Construction of new homes postponed due to energy consumption of data centers

A recent study has highlighted that the explosive expansion of energy-intensive data centres is slowing down new housing projects in London, exacerbating the citys already severe housing shortage. These data centres, massive facilities housing high-powered computers that support digital services such as streaming and artificial intelligence, consume vast amounts of electricity from the National Grid to operate.

The report, produced by the London Assembly Planning and Regeneration Committee, revealed that some residential developments in west London faced temporary halts due to the local electricity grid reaching its limit. James Small-Edwards, the committees chair, described energy availability as a "significant bottleneck" for both housing growth and economic development in the city.

Investigations initiated by the General London Assembly in 2022 examined delays in housing projects within the boroughs of Ealing, Hillingdon, and Hounslow. Completed developments reportedly faced waits until 2037 for grid connections, raising concerns that construction in these areas might come to a complete standstill until solutions were found. Short-term interventions with the National Grid and energy regulator Ofgem prevented the most severe outcomes, though some projects still experienced delays.

The report emphasized the need for long-term planning around electricity capacity. Although data centres accounted for less than 10% of the UKs electricity use last year, projections indicate this could surge by up to 600% between 2025 and 2050. A typical data centre consumes energy comparable to approximately 100,000 households. Currently, the UK hosts around 447 data centres, with more than half of new developments planned in London and surrounding areas, and roughly 100 additional centres expected in the next few years.

Andrew Dakers, CEO of West London Business, acknowledged the benefits of digital investment while warning of energy challenges. "The National Grid aims to add 7 GW of power to west London by 2037, but that timeline is far too slow for current demand," he said.

Rhodri Williams, technical director at the Home Builders Federation, stressed the importance of government investment in the electricity network to ensure new housing projects can proceed without interruption.

The committee recommended creating a distinct planning category for data centres to better coordinate energy requirements. Government representatives confirmed that options are being considered, including input from the AI Energy Council, to support both the data centre industry and the housing sector. The report also urged the Mayor of London, Sadiq Khan, to include a dedicated data centre strategy in the upcoming London Plan. The Mayors office stated they are reviewing the recommendations and are committed to balancing housing growth with the citys digital infrastructure needs.

Author: Ethan Caldwell