Data centres: will they prove a catalyst or constraint for a greener Britain?

Data centres have quickly shifted from background enablers of the digital economy to critical pillars of the UK’s infrastructure. Now formally designated as Critical National Infrastructure, these facilities can consume as much electricity as an entire town. With demand fuelled by cloud computing, streaming and the rise of AI, their footprint is rapidly expanding, and so is their impact on our energy system.

This surge poses a stark choice. Left unchecked, data centre growth could tighten energy grid bottlenecks, escalate costs and delay other essential infrastructure. But if we take a whole-system perspective, carefully coordinating their construction with those of electricity, heat, water and telecoms networks, data centres could instead become powerful catalysts for faster, smarter progress toward a Net Zero future.

Policymakers, planners, and industry leaders all play a role in shaping the UK’s digital and energy infrastructure. As lawmakers debate changes to planning rules that could require the use of Local Area Energy Planning (LAEPs) to support national and regional energy strategies, this blog explores why such coordinated approaches matter for the future of data centres. Understanding how smart, integrated planning can unlock growth while safeguarding the resilience of our energy system is essential to achieving Britain’s economic and climate ambitions.

Not all data centres are the same

To better understand the energy impact of data centres, it’s important to recognise that different types serve different functions, from hosting cloud services to training AI models, each with distinct energy consumption patterns and infrastructure needs.

• Co-location centres host multiple tenants, with medium-to-high energy use and rack densities of around 30 kW. Rack density refers to the amount of power required per cabinet of servers. Higher densities mean greater electricity demand and cooling needs. These centres require highly reliable grid connections and benefit from being close to cities.
• Hyperscale cloud centres demand massive power, often between 50–500 MW, but achieve greater efficiency through advanced cooling and optimisation. These facilities are typically sited away from cities and need both robust grid connections and reliable access to cooling resources, such as water or air, which can influence where development is most viable.
• AI/large language model-specialised centres have the highest rack densities, up to 100 kW, and require continuous, reliable baseload power. As latency is less critical for training AI-models, they can be located wherever grid capacity is available. Even in remote locations.
• Enterprise data centres, though smaller, still contribute to cumulative demand and often need to be near business operations.

These differences matter. Our modelling shows that energy demand depends not only on total electricity consumed but also on when and where consumption occurs. High rack density or continuous baseload requirements place different stresses on the system than smaller-scale sites, so siting and planning cannot be one-size-fits-all.

The risks of siloed growth

Right now, the system isn’t set up for success. For data centre developers, the priority is connection certainty and access to existing infrastructure. This often leads to clustering in established locations such as London and Slough, where transmission access and planning precedent are strong, even as grid capacity tightens. For system planners, this trend leads to grid congestion and spiralling connection queues, as well as missed chances to optimise how and where data centres connect to the national system.

The pattern is unsustainable. When developers turn to on-site power generation outside the main system planning process, it hides real demand from the network and reduces flexibility. It also risks duplicating investment, once in local generation and again in wider system reinforcements.

The result? Slower connections, higher system costs and a less resilient energy future for everyone.

Whole-system planning: a smarter path

There is a better way. And it doesn’t mean slowing the pace of development. By using whole-system planning we can steer data centre development towards places that unlock efficiency for all. Analysis undertaken with our Energy System Modelling Environment (ESME) tool shows that simply taking a ‘smarter siting’ approach can reduce overall net electricity demand across the energy system. The upshot: new projects become not only greener, but also cheaper, faster and easier to connect.

Whole-system planning means aligning growth with untapped capacity, for example, targeting regions like the East of England, where proximity to offshore wind and strong grid infrastructure provides clear mutual benefits for both developers and the wider energy system. It also means designing data centres to play an active role in flexibility markets, dialling their power demand up and down in response to peaks and dips in power supply to help strengthen rather than strain the system.

Above all, it means embracing data transparency. Sharing data is vital. We need utilities across electricity, water, and telecoms, together with developers, to provide planners with clearer, more consistent data. This will give operators the insight they need to make faster, smarter decisions and cut through today’s uncertainty.

Instead of being a headache for the grid, well-planned data centres can become accelerators for more resilient, low-carbon growth.

The practical next step

The path forward is clear and starts with practical collaboration. Bringing together distribution network operators, local authorities, developers and other key stakeholders early on will help identify shared priorities, figure out critical data gaps and achieve quick results. This will lay the foundation for practical pilot projects that show how coordinated, evidence-driven planning can lead to faster connections, reduce costs, and build resilience across energy and digital infrastructure.

Data centres are far more than buildings housing servers, they are a decisive test of the UK’s capacity to build a resilient, low-carbon economy. Treating them as strategic infrastructure and embedding shared data and joined-up decisions into planning, will ensure that Britain’s digital and energy transitions move forward together and at pace.

What needs to happen next

To ensure data centres become catalysts, not constraints, each group has a critical role to play:

• Policymakers need to align national ambitions with local needs by embedding data centre planning within wider strategies for growth, Net Zero and industry. We’ve discussed the importance of LAEPs and why a ‘whole energy system’ approach is central to planning. Current energy, digital and planning objectives are often pursued in isolation, leading to disjointed priorities and missed opportunities. Stronger coordination across departments and clearer, consistent policy signals will help balance growth, capacity and sustainability, giving developers the confidence to invest where it adds most value.
• Planners and local authorities need access to transparent, shared data to identify suitable sites early, forecast demand accurately and coordinate utilities effectively. Better visibility of infrastructure capacity and constraints supports accurate modelling, helping to focus investment where it is most needed and strengthening local energy, digital and transport networks while supporting balanced economic growth.
• Industry leaders and developers need to engage early with energy and utility providers, sharing information on projected demand and exploring opportunities for flexibility, co-location and low-carbon power sourcing.

Together, these actions will turn today’s planning challenges into opportunities for faster, fairer and cleaner digital growth.