Merlin Properties wants to break ground by the end of September on its new data center in Navalmoral de la Mata (Cáceres), provided it completes the environmental permitting process and secures the corresponding license. The first phase starts with 29 MW of granted electrical power, equivalent to about 20 MW of IT capacity, though the project is part of a much larger plan that could reach 1.4 GW at this site if enough grid capacity becomes available.
Merlin’s data center in 30 seconds
- Merlin wants to start construction in Navalmoral by late September, after clearing its remaining permits.
- It currently has 29 MW of electrical power, enough for around 20 MW of IT capacity.
- Its current planning envisions up to 1.4 GW at Navalmoral, though that figure represents future, uncommitted capacity.
- Access to electricity has become the main constraint on expanding the project.
- The company is also getting ahead on purchases of transformers and generators as lead times grow longer.
The gap between the initial 20 MW and the project’s full potential helps explain one of the main problems currently facing the data center industry. Demand for capacity is growing, especially from AI and cloud workloads, but building new facilities does little good if the power grid can’t supply enough electricity to fill them with servers.
Merlin is trying to manage that uncertainty by moving forward in phases. The company plans to start building with the power it already has secured and prepare the site to grow further if it obtains new power allocations during the roughly two years of construction.
From an initial 20 MW to a project that could reach 1.4 GW
Merlin’s plans for Extremadura first became known in January 2025. The company and the regional government of Extremadura (Junta de Extremadura) announced two large campuses at the time, aimed at generative AI and advanced computing, in Navalmoral de la Mata and Valdecaballeros.
The initial planning talked about roughly 1 GW of potential IT capacity at each site. In later corporate documentation, Merlin raised its planned portfolio for Navalmoral to 1.4 GW.
The company’s May 2026 corporate presentation splits this so-called Phase IV into two parts: the EXT-NAV 01 and 02 projects, totaling 200 MW, and a further 1.2 GW after that.
These are long-term planning figures, not capacity that is currently available.
For the first phase, the picture is much more concrete. Merlin has confirmed it has 29 MW of electricity, enough for around 20 MW of IT load.
The company wants to start with a large building designed to scale up its capacity gradually. That lets it move ahead with physical construction while it waits for new grid access requests to be resolved.
The approach avoids taking on, from day one, the cost of equipping hundreds of megawatts without knowing when they could actually be connected.
It also shows that the most important unit of measurement for a data center is no longer just square meters. In projects aimed at AI, the IT power actually available determines how many GPUs, servers, and storage systems can be installed.
Electricity is setting the pace for new data centers
Energy availability has become one of the factors shaping data center expansion in Europe.
AI is accelerating the problem because new clusters use much higher-density servers. A conventional rack and one built to house AI accelerator systems can have very different power requirements.
Merlin was already designing its Extremadura projects with those workloads in mind. The company’s documentation outlines densities of up to 70 kW per rack with air cooling and 200 kW per rack with liquid cooling.
That helps put the scale of power needed into perspective once the design is applied to entire buildings.
Navalmoral also has a favorable characteristic: the campus is planned on land owned by Expacio Navalmoral, and its plans include a connection to the 400 kV Arañuelo substation, owned by Redeia.
Merlin believes there is room to secure more capacity and expects to make progress on that front during construction. However, that allocation depends on the power system’s access and connection procedures, not solely on the developer’s needs.
That’s why it’s important to distinguish the 1.4 GW potential from the 29 MW the company currently has been granted.
A data center can be designed to grow over years, but effective commercial capacity will only arrive as electricity, finished buildings, and installed equipment become available.
Environmental permits are the first hurdle to clear
Before construction can start, there’s also an immediate condition to meet.
The project is still going through environmental permitting. The application for an integrated environmental authorization and the environmental impact study were opened for public comment in May.
The Association for the Defense of Nature and Resources of Extremadura (ADENEX) subsequently filed objections related to, among other issues, water, waterways, noise, waste heat, habitats, and diesel fuel storage.
