This multidisciplinary study examines the EU legislation applicable to data centres, as well as the technical and regulatory challenges at stake. It draws on case studies from both within and outside Europe, including France, Germany, Iceland, Ireland, the Netherlands, Norway, and the United States. The report calls for a more flexible and layered regulatory approach – one that is adaptive, proportionate, and responsive to evolving developments in the sector. It concludes with the following policy recommendations: Streamline Permitting for Socially Valuable Infrastructure Projects National authorities should further harmonise and simplify permitting processes and efficiency standards. Fast-track permitting should be granted to projects with high positive social impacts, including qualifying DCs, and use-it-or-lose-it provisions should be applied to reduce connection queues. Enable Incentives for Grid Flexibility and Clean Energy Use CERRE estimates that the EU could unlock 50–60 GW of demand-side flexibility by 2035 through strategic grid user integration. Policy makers should encourage DC operators and other users to deploy battery storage, provide demand-response mechanisms, and integrate renewable energy sources. Incentives could include tailored network tariffs, electricity prices, co-investment models, and long-term pricing agreements (PPAs). Integrate DCs into Spatial and Electricity System Planning Regulators and system operators should integrate digital infrastructure projections into spatial planning and designate ‘ready-to-connect’ zones in areas with low-carbon generation and uncongested grids, supported by participatory and inclusive planning mechanisms. Improve Transparency and Market-Based Signals Update metrics measures such as Power Usage Effectiveness (PUE) and promote transparency on energy use, carbon emissions, and contributions to grid flexibility. Standardised tools like data-sharing platforms and flexible connection agreements can support demand-side response, while greater voluntary participation in ancillary service markets is essential. Strengthen Cross-Sector and Cross-Border Coordination Support structured dialogue between transmission and distribution system operators (TSOs and DSOs) and industry, including across national borders, to resolve technical and regulatory issues and ensure a more coherent EU-wide strategy.