Data centres: planning policy, sustainability, and resilience

Data centres are warehouse-like facilities that house the information technology (IT) equipment upon which almost all digital activity relies. The UK Government says that they “underpin almost all economic activity and innovation, including the development of AI [artificial intelligence] and other technology, public service delivery, and how we interact with one another”.

In September 2024, the UK Government designated data centres as part of the country’s critical national infrastructure.

The UK data centre sector

Data centres can be categorised by their use and ownership:

• Enterprise data centres: owned and operated by a single organisation for internal purposes.
• Co-location data centres: the facility is operated by a third party that rents space to customers.
• Hyperscale data centres: massive facilities built by major cloud providers like Amazon, Microsoft and Google.
• AI data centres: facilities specialised for the high-performance computing needs of AI development.

A data centre’s capacity is usually expressed as the maximum power it can draw, which determines how much IT equipment it can support. The UK had approximately 1.6 gigawatts (GW) of data centre capacity in 2024.

Most UK data centres are concentrated in Greater London, which is Europe’s largest data centre market. However, new hubs are emerging in places such as Manchester and South Wales.

Economic impact

As data centres do not have an industrial classification in the UK, it is difficult to identify their economic impact. techUK estimates that UK data centres have an annual gross value added (GVA) of £4.7 billion. This is based on an average from a range of international studies.

Data centres also support other sectors that benefit from data processing and storage services, including AI, cloud computing, and financial services.

Data centres are highly automated facilities and the number of jobs they create is relatively modes, particularly given their size and cost. A £10 billion campus in Blyth, Northumberland, which could house up to 10 data centres, is expected to directly create 400 full time on-site jobs.

Why have data centres in the UK?

Preliminary analysis for the government found that UK data centre capacity could rise to between 3.3 GW and 6.3 GW by 2030, depending on policy interventions, but that this may not be enough to meet demand.

Although data can in principle be stored and accessed from anywhere in the world, there are several reasons for expanding data centre capacity within the UK, including:

• to make it easier for UK organisations to access high-quality data processing power, enabling them to conduct research and develop new products and services.
• to support the deployment of AI technologies: data needs to be processed close to the user for AI applications that require real-time decision-making, such as autonomous vehicles or remote healthcare. The government sees data centres as a key part of its proposed AI Growth Zones (AIGZs), through which it aims to establish AI innovation hubs across the UK.
• to allow the UK Government to regulate data centres, such as by requiring them to meet cybersecurity standards and reduce their environmental impact.

Policy issues for data centres Planning policy

Following December 2024 reforms to the government’s National Planning Policy Framework, which applies in England only, local authorities are required to consider the need for data centres when setting local policies and deciding planning applications. This change was welcomed by industry stakeholders, who had previously faced challenges getting approval for new developments.

Data centres are also able to opt into the Nationally Significant Infrastructure Projects (NSIP) regime. NSIP applications are determined by the Secretary of State, rather than local planning authorities.

Planning policy in Scotland [PDF] is supportive of data centres that utilise renewable energy produced in Scotland. Data centres are not mentioned in planning policy in Wales or Northern Ireland.

Energy consumption

Data centres currently consume around 2.5% of the UK’s electricity. The sector’s electricity consumption s expected to rise four-fold by 2030.

There are concerns about the sustainability of data centres and whether the sector’s expected expansion is compatible with the government’s net zero commitments. Major data centre operators have committed to achieving voluntary sustainability targets by 2030. They support renewables projects through power purchase agreements (PPAs), although some studies have questioned whether PPAs contribute to decarbonisation. Data centre operators are also exploring nuclear power, including small modular reactors, as a source of clean, reliable power.

Industry stakeholders and commentators have pointed to high energy price and grid capacity constraints as factors limiting the growth of the UK data centre sector. The Social Market Foundation, a think tank, has found that powering a data centre in the UK is more expensive than in other European markets, and four times more expensive than in the United States. This has led to calls for data centres to be included in energy-intensive industry support schemes and for reforms to electricity pricing.

Limited grid capacity means it can take years to get permission to connect to the national grid. The government has tried to improve the situation by reforming the connections process and prioritising strategically significant projects, including data centres in AIGZs.

Water consumption

Cooling is essential to data centre operations, as they generate heat, and many facilities use water for cooling. Depending on the size and the cooling method used, data centres can consume large quantities of water.

Industry groups argue that water consumption is much lower in the UK than in the US, because UK data centres tend not to use water-intensive cooling methods. However, environmental campaigners have criticised the lack of transparency regarding water consumption.

Resilience

As data centres become more critical, their resilience to cyberattacks, power outages and climate risks is increasingly important. techUK argues that data centres designed in accordance with international standards are highly resilient.

The government has taken steps to enhance resilience by designating data centres as critical national infrastructure and proposing new cybersecurity standards under the Cyber Resilience Bill.