Housing Developments in London Hindered by Energy-Intensive Data Centres

A recent report has highlighted that the burgeoning presence of energy-intensive data centres is obstructing the construction of new homes in London, coinciding with the city’s housing crisis reaching a critical point.

These data centres, which serve as vast repositories filled with powerful computers, are essential for operating various digital services, including streaming platforms and artificial intelligence applications. However, their operations demand significant amounts of electricity from the National Grid.

The London Assembly Planning and Regeneration Committee reported that some housing projects in west London faced temporary delays as the electricity grid hit its maximum capacity.

Impact on Housing and Economic Growth

James Small-Edwards, the committee’s chair, emphasized that the limitations of energy capacity are a substantial barrier to both housing and economic development in the capital.

In 2022, the General London Assembly (GLA) initiated an investigation into the hold-ups affecting housing projects in the boroughs of Ealing, Hillingdon, and Hounslow, following complaints that completed developments were informed they would wait until 2037 for a grid connection.

Concerns were raised that these boroughs might need to halt all new housing initiatives until the electricity supply situation improved.

Short-Term Solutions Identified

Fortunately, the GLA was able to identify temporary solutions in collaboration with the National Grid and energy regulator Ofgem to prevent the most severe outcomes, although several developments still experienced delays.

The report underscored the necessity for more comprehensive long-term planning regarding grid capacity to address these ongoing issues effectively.

While data centres represented less than 10% of the UK’s total electricity consumption last year, projections indicate this figure could soar by as much as 600% between 2025 and 2050.

Current Data Centre Landscape

It is estimated that the energy consumption of an average data centre is equivalent to that of approximately 100,000 homes.

Recent figures reveal there are an estimated 447 data centres operating in the UK, with projections suggesting an increase of around 100 in the forthcoming years.

More than half of these new data centres are slated to be established in and around London.

Industry Perspectives

Andrew Dakers, the chief executive of West London Business, expressed pride in the area’s role as a hub for digital technology and investment, while also acknowledging the accompanying challenges.

“Currently, the National Grid aims to inject an additional 7 GW of power into west London by 2037,” he stated. “We believe this process must be expedited; waiting twelve years is simply too long. The demand is immediate.”

Rhodri Williams, technical director of the Home Builders Federation, asserted the critical importance of government investment in the energy supply network to facilitate new housing developments.

Recommendations and Future Planning

Among the committee’s recommendations was the establishment of a distinct planning category for data centres to enhance energy coordination.

A government representative indicated that they are currently exploring tailored strategies, including initiatives through the AI Energy Council, to support both data centres and the housing sector.

The report also urged London Mayor Sir Sadiq Khan to incorporate a specific data centre policy into the forthcoming London Plan.

A spokesperson for the mayor confirmed that efforts are underway to address the demand for data centres in the upcoming London Plan and that the recommendations from the report will be thoughtfully evaluated.