Alibaba, one of China’s biggest tech giants, is in preliminary talks with Spanish solar power company Solaria to provide power for a new data center in Puertollano, south of Madrid. The move comes as Spain prepares new regulations that will require data center operators to be based in the European Union and keep all data within European borders.
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Talks with Solaria are still in their early stages, Bloomberg reports, and the plant under consideration is located about 240 kilometers south of Madrid. While both companies declined to comment on the talks, the partnership could be a significant step for Alibaba in the European market, especially at a time when sustainability and energy efficiency are key priorities.
The plan calls for the use of renewable energy sources, which is in line with Alibaba's recent announcements about the development of new data centers. The company has already started talks with other suppliers, seeking to ensure its energy autonomy and sustainability.
The draft Spanish decree includes two main components. The first concerns electricity, requiring sites above 1MW to use 80% renewables every hour or risk losing their connection to the grid. New demand must be matched by new clean capacity built, which reinforces the need for investment in renewable energy.
The second component is more complex and concerns the ownership and management of data centres. Operators would have to be based in the EU, with all data and metadata kept within European borders. This measure goes beyond the EU guidelines on data sovereignty, as it covers sensitive public sector work.
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Solaria seems to fit the first requirement well. The company raised €300 million in April and has a portfolio of 3.4GW of secured data center capacity across five countries. Its Puertollano project, with 200MW of capacity on 100,000 square meters, is housed in clean rooms that once manufactured photovoltaic cells.
Alibaba is no stranger to the European market. It has operated data centers in Germany since 2016 and opened a new center in Paris in June. It has also announced plans to add its first cloud regions in Finland, the Netherlands and Turkey within the next twelve months. The expansion underscores Alibaba’s strategy to strengthen its presence in Europe, capitalizing on the opportunities presented by the growing demand for cloud infrastructure.
However, it remains unclear whether an EU subsidiary of a Chinese parent company, such as Alibaba, would be considered established in the EU under the new decree. This is an issue that the draft has not answered, and no one has suggested that Alibaba would be exempt from the regulations.
Spain, with its growing data center capacity, is where this issue will be solved. The country’s data center capacity reached 439 megawatts at the end of 2025 and is projected to approach 2,537 megawatts by 2030. This growth makes Spain an attractive destination for data infrastructure investments.
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Spanish Prime Minister Pedro Sanchez has signed deals in Beijing this year to attract Chinese investment, and is among the few EU leaders who support closer ties with China, rather than stricter ones. His government aims to publish the new regulations by the end of the year, with one aspect of the rules supporting that deal, while the other may not.
