In a world where the web is taken for granted, and AI is becoming established in every part of our lives through phones, tablets and computers, can the UK keep pace with the growing demand for data centres? Tim Clark reports
The UK has a desperate lack of data centres, and the energy grid to power them.
Just over a week ago tech firm Google warned that the UK risks being “left behind” if it didn’t invest in more data centres.
Speaking to the Guardian, Google’s UK managing director, Debbie Weinstein, gave the government credit for understanding the importance of AI to the economy and socially, however on-the-ground policies were thus far lacking.
“We have a lot of advantages and a lot of history of leadership in this space,” she said. “But if we do not take proactive action, there is a risk that we will be left behind,” she said.
The UK ranks seventh in the global rankings for data and infrastructure according to the government AI Readiness Index 2023, which was produced by Oxford Insights. In terms of vision, the UK scored full marks, and the same report placed the UK at third overall globally, however without action to tackle the data centre shortage this position is under threat.
As the data centre issue bubbles over, the tech world has continued to grow. Research published earlier this year by RSM UK found that tech incorporations in London rose by 26% in the last year.
Welcome boost
Last week the news that Blackstone will invest £10bn into a major new AI data centre in the North East, creating 4,000 jobs in the process has been welcomed as a huge “vote of confidence” in the UK by the prime minister.
The centre in Blyth will be one of the largest in Europe, and will sit on the same site as the former Britishvolt proposals for an electric car factory.
Blackstone isn’t the only corporate financial institution looking to invest heavily in AI. BlackRock has a war-chest of £22bn globally to invest in AI; Amazon alone has £8bn.
The Labour government’s (arguably short) record on data centres is mixed. The government was criticised for scrapping the commitment to an £800m exascale supercomputer, as well as another £500m for an AI research centre.
However in the week after the general election the chancellor Rachel Reeves and deputy prime minister Angela Rayner said that they would re-open two previously refused data centre planning submissions. Planning can be considered one of the key issues when it comes to data centres, but it is not the only one.
“The UK’s under-supply of high-capacity, and modern, data centre space should not be blamed entirely on the failures of our planning system. Indeed many local authorities, especially those within or close to urban conurbations, have encouraged new data centres, recognising the economic and jobs benefit they bring to their local communities,” says Ben Kearns, partner and head of venture at Workman LLP.
“Instead, this new government should recognise that practical, and logistical, issues often pose a greater barrier to the delivery of new schemes, even if they have been granted planning permission and are supported by local authorities.”
The planning regime does look set to be overhauled to make it a more promising environment for data centres overall.
In an article published in July, Savills associate director for planning Nick Heard and planning director Nick Green argued that the new National Planning Policy Framework (NPPF) consultation is a prime opportunity to overhaul planning to help the data centre revolution.
The consultation includes points for local planning authorities. The first is that such authorities should recognise data centres as a form of infrastructure with specific locational requirements to support the modern digital economy. The second is a requirement for sites for data centres when council’s prepare their local plans.
The consultation however goes further in supporting data centres.
“Hidden away in the ‘Scope of Consultation’ document that supports the consultation on NPPF is a question on whether there should be an option for permitting data centres through the Nationally Significant Infrastructure Projects (NSIP) route, which would make the Planning Inspectorate (and ultimately the secretary of state) the decision maker,” Heard and Green write. “If supported by an appropriately positioned National Planning Statement, this could create a framework to allow data centres to come forward within parts of the green belt.”
Powered up problem
The infrastructure issue is varied, but essentially the UK’s energy grid isn’t currently capable of serving the high energy needs of data centres that would power any AI or tech revolution.
In the UK the average data centre can use as much energy as 25,000 homes, which can put huge strains on the energy network. In West London the issue has become particularly severe and has begun to put other developments effectively on-hold as capacity in the energy grid dries up. In late 2022, the Mayor of London’s Greater London Authority wrote to developers warning that connections to the grid in some places could take decades.
“In our experience one of the largest barriers to delivery is the lack of power supply in key markets, where occupier demand is highest and supply is constrained,” Kearns adds. “Data centres are notoriously power hungry, and, by their nature, require constant levels of power throughout the day and night – with little variation during the weekdays, and weekends.
“Notably, we’re seeing significant issues across West London and throughout the M4 corridor, where data providers, keen to take advantage of nearby data cables, are demanding greater space near to Reading, Slough, and Swindon.
“Despite this demand, and government support to encourage regional growth in the West of England, we’re aware that many consented schemes have now been provided with notices from power distribution networks stating that their scheme has been entered into a delivery queue – with extended delays to their required power supply, meaning that centres cannot be operational until over a decade after their initial planning consents.”
Construction conundrum
The construction sector isn’t simply the conduit to more data centres, it is also an end-user in the tech revolution. With the rise of digital twins, the golden thread, BIM and AI, the sector is as much a consumer of data centres as many other industries.
The government’s renewable push may also help data centre growth in coming years. A lesson from Denmark can possibly provide a blueprint for the UK.
“Denmark, Sweden and Iceland are punching well above their weight in attracting data centre development,” says Michael Riordan, managing director of Linesight UK. “Having invested in renewable energy, they are able to meet the high energy needs of data centres, while also minimising emissions and offering an attractive proposition to ESG-focused investors.
“By embracing renewable energy sources and implementing energy-efficient technologies, data centre developers can not only reduce their carbon footprint but also ensure the long-term viability of the UK’s tech ecosystem.”
The National Grid has embarked on what it has called “the great grid upgrade”, which comprises of 17 major infrastructure projects that aim to scale up as well as update the network.
This includes new links to the North Sea to help connect the vast wind farms that have been given the green light by the government. The proximity to the North East data centre by Blackstone doesn’t go unmissed; it may be that more data centres are connected directly to power sources from renewable energy in future.
On many occasions however data centre schemes themselves are financing the construction of substations to upgrade the grid in local areas they are built. Here, amends to planning policy could also help.
Are mini-data centres the answer?
Ways to power data centres have been both radical and outlandish, some suggestions have been to build small nuclear reactors to help take the data centre strain. Another plan, which involves less infrastructure, is to look at the mini data-centre market.
A report by Technavio found that the market size for mini data centres in the US would rise by 21.68% in five years between 2023 and 2028. The growth was spurred on by rising demand from tech SMEs
“In the market, mini data centres incorporate networking modules, edge computing, and contain servers, racks, cooling systems, power supply, and security systems,” the report states.
“Instant data centres, a type of mini data centre, provide organisations with portable and scalable solutions for data storage and computational hubs. The capital investment required for traditional approaches to data centre architecture is significantly reduced with the implementation of mini data centres.
Riordan also believes that building smaller, ‘edge’ data centres in inner city locations can help to drive growth in job opportunities, from construction through to operation, enhancing land value and building ecosystems for new businesses.
“However, these projects also come with specific challenges such as limited space and cooling capacity and the need for local regulation compliance,” he says.
“While older, smaller sites can be well-placed to serve the local community, ensuring power access and connectivity is key to their commercial viability.”
If a forward-thinking approach is cemented within the government’s overhaul of planning, funding and vision, then the UK may begin to meet the demand of the looming digital transformation, and keep its place as a global tech powerhouse.
Image credit: Gorodenkoff/Shutterstock
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