Opportunity
Why Milan is moving into the spotlight
Milan was once viewed as a second-tier market. That perception is shifting, and quickly.
Renewable energy at scale
Lombardy, Italy’s industrial stronghold, produces 11,000 GWh of hydroelectric power each year and 1,500 GWh of solar energy annually.²
This pool of green energy helps data centre investors reduce carbon output, manage ESG commitments, and cut long-term energy bills. Sustainability is central to Lombardy’s growth strategy, with initiatives like a €200 million fund launched by Milan’s publicly owned utility company, A2A, to support green technology acquisitions.³ Other cities with limited renewable sources face higher emissions and stricter regulatory oversight.
Stable pricing and PPA certainty
In the established FLAP-D hubs, the scramble for green power has grown fierce. Negotiations for Power Purchase Agreements (PPA) can become protracted and complex.
By contrast, Milan offers clearer pathways for fixed-rate deals. The city’s Air and Climate Plan (Piano Aria e Clima or PAC) aims for carbon neutrality by 2050, giving developers a predictable policy framework.
Milan’s smaller market also avoids the intense bidding wars that ramp up costs elsewhere. For example, Equinix has signed a ten-year Power Purchase Agreement with French renewable developer Neoen. Under the terms of the PPA, Neoen will supply Equinix with 53MW of energy from seven solar projects across northern Italy.⁴
Meeting EU sustainability rules with less turbulence
The EU’s environmental benchmarks pose headaches for legacy data centres wrestling with older technologies.
Operators in Frankfurt or Dublin risk regulatory penalties if they fail to cut carbon emissions or water use. Milan, with its robust renewable capacity and efficient infrastructure, makes compliance less onerous. Local initiatives support heat recovery, water conservation, and low-carbon construction. That makes future-proofing more manageable and cost-effective.
Skilled labour at a more competitive cost
Wage inflation is hitting many European hubs, but whilst Italy’s labour costs are set to rise by 2% in 2025, this is lower than the 4.6% forecast for the euro area.⁵ This modest wage growth, combined with Italy’s robust educational network, positions the country as an appealing choice for cost-effective yet highly skilled labour.
Developers can collaborate with local universities and colleges to create a pipeline of trained staff, lowering reliance on pricey external contractors. This prudent workforce strategy can cut delays and curb unforeseen costs. This strategy is particularly viable in Lombardy, thanks to its strong educational institutions and industrial base, including prestigious universities like Politecnico di Milano and Università Bocconi, which produce highly skilled graduates.
There are already successful examples of collaboration between universities, businesses, and investors in Lombardy. For instance, the Tech Europe Foundation in Milan is a non-profit initiative supported by Fondazione Politecnico di Milano, Università Bocconi and fintech firms, Ion Group and FS. It addresses skilled labour shortages by creating a pipeline of talent through its collaborations with top universities. By integrating academic research with industry needs, the foundation ensures that graduates possess the skills required by the market, reducing the gap between education and employment.⁶
Favourable business climate and government backing
Milan’s data centre capacity grew above the national average (by 34%) in 2024, contributing 238 MW of IT to the total output. This places the Lombard capital in a position of strategic advantage compared to other emerging cities in the sector, such as Madrid and Warsaw.⁷ Beyond connectivity, the city’s real estate remains more affordable than FLAP-D sites. Brownfield redevelopment is encouraged, reducing planning hurdles and boosting available space.
2 World Energy News: Italy's Lombardy will award two hydroelectric plant contracts by 2025
3 0100: Mediterranean Insights #6: Exploring Milan, Lombardy, Italy
4 DCD: Equinix signs ten-year PPA with Neoen to power Italian data center portfolio
5 Eurostat: Labour cost index - recent trends
6 Invest in Lombardy: Tech Europe Foundation: Milan, Capital of Technological Innovation
7 LineaEDP: Data Center: investimenti in crescita in Italia. Milano +34%