tl;dr

The Schwarz Group, parent company of Lidl and Kaufland, is investing €11 billion in Germany to build a large AI-focused data center. The project, managed by its IT subsidiary Schwarz Digits, aims to strengthen Europe’s digital sovereignty and reduce reliance on U.S. and Chinese cloud providers. Politicians welcome the move as a major boost for Europe’s competitiveness in artificial intelligence and cloud infrastructure.

Deepl translation

The Schwarz Group (Lidl, Kaufland) is investing eleven billion euros in a new data centre in Lübbenau. It is the company’s largest single investment.

The Schwarz Group, parent company of Lidl and Kaufland, is investing eleven billion euros in a new data centre in Lübbenau in the Spreewald region. This is the largest single investment in the company’s history, said Christian Müller, co-CEO of Schwarz Digits, the group’s digital division, at the ground-breaking ceremony at the construction site in Lübbenau.

What is planned?

The first construction phase of the Schwarz Digits Datacenter is scheduled for completion by the end of 2027. According to the company, the data centre will be powered by renewable energy during normal operation. The facility was initially planned with a connected load of around 200 megawatts and can be expanded in two construction phases using a modular design.

This means that up to 100,000 special AI chips (GPUs) can be installed in the data centre in Lübbenau in the future. By way of comparison, the new data centre currently being built by Deutsche Telekom and Nvidia in Munich is expected to run on 10,000 GPUs.

The special chips will also be used at the data centre in Lübbenau to train large models with AI inference. These are computer models that have been trained to understand large amounts of information and use it to make meaningful predictions or responses.

The waste heat from the computers will be fed into the district heating network of the regional energy supplier Süll and distributed to district heating customers in Lübbenau and the surrounding area.

Why is computing power needed?

Digital Minister Karsten Wildberger (CDU) said that Germany needs computing power to play in the top league of artificial intelligence. ‘Only with powerful data centres can we use AI applications on a large scale and strengthen our competitiveness.’ This project shows that Germany has the skills and expertise to advance its digital sovereignty.

‘Today is a good start to a week in which we will focus on strengthening our own technological capabilities and our independence.’ Wildberger and Federal Chancellor Friedrich Merz (CDU) will welcome French President Emmanuel Macron and almost all of Europe’s digital ministers to an IT summit on Tuesday.

According to the Alliance for Strengthening Digital Infrastructures, data centres are the ‘backbone of digitalisation’. ‘They provide the computing and storage power on which almost all processes in business, administration and everyday life are based today,’ said Alliance spokesperson Béla Waldhauser.

Similar strategy to Amazon

The Schwarz Group is pursuing a similar strategy with its data centres to that of Amazon, the world’s largest online retailer. In the mid-2000s, Amazon began offering its own IT infrastructure as an external service. Today, Amazon Web Services (AWS) is the global leader in cloud infrastructure, ahead of Microsoft Azure and Google Cloud.

As the parent company of Kaufland and Lidl, the Schwarz Group is itself a major IT user. The two supermarket chains have steadily expanded their branch network in recent years. They now operate a total of around 14,200 stores in 32 countries. The group now employs around 595,000 people.

However, the new data centre in Lübbenau will not only process its own data – i.e. data from delivery and ordering processes, payment transactions and customer loyalty programmes. Rather, storage and computing power will also be offered to external customers.

Why Lübbenau?

One argument in favour of the Lübbenau location is that it has an excellent power supply. The Schwarz Group can use the infrastructure that was once built for a lignite-fired power plant. The power plant was shut down in the summer of 1996. However, the connection to the electricity distribution and transmission grid is still in place and works perfectly. The city is also well supplied with a fibre optic connection. Deutsche Telekom operates a large distribution node in Lübbenau’s Neustadt district.

How does Germany compare?

According to the Alliance for Strengthening Digital Infrastructures, Germany is the leading data centre location in Europe. German data centres currently have a total capacity of around 2.4 gigawatts. However, in international comparison, Germany lags significantly behind the USA and China. The USA has a capacity of around 40 gigawatts.

Germany’s central location in Europe, its proximity to the internet hub in Frankfurt am Main and its stable networks with a low risk of failure make it an attractive location. According to the Alliance, the high electricity costs and lengthy approval procedures are a disadvantage.