Data centres as energy flexibility assets: a practical guide for local decision-makers

Comment by Kojo Apeagyei, AI Consultant – Digital Team

Data centres support our digital economy but use enormous amounts of electricity. Smart design, however, can turn them from energy drains into helpful partners for our electricity network. With the UK’s new AI Growth Zones initiative creating opportunities for strategic data centre development across the country, local authorities hold the key to ensuring these facilities benefit local communities through smart planning decisions.

Let’s look at how data centres can unlock flexibility, what’s holding them back and a tool that local authorities can use to evaluate proposals.

Beyond energy consumption: a new paradigm

Data centres currently account for around 2% of the UK’s electricity consumption. The National Energy System Operator estimates this could rise from 3.6 TWh in 2020 to as much as 35 TWh by 2050, as artificial intelligence applications surge. AI-focused data centres can consume as much electricity as 100,000 homes, with the largest potentially consuming 20 times as much.

If that energy is demanded greedily at peak times when electricity is in short supply, it will push up energy prices for everyone. However, if data centres are designed to use more or less energy depending on how much is available, they can actually help us have a cheaper and more reliable electricity system.

Energy flexibility explained

Think of energy flexibility like a dimmer switch – data centres can turn their electricity use up or down depending on what the electricity network needs. For the UK, these helpful services are crucial for managing the stop-start nature of renewable energy and maintaining reliable electricity supply across the energy system.

These services matter locally because they enhance energy resilience, reduce strain on local networks during peak periods and create opportunities for community benefits including district heating systems.

Modern data centres can provide flexibility through four key services that local authorities can remember using the acronym FLEX:

• Frequency response: enables data centres to provide rapid response to electricity network changes in milliseconds, helping maintain system stability.
• Load shifting: involves scheduling non-urgent computational jobs during periods of abundant renewable energy generation, matching supply with demand.
• Energy storage: uses on-site battery systems to provide network balancing services, storing excess renewable energy and releasing it when needed.
• eXcess heat recovery: captures waste heat generated by data centre operations and redirects it to local heating systems, enhancing overall energy efficiency.

Proven examples of flexibility in action

Data centre operators may be unaware of the role they can play in flexibility or don’t see energy flexibility as core business. This explains why their participation isn’t more widespread. However, there are notable examples demonstrating where developers, operators and communities are working together successfully.

Microsoft’s facility in Dublin uses its battery capacity to provide fast response services to the electricity network. Working with Enel X and Digital Realty, its estimated that the addition of 1MW of capacity can save the network around 4,000 tonnes of CO2 each year through better electricity management.

Meanwhile, Verrus has demonstrated technology allowing data centres to reduce their electricity use by up to 100% within one minute of receiving a signal, seamlessly switching to utility-scale batteries. For heat recovery, research shows potential for an 87% decrease in heat demand through optimised operations. The UK government recently allocated funding towards data centres supplying heating to thousands of homes.

Why flexibility isn’t the default

Despite technical potential, several factors explain why flexibility isn’t standard practice.

• Business concerns present the primary challenge. Data centres guarantee 99.9%+ uptime to customers, creating a risk-averse culture where any operational changes are seen as threats to service reliability. Customer agreements may conflict with flexibility requirements, and operators face uncertainty about flexibility revenues compared to predictable hosting fees.
• Technical barriers compound these challenges. Data centre operators are computing specialists, not energy market participants. Legacy infrastructure wasn’t designed with flexibility capabilities, and investment currently prioritises core computing capacity over network integration.

Market constraints further limit adoption. UK network connection delays can reach up to 14 years in some areas, discouraging additional investments. While reforms are underway to prioritise assets delivering the most value, current market structures don’t adequately reward flexibility services. The connection queue is arguably the biggest obstacle to deploying additional data centres. Mandating flexibility and community investment can be used as leverage for data centre operators aiming to advance in the queue, as UK SME Piclo intends to do in the US with their new Accelerated Community Energy programme. Local authorities can encourage flexibility by ensuring district heating network plans are transparent and accessible for data centre operators, and by demanding clear technical commitments during proposal evaluations.

What makes a “good” flexible data centre?

Councils should look for specific commitments when evaluating proposals, using the FLEX framework as a guide.

Essential technical features include advanced cooling systems. Liquid cooling can reduce power consumption by 30-90% compared to traditional air cooling and significantly reduce water consumption. Energy storage integration with on-site battery systems providing network services demonstrates a serious commitment to supporting the local electricity system.

Operational commitments should cover each FLEX element systematically. Ask developers: What frequency response services could you provide and at what capacity? What do you require to implement load shifting without compromising customer agreements? What energy storage systems can you install, and how will they serve the local network? What excess heat recovery opportunities can you develop to benefit the community?

Due diligence should include reviewing technical specifications and performance guarantees, evidence of staff expertise in energy markets, and risk management procedures that allow flexibility without compromising core services. Contractual commitments should be legally binding, not aspirational.

What next?

For local authorities, planning processes offer crucial leverage points for ensuring community benefit and network participation. The UK government’s designation of data centres as Critical National Infrastructure provides policy momentum, while AI Growth Zones create specific opportunities to establish world-leading standards.

It’s urgent that local authorities build internal expertise or access technical advisory support to properly evaluate proposals, particularly those in AI Growth Zones.

With the rise of AI-powered computing, we must transform data centres from being drains on the energy system to providing local benefits that accelerate the UK’s transition to a flexible, renewable energy system. Success requires understanding both potential and barriers.

The FLEX framework provides local authorities with a memorable tool to ensure data centre developments contribute meaningfully to local energy systems and deliver results that work for operators, communities, and the wider electricity network alike.