What the datacentre industry would like to see from the government's planning reforms

UK must compete on power procurement

Private wire, for instance, can enable energy generated on site to power commercial buildings without waiting on connections to the grid or preventing green energy being fed to consumers. Red tape and other constraints must be reviewed on this for UK hosting to be competitive, he says.

“Because right now, people are charging private wire at 13 pence per kilowatt-hour (kWh), buying green private wire energy in the Nordics for seven cents. The UK’s almost double the price,” Griffin says.

“If I were to open up and use private power, right now that is illegal above a certain volume of power. And this is just historical and nobody has addressed it.”

Additionally, providers need to be able to on board connections to the national grid faster, with current wait times between four and 10 years. “This is not acceptable,” says Griffin. “And many of the pieces enabling datacentres in the UK are in silos.”

From top to bottom, all links of the chain – including policies, planning, energy generation and consumption – must be considered together rather than separately.

Law firm organisation CMS has suggested that datacentre infrastructures need evolution beyond legacy kit, updated power networks and availability. Despite increased flexibility of location provided by the rise of artificial intelligence (AI) datacentres, growth in “non-traditional” approaches may be needed.

Larger sites with more potential for on-site power solutions (both for greening purposes and for reducing reliance on the grid) are needed, and most need to navigate complex financing structures, compete against construction supply chain constraints, housing schemes and negative public perceptions, CMS notes.

“Datacentres find themselves in the mire of a UK planning system which is overly complex, is not fit for purpose, and doesn’t cater for the unique nature of such developments,” CMS writes. “In particular, datacentres do not benefit from a specific use class or any tailored planning policy at national or, in most cases, local authority level.”

In England and Wales, datacentres do not fit neatly into any existing UK planning use classes, creating technical complications for datacentre applications and acquisitions, especially given the fact that local planning authorities typically adopt different approaches. Scotland’s framework is similar, where datacentres generally falling within “class 6 – storage and distribution”, “class 6 with ancillary usage” or “sui generis”.

Prioritising datacentre development from the top

The new government has been looking at addressing this. In Rachel Reeves’ inaugural speech, the Labour government suggested that it aims to reform the planning permission system to accelerate the pace of large-scale infrastructure projects, revising the National Planning Policy Framework (NPPF). A consultation on this move recently completed at the end of September.

Montagu Evans partner Ashley Collins and senior planner Rachel Mushet have noted the current NPPF refers to “clusters of knowledge and data-driven, creative or high technology industries”, but has not been enough to provide local planning authorities with a specific hook needed to support datacentre development.

On their website, they said a proposed update to paragraph 85a would highlight datacentres and grid connections and that planning policies and decisions should support the delivery of this key infrastructure. In addition, an updated paragraph 84b has outlined the need for “appropriate sites for commercial development” of datacentres, laboratories, giga-factories, digital infrastructure, freight and logistics.

That could be complemented by permitting development under the Nationally Significant Infrastructure Projects (NSIPs) process as part of the Planning Act 2008, including for energy, transport, water, wastewater, and waste development, and in Labour’s newly defined “grey belt” for sections of green-belt land deemed “underutilised”, “poor quality” or “previously developed”, such as land bordering housing (countryside lobbyists warn the devil is in the detail here).

Waleed Zafar, director of construction solutions provider XYZ Reality’s construction management services group, favours policy and planning reforms that encourage expansion beyond current hubs such as London. While some moves in this respect have happened, more could be done to support and encourage build-outs in a joined-up way.

“Think about the challenge of bringing the labour force and being able to build that super-complex datacentre. What it can do for the local economy is huge,” Zafar says. “People have to live somewhere, they have to eat somewhere, and so on.”

Datacentre builds can support jobs that fuel local services, from leisure facilities, bars and restaurants, to council tax and levies that plump up previously limited funding for critical infrastructure and services provision.

“I’ve seen this effect first-hand in towns across Europe where we’ve supported build-outs. In Odense, Denmark, the return to growth was amazing, from the first day when restaurants and bars were on the verge of being closed down,” Zafar says.

However, education is also needed so people better understand what datacentres actually are and how they can benefit a local economy. Bring residents deeper into the planning procedures and ensure they not only know what it can deliver but that they can get what they want, he urges.

Zafar adds that another issue that should be looked at is countering the fact that “something like 33%” of all construction materials are spent on rework activities – fixing things on site that were not done appropriately the first time, increasing waste and emissions.

That is alongside fostering development of new energy infrastructures to ensure power availability for datacentre growth through updated regulatory and planning frameworks.

“This is a bit of an arms race, at this point in time, if the UK is to stay at the forefront of tech,” Zafar says.

Alex Sharp, datacentres chief projects officer at AI datacentre and compute company Nscale, agrees that industry needs to move faster to meet demand: policy and planning should evolve to keep pace.

Government policy and planning for datacentres was already starting to look at performance and waste, including utilisation of power and water – and this is a good thing.

However, Sharp says it’s not especially the government’s responsibility to think up solutions beyond their role as gatekeepers.

“There have been very positive signs around demonstrating your environment or sustainable credentials. Gone are the times when companies can just talk about things without demonstrating they’re achieving the levels of efficiency set out in initial planning applications,” Sharp says.

Sharp adds though that well-designed enterprise zone or tax incentive approaches that drive down energy consumption, foster renewables, and minimise emissions and other environmental impacts alongside relevant policy changes would be welcomed. Tighter controls on infrastructure projects remain “absolutely essential”.

“Anyone that truly wants to operate in this space has to commit to doing less damage,” says Sharp. “Done correctly, it can be for the good of everyone.”