UK data centre growth: a strategic approach

The demand for data centres is forecast to grow at a compound annual growth rate (CAGR) of around 10–20% over the next five years. This growth is driven by increased use of transactional cloud storage, high-performance computing, and generative AI. In response, the UK government has set out plans within its Industrial Strategy aimed at reducing regulatory barriers and supporting investment in data centre development from both domestic and international sources.

In addition, recent government policy discussions have focused on reducing the risk of UK technology and scientific talent relocating abroad. A key element of this approach is the development of AI Growth Zones. These zones are intended to support infrastructure development while also contributing to regional economic growth, skills development, and employment opportunities across the UK.

A central part of the strategy involves improving access to electricity grid connections and accelerating planning processes. The national grid is currently operating under significant demand pressure, which has led to a need for faster connection timelines. At the same time, Local Planning Authorities (LPAs) often face challenges in assessing large and complex AI data centre applications due to limited specialist expertise. One proposed approach is to prioritise strategically important projects to ensure resources are allocated effectively.

Overall, the effectiveness of these initiatives is expected to be assessed not only by the physical infrastructure delivered but also by their wider economic and social impact. The broader objective is to strengthen the UK’s position in technology development and investment.