Billions for UK data centres pose challenge for power grid

In the week that Donald Trump came to visit, Microsoft said it would invest £22bn over four years to expand UK AI infrastructure and help build a national supercomputer – its largest investment outside the US.

Blackstone announced a £10bn data centre project in Blyth, while Google committed £5bn over two years and opened a data centre in Hertfordshire. Nvidia has invested £500m in Nscale, a London-based AI infrastructure company that Huang said could be “a national champion”.

But energy executives have warned it will be a challenge to provide extra grid capacity to power these projects, especially in a country with some of Europe’s highest energy costs.

Analysis of the announcements by The Observer shows that between 500 and 900MW of data centre capacity could become operational in the next three to five years. Powering a 100MW data centre currently costs £226m a year in the UK, compared with £156m in France and £67m in Sweden, according to a February report from the Social Market Foundation.

“Consumer bills are already under pressure in the wrong direction,” said Stuart George, boss of Welsh energy company Green GEN Cymru. He said the projected data centre rollout had “the possibility of exacerbating that issue if it isn’t counterbalanced by rapid deployment of low-cost generation and grid infrastructure”.

A source close to the National Grid said it was trying to work out how much of the announced infrastructure was “new or among projects already in queues”. They said it was “unclear” how many of the investments due to be realised in the late 2020s would be “contingent on government planning or consenting reform”.

The government has pledged to remove barriers to building, and it is unclear how far the new environment secretary, Emma Reynolds, formerly a Treasury minister, will go towards cutting environmental regulation to allow for more development.

Much of the new investment is focused on an “AI growth zone” in the north-east of England made up of sites in Blyth and Cobalt Park near Newcastle. But having seen previous projects come and go – notably Britishvolt’s failed attempt to build a battery gigafactory near Blackstone’s Blyth site – locals are sceptical.

“Britishvolt built everyone up and knocked them flat,” says Michael McGhie, an ex-miner who is chair of the United Services Club in Blyth. “Now we take promises from London with a bucket of salt.”

Ian Lavery, Labour MP for Blyth and Ashington, also sounded a note of caution, saying people “will not believe this is going to happen until they see the construction cranes. We’ve had that many false dawns.”

The Blyth site is well positioned to receive power from the 720 km-long North Sea Link from Norway and is also the landing point for a cable to the Berwick Banks offshore wind farm, but it’s not clear whether other sites across the country will have the same access to clean energy. Wind or solar farms often take much longer to bring online than data centres, and global renewables supply is limited. If the UK redistributed renewable energy towards AI, other industries would still have to rely on oil and gas.

In August, the FT reported that developers are exploring connecting data centres to the UK’s main gas pipelines – a sign that rapid AI infrastructure expansion may, in practice, rely heavily on fossil fuels.

Last week’s announcement also included a bilateral deal to accelerate the development of nuclear power, but this, too, is unlikely to meet the immediate surge in energy demand. Commitments to build fleets of reactors across the country are unlikely to materialise before the mid-2030s, while building a data centre takes three to five years.

Environmental groups warn that the current wave of projects risks locking the UK into vast energy and water demands without proper oversight. Donald Campbell, director of advocacy at the non-profit Foxglove, said there is a “total lack of transparency and accountability” about existing UK data centres and their environmental impact.

“There’s no one, so far as I can tell, in the government or in industry who can say how many data centres there are currently across the UK, how much power they’re using, how much water they’re using,” he added.

Planning documents point to the scale of what is coming. In Lincolnshire, a proposed 1GW facility is projected to emit more than 857,000 tonnes of CO2 a year – enough to power 140,000 UK homes for a year – and has drawn objections from Anglian Water over the potential strain on local supplies. Google’s planned Thurrock data centre in Essex is expected to generate about 569,000 tonnes of CO2 annually, according to its climate impact assessment.

National AI infrastructure could make the UK an AI “maker, not taker”, say supporters of the deals. They say that if the UK can resolve its energy bottlenecks, the investment could bring thousands of jobs and turn regions like the north-east into a hub for the next wave of the global tech economy.

“Recent experience shows that big tech firms often … prioritise their own commercial interests over those of the economies in which they operate, and over the safety of citizens,” a coalition of British businesses and civil society groups wrote to the prime minister on Tuesday.

“The UK must not allow its digital future to be dictated by a small coterie of US big tech firms,” they added. Signatories included Demos, the Financial Times and Pact.

Referring to the US-UK deal, Sir Nick Clegg, a former executive at Meta, said the UK has to be “a bit firmer about what we can do ourselves rather than just taking sloppy seconds from Silicon Valley”.

Photograph by Ian Maule/Bloomberg via Getty Images