How LNG Forecasts Could Impact EU Data Centre Energy Costs

Europe’s energy intensive sectors could see a material shift in operating economics over the next decade, with liquefied natural gas (LNG) emerging as a stabilising force. 

New analysis from Wood Mackenzie suggests that expanding global LNG supply could reduce European industrial energy costs by US$41bn a year by 2032, delivering cumulative savings of US$189bn.

While the forecast focuses on heavy industry, the implications extend to data centres, where power availability and long term price certainty are now central to location and investment decisions.

Lower and more predictable gas prices could reshape the economics of grid connected facilities across the region.

LNG supply and European power pricing

According to Wood Mackenzie, demand for natural gas across Europe’s industrial sectors has fallen by 21% since 2021 as prices surged following supply disruptions and geopolitical shocks. 

Those high prices triggered a wave of LNG investment, particularly in the US and Qatar, with new capacity now set to come online at scale.

The consultancy expects European traded gas prices to almost halve by 2030 compared with 2025 levels, as LNG supply growth outpaces demand. Even after a modest rebound, prices are forecast to average around US$8 per million British thermal units between 2030 and 2035.

For data centre operators, this trend matters because gas remains a key marginal fuel in many European power markets. Cheaper gas translates into lower wholesale electricity prices, improving the business case for new capacity and long-term power purchase agreements.

“Market dynamics from global LNG supply are creating a window for European industrial recovery that policy intervention has struggled to deliver,” says Massimo Di Odoardo, Wood Mackenzie’s VP for Gas and LNG Research.

“For sectors like petrochemicals and metals that have operated under severe cost pressure, this price reversal window could determine whether they manage decline or achieve recovery.”

Data centres and industrial competition

Wood Mackenzie’s analysis highlights that Europe’s competitive disadvantage against the US is likely to narrow as LNG exports lift American domestic gas demand. The consultancy forecasts that US gas consumption will rise by almost 40% over the next decade, driven by LNG exports and the rapid expansion of the data centre sector.

That demand growth is expected to push US gas prices to an average of US$4.9 per million British thermal units between 2030 and 2035, nearly 50% higher than 2025 levels. While US prices would still undercut Europe, the gap would shrink significantly.

For European data centres, this could ease a long standing cost imbalance. Power intensive facilities in Frankfurt, Paris and Dublin have struggled to match the economics of US hyperscale campuses. More competitive electricity pricing would support both colocation growth and sovereign compute strategies within the EU.

Winners, limits and data centre investment

Not all industries are expected to benefit equally from cheaper energy. Wood Mackenzie suggests sectors such as iron, steel and chemicals may only stabilise rather than regain lost competitiveness. Pharmaceuticals and food processing, by contrast, are seen as better placed to expand output and exports.

Data centres sit somewhere between these categories. Lower energy costs could accelerate investment at a time when Europe lags the US and China in installed compute capacity, despite EU ambitions to triple capacity by 2035. 

Reduced power costs could also support higher density AI workloads, which have raised concerns about grid constraints and affordability.

However, Wood Mackenzie cautions that energy prices alone will not unlock a full industrial or digital revival.

Decarbonisation pressures remain

Massimo warns that Europe’s decarbonisation framework remains the biggest structural constraint on competitiveness, even if gas prices fall.

“The outcome will depend on whether the EU can find a better balance between its goals to reduce carbon emissions and the imperative to boost European industrial competitiveness,” he argues.

Carbon prices under the EU Emissions Trading Scheme already exceed US$84 per tonne and continue to rise. Energy intensive users face pressure to invest in hydrogen, biomethane or carbon capture as free allowances are phased out. For data centres, this adds cost and complexity to backup generation and power sourcing strategies.

The Carbon Border Adjustment Mechanism, due to take effect this year, will apply carbon costs to imports but is unlikely to fully offset domestic regulatory burdens.

What this means for data centre strategy

Wood Mackenzie’s analysis suggests that LNG driven price relief could create a more favourable environment for European data centres, particularly those tied to industrial clusters or constrained grids. Cheaper gas could improve grid stability, reduce power costs and support new capacity where projects have stalled due to energy economics.

At the same time, operators will still need to navigate carbon pricing, permitting delays and sustainability targets that remain more stringent than in competing regions. LNG may ease pressure on operating costs but it does not remove the need for careful long term power and carbon planning.

For data centre developers weighing European expansion, the next decade may offer a narrower but more workable path, shaped as much by energy policy as by global LNG markets.