The Portuguese government has proposed new rules that would require data centers in the country to be powered by renewable energy and to use waterless cooling systems.

Environment Minister Maria da Graca Carvalho said that the Portuguese government was finalizing legislation that would see data centers face "stringent requirements on water use" and a "very rigorous" environmental review.

"We'll ‌require ⁠projects to either have a cooling technology that does not require fresh water, because that is already possible, or a water solution that does not ​conflict with water ​supplies for ⁠the general population and other socio-economic activities," she told a parliamentary hearing.

The rules would mean that data centers in the European country would have to run on renewable power, said Carvalho, citing the country’s abundant solar, wind, and hydropower resources. According to data from the European Commission, in 2025, more than 80 percent of the country's power came from renewable sources.

The Portuguese data center market is growing rapidly, with more than 2.6GW of capacity currently under development. This is a significant increase from current levels. Currently, the country has 36 operational data centers, with ten more under construction or in planning. Lisbon is the biggest market, with 25MW of operational capacity and almost 1.4GW of planned capacity.

This has led to growing pushback from locals. Notably, in 2023, a corruption scandal linked to the Start data center campus brought down the Portuguese government, leading to then-Prime Minister António Costa's resignation. Despite the scandal, the project, which is slated to have a capacity of 1.2GW, is expected to go ahead.

Portugal joins neighboring Spain in drafting new rules that seek to mandate the use of renewable energy. The Spanish government initially proposed in August that data centers would have to source at least 80 percent of their electricity consumption from new renewable generation on an hourly basis.

In October, it revised those rules, increasing the threshold of data centers subject to the rules from 1MW to 10MW.