The Starmer government jumped right into a consultation on datacentre planning reforms, pushing for a unified approach that many in the industry have been calling for. Cathal Griffin, chief revenue officer at colocation provider Asanti, emphasizes the need to “join the dots.” He believes planning reform should take a comprehensive look at building permissions and grid connections while making sure there are strong ties to communities. This includes promoting sustainable practices like heat reuse and waste reduction.
Griffin points out that headlines celebrate sustainable datacentre projects but often overlook crucial steps to make those projects a reality. He highlights that vast amounts of wind power from UK farms sit idle simply because there’s no means to transport or store it. Some advocate for a fully decarbonized UK by 2030, while others extend the timeline to 2050, leading to confusion and driving up costs for datacentres and net-zero initiatives.
Griffin shares that Asanti, currently in “acquisition mode,” has noticed many hurdles to optimizing power use that can fuel business growth. He’s talked with the ministry for business and civil servants keen to push this agenda. However, while new offshore projects are signed, clear pathways for energy delivery remain uncertain. For example, Microsoft is set to build hyperscale datacentres in Yorkshire, but full land acquisition won’t be completed until 2026, which suggests that the necessary connections—planning, policy, and reform—aren’t fully aligned yet.
When it comes to power procurement, the UK faces challenges. Private wire systems could allow on-site generated energy to power buildings without waiting for grid connections. However, Griffin notes that current regulations create barriers, like overcharging for private wire energy at 13 pence per kilowatt-hour, while similar energy costs only seven cents in the Nordics. This discrepancy makes the UK less competitive.
The wait for national grid connections can take between four and ten years, which Griffin considers unacceptable. He stresses that all elements—policies, planning, and energy consumption—must be assessed collectively instead of in isolation. Law firm CMS suggests datacentre infrastructure needs to evolve beyond outdated setups. Even as AI datacentres offer more flexible locations, bigger sites with significant on-site energy solutions are crucial for reducing dependence on the grid. Yet, financial hurdles, supply chain limitations, housing projects, and public perception stand in the way.
CMS criticizes the UK planning system as overly complex and ill-suited for the unique needs of datacentres, which lack a specific use classification in planning policies. In England and Wales, datacentres often don’t fit into any existing planning classes, complicating applications. In Scotland, they typically fall under various storage classes or “sui generis,” adding to the challenges.
The new government is working on addressing these issues. In her inaugural speech, Rachel Reeves indicated plans to reform the planning permission process to expedite large-scale infrastructure projects, including revisions to the National Planning Policy Framework (NPPF). A recent consultation on this topic wrapped up in September.
Experts like Ashley Collins and Rachel Mushet from Montagu Evans note that the current NPPF mentions clusters of technology industries but fails to give local authorities the specific guidelines needed to support datacentre development. They propose updating the framework to reference datacentres and their connections, advocating for appropriate sites for commercial development.
Additionally, the Labour government could utilize the Nationally Significant Infrastructure Projects (NSIPs) process for various developments. This includes energy and other infrastructure projects, spotlighting the so-called “grey belt,” which refers to underutilized greenbelt land.
Waleed Zafar from XYZ Reality stresses the need for policy reform that promotes expansion outside major hubs like London. This could significantly boost local economies, offering jobs and supporting local services. He’s witnessed the transformation in towns like Odense, Denmark, where datacentre projects revitalized struggling local businesses.
Educating the public on datacentres and their benefits is crucial. Engaging residents in the planning process helps them see the value these developments bring to their communities. Zafar also points out that up to one-third of construction materials go to rework, wasting resources and increasing emissions. New energy frameworks are vital for ensuring enough power supply to support datacentre growth.
Alex Sharp from Nscale underscores the urgency for the industry to adapt more swiftly to demand. He believes policy and planning should speed up to keep pace with evolving needs, highlighting positive trends in environmental accountability among companies.
Sharp claims that while it’s not solely the government’s role to provide solutions, regulations must evolve. Effective enterprise zones and tax incentives that lower energy usage and promote renewables are essential. Tight controls on infrastructure projects are critical—those serious about entering this space must commit to minimizing environmental impact. When done well, these initiatives can benefit everyone involved.