While the announcement reflects London’s growing role as a technology hub, as confirmed by the anticipated dedicated data centre policy in the next London Plan, it also highlights an important planning challenge: how can the city accommodate rapidly increasing demand for data centres without compromising on housing delivery, economic growth and net zero ambitions?

An ongoing demand for power

A new report commissioned by City Hall, London’s Data Centre Future Growth Forecasts and Strategic Insights, summarises London’s significant contribution to the UK’s data centre market. The report states that London has 99 data centre sites delivering around 760MW at peak demand, said to be the equivalent to the electricity use of 750,000 new homes.

As demand for cloud computing and AI data centres continues to accelerate, pressure on the capital’s electricity network is expected to increase with grid connection requests reportedly reaching up to ten times the capacity currently serving London’s data centres. As set out in the report, balancing power requirements and demonstrating feasibility will therefore be crucial to accommodate long-term delivery alongside other objectives in London, including housing.

Such is their importance, data centres are now recognised by the government as Critical National Infrastructure; however, data centre developments face competition for finite electricity capacity alongside new homes, commercial development and other infrastructure. Managing these competing demands on the city’s resources will require a more strategic approach.

Towards a New London Plan

To address this challenge, the Mayor is expected to implement a whole-city partnership approach to bring together London boroughs, energy providers, developers and other stakeholders. Arguably the most significant aspect of the Mayor’s announcement, is the confirmation that the next London Plan will include a dedicated policy for data centres.

The draft London Plan, due to be published this summer, promises to take a strategic approach to major energy users such as data centres. This is to align their growth with other priorities for the city. Alongside this, the recently launched London Infrastructure Framework seeks to take a coordinated, long-term approach to ensure the capital’s energy, transport and digital infrastructure can keep pace with rising demand.

Delivering greener digital infrastructure

The draft wording of this policy will emerge in the London Plan Review consultation this summer; however, in the context of the Mayor’s ambitions for data centre development to contribute to wider sustainability objectives, we consider the draft policy will focus on several key matters.

It is expected the draft policy will offer support for data centres that is reflective of national planning policy, including a requirement for Local Plans to allocate suitable sites. We anticipate the policy will recognise the importance of digital infrastructure to London’s economic growth ambitions, and offer support for data centres in the right locations – likely to be in established clusters. In the context of limited grid capacity, we anticipate the policy will require the demonstration of delivery – including power arrangements and other matters such as low carbon assessment, addressing water-related considerations (where relevant) and the feasibility of waste heat recovery where this can make a broader contribution to energy resiliency in boroughs.

A long-term strategy

The Mayor’s announcement is an important step in recognising that supporting London’s digital economy requires more than simply providing additional data centres but, instead, necessitates coordinated planning between boroughs, energy providers, developers and industry stakeholders. This is to ensure that infrastructure investment keeps pace with demand whilst supporting wider environmental objectives including carbon and energy, air quality and waste heat recovery.

The long-awaited draft London Plan will provide the first indication of how this delicate balance will be achieved. As digital infrastructure becomes an increasingly important part of London’s built environment, a clear policy framework will be essential to support the capital’s ambitions for economic growth and digital infrastructure alongside housing delivery and other objectives including decarbonisation.

Further information

Contact Annamaria Sgueglia or Alex Cole