Merlin said in its latest earnings presentation that it was wrapping up this phase after receiving comments on the file.
The existence of objections doesn’t mean the project has been rejected. The administration has to review them as part of the process before issuing its environmental decision.
After that, a municipal permit will still be needed before construction can begin.
So the goal of starting by the end of September still depends on those procedures wrapping up on schedule.
Merlin is also buying equipment before it needs it
Electricity isn’t the only resource whose availability worries developers.
Merlin has flagged longer lead times for certain equipment used to build data centers. The company believes these pressures could eventually spill over into costs as well.
Its response has been to buy ahead of schedule.
According to its first-half earnings presentation, all the equipment for buildings already announced and currently under construction has already been purchased.
The company is now looking at going a step further and buying, in advance, components that are relatively reusable across projects.
Two particularly important items are on that list: transformers and generators.
Transformers convert and distribute the electricity received from the grid to the data center’s different systems. Generators are part of the backup infrastructure meant to keep services running when the main power supply is interrupted.
Ordering these components once a building is close to completion can become a problem if the manufacturer has months of backlog.
Buying earlier reduces that risk, though it also means tying up capital and managing storage for equipment that isn’t needed yet.
The decision shows how digital infrastructure construction is changing. Developers now have to coordinate land, permits, power, fiber, construction, and a supply chain where some electrical components are seeing increasingly longer lead times.
Data centers are already showing up in Merlin’s numbers
Merlin’s push into this business is also starting to carry financial weight.
The company closed the first half of 2026 with €308 million in total revenue, up 11.7% from the same period in 2025. EBITDA reached €229 million, also up 11.7%, while operating profit (FFO) rose to €180 million, up 8%.
Merlin attributed part of that growth to its data center division, which reached 160 MW leased.
The company already operates or is developing facilities in Madrid, Barcelona, Álava, and Lisbon, and continues expanding its Iberian portfolio. In July, it also announced Zaragoza-WIND, a 144 MW IT project in Botorrita (Zaragoza) tied to renewable generation.
Navalmoral represents a different scale of potential.
If grid access allows the currently planned 1.4 GW to be developed progressively, the site would end up becoming one of Europe’s major campuses for advanced computing.
But there’s a considerable distance between having land and planning for 1.4 GW and actually having that capacity in place.
For now, the number that defines the project is 29 MW of granted electrical power and around 20 MW of IT capacity. Merlin intends to use that initial capacity to get construction underway without waiting for the full future expansion to be resolved.
The strategy reflects the moment the European data center industry is going through fairly well. Demand may exist, capital may exist, and projects may be designed, but the timeline increasingly depends on the power grid and on an industrial supply chain capable of delivering transformers, generators, cooling systems, and the rest of the equipment on time.
In Navalmoral, building the facility will be only part of the project. The other part will be securing enough electricity to progressively fill it with technology infrastructure.
For more on how power constraints are reshaping data center development across Spain, see our earlier coverage of how Spain wants greener data centers, but it could put its digital race at risk, and on Merlin’s broader push into the sector, CoreWeave outscores Inditex, Endesa, and Hotusa as Merlin Properties’ main tenant.
Frequently asked questions
How much power will Merlin’s Navalmoral data center have?
Merlin currently has 29 MW of electrical power granted, equivalent to roughly 20 MW of IT capacity. Its planning envisions potential of up to 1.4 GW, but that capacity will depend on future expansions and power availability.
When will construction start on the Navalmoral data center?
The company aims to start by the end of September 2026. Before that, it needs to complete environmental permitting and obtain its construction license.
Why does electricity limit data center construction?
Large data centers need connections of tens or hundreds of megawatts. AI is also raising the power density of servers, so having land and financing isn’t enough if the grid can’t supply the power required.
What other data centers does Merlin have in Spain?
Merlin has digital infrastructure projects in locations such as Madrid, Barcelona, and Álava, plus Lisbon in Portugal, and is developing new facilities including Zaragoza-WIND and the projects planned in Extremadura.
