Data Centres Impeding Housing Development Amid London’s Crisis

A new report highlights that the swift expansion of energy-intensive data centres is hindering the development of new housing in London, coinciding with a period of severe housing shortages.

These vast facilities, filled with high-performance computers that support various digital operations including streaming services and artificial intelligence, are highly reliant on substantial electricity supplies from the National Grid to function effectively.

The London Assembly Planning and Regeneration Committee revealed that several housing projects in west London have faced temporary hold-ups due to the electricity grid reaching its maximum capacity.

Energy Constraints Impacting Growth

James Small-Edwards, the chair of the committee, emphasized that the limitations in energy capacity have emerged as a significant barrier to both housing and economic development within the city.

In 2022, the Greater London Authority (GLA) initiated investigations into the delays affecting housing projects in Ealing, Hillingdon, and Hounslow, prompted by reports indicating that some completed developments were being informed of potential waits until 2037 for grid connections.

This situation raised concerns that these boroughs might need to suspend new housing initiatives entirely until a resolution was achieved.

Short-Term Solutions Found

Fortunately, the GLA managed to negotiate short-term solutions with the National Grid and the energy regulator to prevent the most dire outcomes, although some projects still experienced setbacks.

The report indicates that the pressures faced by certain areas in London underline the necessity for more strategic long-term planning regarding grid capacity going forward.

While data centres accounted for less than 10% of the UK’s electricity consumption last year, projections suggest that this figure could surge by up to 600% from 2025 to 2050.

Growing Demand for Data Centres

It was estimated that the energy consumption of an average data centre is comparable to that of about 100,000 households.

Recent figures indicated that the UK currently has approximately 447 data centres, with projections showing an increase of around 100 facilities in the coming years.

More than half of these new data centres are anticipated to be established in London and its surrounding areas.

Industry Perspectives on Energy Needs

Andrew Dakers, the chief executive of West London Business, acknowledged the region’s pride in its robust digital technology sector and investment, while also recognizing the accompanying challenges.

He stated that the National Grid is aiming to introduce an additional 7 GW of power to west London by 2037, but stressed that this timeline is too extended given the immediate demand.

Rhodri Williams, technical director of the Home Builders Federation, argued that it is crucial for the government to ensure sufficient investment in the power supply network to support ongoing housing projects.

Recommendations for Future Planning

The committee proposed several recommendations, including the establishment of a distinct planning category for data centres to enhance energy management.

A government representative noted that they are exploring tailored options, including collaboration with the AI Energy Council, to bolster both the data centre and housing sectors.

The report urged Mayor of London, Sir Sadiq Khan, to incorporate a specific policy addressing data centres in the upcoming London Plan.

A spokesperson for the mayor affirmed their commitment to addressing the need for data centres in the next plan, stating they will carefully evaluate the report’s recommendations.

They also highlighted that under Khan’s leadership, London has witnessed the highest number of new council homes initiated since the 1970s, and prior to the pandemic, the completion of new homes was at its peak since the 1930s.

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