commission intends to promote changes in data center design and operation that will reduce emissions, increase grid efficiency, and expand waste-heat use by enabling comparison between data centers in the same region or with similar characteristics.

Core Elements

The new rating scheme addresses how the information collected under the current reporting scheme should be used for ratings. The European database will automatically generate ratings as electronic labels at the end of each reporting period.

Key provisions of the rating scheme include:

• Content of the label: The label would display select indicators from those already reported by data center operators to the European database, such as Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE), and assign grades to those reported values. For example, the highest PUE grade, A, requires a value of 1.15 or less, and the lowest, G, applies above 1.9; the highest WUE grade, A, requires a value of 0.1 or less, and the lowest, G, applies above 1.0. The label would distinguish renewable and nuclear energy, including supply through on-site generation, power purchase agreements, and guarantees of origin. It would also identify contributions to new clean renewable and nuclear energy capacity, provision of grid-flexibility services, and whether the data center is “waste heat reuse ready.”
• Explanatory document: Each label would be accompanied by a common document prepared by the Commission explaining key elements such as the relationship between PUE and location specific climate conditions, the relationship between PUE and WUE and data center size and age, the interdependence and trade-offs between PUE and WUE, possible ways to rate sustainability, and possible reasons why a data center does not offer waste heat for reuse.
• Validity of label: Beginning August 15, 2027, the European database will automatically generate the electronic labels and supply them to data center operators. Labels would be valid for one year. Operators would have to make their label available to anyone requesting it, including by referring them to the database or a free access website. Facility-specific information beyond what the label discloses would remain subject to the regulation’s confidentiality protections.

Additional Amendments

The delegated regulation proposes certain amendments to facilitate label generation, including amendments to certain key indicators (e.g., revising definitions for “waste heat reuse ready” and “freshwater”, and replacing “potable water input” with “freshwater input”) and calculation methodologies (e.g., IT equipment energy consumption would be measured closer to the IT equipment). While the Commission’s definitional amendments are intended to ensure consistency with existing and recently adopted initiatives, these amendments could significantly change how data center operators measure key performance indicators and the ultimate metrics reported. For example, replacing “potable water input” with “freshwater input” could broaden the scope of total water input measured and reported by including non-potable freshwater.

Specified renewable and nuclear energy quantities would determine a new Low-Emissions Energy Factor (LEEF), while reporting entities would no longer need to report data traffic indicators, and the label would not incorporate those indicators.

MPS: Core Elements and Implications

The Commission’s MPS initiative is intended to gather evidence on the necessity and feasibility of minimum performance standards for EU data centers, with the aim of “ensur[ing] that all new or retrofitted data centers meet a minimum level of performance, as regards their energy efficiency, use of water, reuse of heat, energy system integration and services to the grid, and possible other sustainability criteria.”

The MPS initiative could move the EU framework beyond measuring and disclosing data center sustainability performance to requiring facilities to meet binding minimum performance standards. A future proposed MPS regulation may cover a range of performance areas. A report prepared for the Commission in 2025 in support of developing MPS evaluated PUE, WUE, Energy Reuse Factor (ERF), and Renewable Energy Factor (REF) as possible foundations for MPS. Germany and China have already implemented minimum performance standards for new data centers.

In its consultation questionnaire, the Commission requests feedback on which key sustainability indicators it should include in an MPS scheme and lists indicators such as PUE, WUE, ERF, REF, and LEEF. The Commission also asks whether MPS should apply to new data centers only or also to new and renovated or existing data centers, and by when. The Commission requests feedback on the feasibility of transitioning toward a net-zero-emission data center sector and, specifically, whether to introduce provisions for data center carbon neutrality.

Unlike the rating scheme, which does not require facilities to achieve a minimum grade, the MPS, depending on their scope and stringency, could have more direct operational and financial consequences, potentially necessitating substantial investment in cooling or heat-recovery systems, changes to energy procurement, or revisions to the siting and design of new projects. Potential application to existing facilities also raises the prospect of retrofits outside normal investment cycles, making transition periods and recognition of technical and location-specific constraints particularly important.

Next Steps

The delegated regulation for the rating scheme is subject to a two-month scrutiny period during which the European Parliament or Council may object but cannot amend the text. If it clears scrutiny, the regulation would enter into force 20 days after publication in the Official Journal. It provides for the first labels by August 15, 2027, annual label issuance thereafter, and an initial review by December 31, 2028, followed by reviews every three years.

The MPS process will proceed separately. Responses submitted by December 14, 2026, will inform the legislative proposal planned for the second quarter of 2027.

For data center operators and developers, the practical next step is to assess readiness for public facility-level comparisons while documenting and disclosing, as desired, the implications of possible MPS. Evidence of retrofit costs and lead times, site-specific water constraints, opportunities for heat reuse, and the operational limits of providing grid flexibility can help demonstrate where differentiated requirements or transition periods may be warranted. Investors and customers should likewise consider how facility labels and MPS may affect diligence and procurement criteria.

Beveridge & Diamond’s Data Centers, ESG and Sustainability, and International Environmental Law practices help companies identify, understand, and manage evolving environmental and sustainability requirements affecting data center development and operations worldwide. For more information on these developments, please contact the authors.