UK’s data centre ambitions threatened by grid red tape

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Sir Keir Starmer's government has prioritised investment data centres as a major pillar of its plans to boost economic growth.
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Delays connecting to the electricity grid may risk the UK’s position in the global AI race, as proposals for new data centres are pushed down the track, experts have warned.

The National Energy Systems Operator (NESO) is grappling with a major backlog, and it is understood that any proposed big infrastructure project looking to hook up to power will currently need to wait until at least 2037.

Such delays are leading the developers of UK data centres, critical for providing the immense computing power needed to run AI algorithms, to hold off on submitting new planning proposals until the issues are resolved.

Stephen Beard, head of data centres at Knight Frank, told CityAM there was a “disconnect” between the government’s AI ambitions and the ability to “secure timely grid connections”.

“Without improvements, these delays could pose a challenge to the UK’s goal of becoming a global AI leader”.

It comes as Sir Keir Starmer’s government prioritises investment in data centres as a major pillar of its plans to fast track infrastructure projects and grow the economy. Ministers in September designated data centres ‘critical national infrastructure’  in a bid to encourage investment into new builds.

However, grid capacity has fallen short in three of the past five years, as more than £100bn in investment is plugged into data centres each year.

NESO suspended applications for new grid connections in January as reforms aimed at easing up the backlog were put into place.

While some operators have managed to secure offers, they face huge trouble getting any more power should it be required.

DC01UK, currently the largest approved data centre in Europe, has capacity for 320MW of power and has secured a connection date. But even still, “actually getting any excess would be extremely challenging,” two Clifford Chance lawyers, Neil Evans and Kirsty Souter, told CityAM. 

A spokesperson for NESO said:  “In December NESO submitted its proposals for connections reform to the regulator Ofgem for approval.

“These reforms will enable greater clarity in the future needs of the electricity network, by removing projects that are unlikely to deliver and providing a clear picture of those projects for both supply and demand that need access to the future network. 

“These reforms will speed up the connection process and provide a clearer direction for the Transmission Owners to deliver the necessary upgrades and new transmission infrastructure.”

There are more than 500 data centres in the UK, behind just the US and Germany in the global rankings.