Since taking office in July 2024, the government has made it clear that it wants to speed up the construction of new datacentres in the UK. They’ve promised to make planning processes smoother to help this sector thrive, highlighting the economic boost that these developments could bring. By September 2024, the government recognized datacentres’ importance by designating server farms as critical national infrastructure.
This newfound focus led developers to announce ambitious plans for huge facilities dedicated to artificial intelligence workloads, eager to take advantage of the government’s pro-datacentre stance. Leading the charge is a £10bn proposal for Europe’s largest AI datacentre in Blyth, Northumberland, backed by US investment firm Blackstone and the UK government’s Office for Investment. They also revealed plans for a £3.75bn hyperscale datacentre near South Mimms Service Station in Hertfordshire. This project, overseen by DC01UK, won local council approval in January 2025 and aligns with the government’s vision of fostering such initiatives.
While these projects seem to be flourishing, there’s rising concern about their potential impact on the UK’s strained power grid. Even before the government pushed for more datacentre growth, industry analysts were warning that the UK might be running out of suitable sites to meet the increasing demand for compute capacity. This is part of why recent government policies have allowed more datacentres to be built on protected green belt land, despite objections from those who question the need to sacrifice green spaces for economic reasons.
Not everyone believes that bigger is better. Stewart Laing, CEO of Asanti Data Centres, emphasizes the need for a diverse approach to meet the UK’s computing needs. He argues that simply adding more hyperscale facilities isn’t practical or sustainable. The government should support smaller, strategically located datacentres, which could reduce energy demands while promoting local economies outside major urban centers.
These hyperscale data centres, typically sprawling over 100 hectares, require significant energy, raising concerns about the UK’s ability to supply enough power, especially with rising energy costs for businesses and consumers. Laing’s company has focused on developing smaller, geographically diverse sites, contending that there are plenty of regions in the UK that could benefit from investment without overloading existing infrastructure. Additionally, the economic implications of large-scale projects backed by US corporations have stirred debates about fair tax contributions.
Laing isn’t the only one questioning the wisdom of reserving large stretches of land for hyperscale datacentres. Investment priorities can shift over the long periods these projects take to develop. A recent report from TD Cowen highlighted Microsoft’s plans to cut back on datacentre expansions in the United States, indicating a potential oversupply of capacity. Although Microsoft has stated that it remains well-prepared to meet demand, industry analysts see this as a shift in priorities.
In the UK, some experts believe that the trend toward massive datacentres is starting to slow. Peter Hannaford, a seasoned expert in the field, points to rising energy constraints and economic pressures. According to a report by Cushman & Wakefield, there are currently significant requests for power connections that will likely go unfulfilled, largely due to existing limitations in the grid.
Hannaford’s startup, EdgeNebula, aims to leverage unused commercial properties and transform them into micro-datacentres to meet expanding demands for compute power. He believes the traditional “bigger is better” mindset is no longer tenable. Trends like cloud repatriation and a growing preference for sovereign cloud solutions suggest that the need for hyperscale facilities may begin to decline.
Ideas about reusing existing buildings for datacentre use are gaining traction. Derek Main from engineering firm Hoare Lea notes a shift toward transforming logistics warehouses into datacentres. This approach can enhance efficiency and speed up construction. Digital Realty, for instance, turned an old printing press into a modern datacentre in London, proving that repurposing existing structures can meet the growing demand for capacity sustainably.
Yet, the process isn’t without hurdles. Séamus Dunne from Digital Realty acknowledges the complexities of navigating regulations and preserving historic attributes during such transformations. The UK’s aging grid infrastructure requires significant investment to support these transitions, reflecting the urgent need for modern solutions in the face of rising demand and technological advancements.