TECHNICAL
forecasting, and maintaining control and visibility. These elements are essential for establishing a clean and economically efficient energy system.
for significant energy savings.
pilot new solutions, such as geothermal or small modular reactors (SMRs), to provide more stable energy sources. There have been very positive policy developments toward potential solutions, including the establishment of the National Energy System Operator (NESO) and publication of the Connections Action Plan. It is critical that Government implements these changes effectively to ensure that power constraints do not hamper the growth and development of the data centre industry.
n It is necessary to balance the need for both lowering energy demand and decarbonisation measures to be considered and implemented, rewarding operators with robust plans for measuring, monitoring and reporting progress on their journey towards net zero, aligning with International Sustainability Reporting Board (ISSB) Standards.
Sustainability
While the demand for data and AI applications is increasing, the data centre industry has been driving increased efficiencies and making better use of the power required by its customers. Despite a doubling of data centre workload, electricity demand has remained flat since 2015, and significant efforts across the sector mean that the average Power Usage Effectiveness (PUE) – the ratio of the total amount of power a data centre uses and the amount of power used for the IT equipment housed within it – is improving in the UK, demonstrating energy efficiency gains by the industry. There is an ever greater focus on sustainability as international organisations and alliances (including the Climate Neutral Data Centre Pact) collaborate to set sustainability standards. These standards will be front and centre as operators continue to seek ways to optimise resource use, especially with the increasing adoption of generative AI by end users that is driving an increase to power density, which can be energy or water-intensive. Resource optimisation is being observed through several initiatives. This includes the rise of prefabrication and modular (PFM) data centres that can enable the construction process to take place off-site. The exploration of district heat networks, and ongoing experiments around how residual heat can benefit communities and the environment, are further examples of the positive work being driven forward by the industry.
n There is significant promise in
integrating data centres into district heat networks, once heat networks are developed, but industry consensus is that residual heat reuse should ideally be explored after a data centre has been optimised from an energy point of view. This – alongside key challenges including seasonal fluctuations and variable energy demand in the UK – means rules around heat export must be flexible if data centres are considered as heat sources. n We strongly recommend a spot check exercise to review resilience measures in a subset of on-premise data centres, ideally across both public and private sectors, to ensure that resilience measures are appropriate for the type of data that is managed by the facility. As the next step, the Government could also create a central register of all data centres that it operates, as recommended in the “Review of the cross-cutting functions and the operation of spend controls” conducted by Lord Horsham in 2021. We believe this would be a helpful step in improving transparency and should be extended as widely as possible across the public sector. Planning The UK’s planning system requires reform to ensure data centres can reach their full potential in driving significant economic growth. Currently, there is no data centres national policy statement (NPS), with the lack of clear national planning guidance meaning data centres often suffer delays and inconsistent decision-making. It is imperative that necessary resource – with the required data centre expertise – is made available to review and progress data centre planning applications within Local Planning Authorities (LPAs).
Policy recommendations
n The Department for Energy Security and Net Zero (DESNZ) needs to work with the Office of Gas and Electricity Markets (Ofgem) and NESO to regularly monitor and publicly report connection queues as well as reform the queue processes, for both load and generation to ensure projects are entering the market in timeframes and locations needed to increase cost effectiveness of the system. DESNZ, Ofgem, and NESO should also continue to work to ensure energy costs are affordable, by providing clarity on next steps for REMA.
n The grid connection process
must provide open data available for developers and investors to understand likely connection timescales and project options throughout the year. Accurate and non-shifting connection estimates are critical to providing contractual certainty for investments. Furthermore, the connection gates must also incorporate the possibility of digital infrastructure energy demand increases in a short period of time and provide flexibility. n While Great British Energy aims to lower energy bills by increasing renewable energy production, the benefits may not be immediate. The upfront costs of developing renewable energy projects need to be covered first, leading to uncertainty and socialisation of costs to the end consumer. This is why visibility over the strategic direction and coherent whole system view is needed. n The rapid digitalisation of the sector is crucial for informed decision-making in critical areas such as operational control, effective investment, system spatial planning, demand and supply
Policy recommendations
n DESNZ should consider previous techUK recommendations with regards to the Climate Change
Agreement (CCA) for the data centres sector. In particular, we encourage the prioritisation of carbon savings, as this would expand the scope to include enterprise (in-house/non-commercial) data centres, as well as drive energy stewardship, improved efficiency, transparency, benchmarking and accountability within the part of the sector that is currently ineligible for the scheme but where there is potential
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SEPTEMBER 2026 Volume 48 No.3
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