Executive Summary
- VP of Global Energy Markets at AECOM, Adrian Del Maestro, opened up the virtual event DCi Horizons with a keynote speech on global trends and UK realities in data centre deployment.
- The top four big tech companies are forecast to spend more than $660 billion in 2026, signifying a monumental investment that is comparable to the oil and gas industry. All the while, distribution and transmission grids face extreme pressure for connections, pushing connection times to seven years in London and up to ten years in Tokyo and Amsterdam.
- Beyond power demand and grid delays, data centres face high power price structures, domestic water shortages and mounting community opposition in the UK.
Power demand is a huge hot topic in the industry, with grid congestion being a big challenge for the industry right now, but to understand the scale of the investment flowing into the sector, you need to look at the global macro picture of CapEx and power scaling.
Globally, the power consumption of data centres is significant and we’re looking at around 1% to 1.5% of global electricity demand, set to go over 3% by 2030. We must endeavour to keep those metrics in perspective against global electricity demand growth across different electrification vectors, such as heavy industry and cooling. Adrian states, “There are other sectors that are driving electrification that are going to consume much more power than data centres. But the reason why data centres have a disproportionate say in the conversation and in our minds is that the impact is so much more immediate.”
Every major digital hub around the world are facing queues for connection because transmission and distribution grids need to be upgraded to handle pressure from offshore wind, electric vehicle charging and data centre deployment. JLL tracks these connection timelines:
- London – 7 years
- Amsterdam – 10 years
- Tokyo – 10 years
- Northern Virginia – 7 years
Alternate energy profiles
There’s a wave of innovation around energy sourcing in the face of the grid connection timeline.
- Islanded power (natural gas): In the US, many operators are reverting to natural gas if they can’t secure a grid connection. This works by installing a combined cycle gas turbine on the data centre, fed by natural gas. To deploy and finance, it works well. The big four tech companies do have ambitious carbon-free goals, but they face intense pressure to build data centres to cope with the demand.
- Low carbon solutions: combining solar, wind and battery energy storage solutions have become another alternative that operators are turning to. Applications for hydro and geothermal are growing too.
- Nuclear and SMRs: clean, stable nuclear baseloads are also an alternative energy profile, such as bringing back a generator online at Three Mile Island. Small Modular Reactors are expected to provide 300 to 600 megawatts on site, but they’re not happening soon enough, with the most ambitious deployment to land in the early 2030s.
- Speculative power (fusion): Operators are desperate to source power, and that is illustrated clearly in the fact that Helion has a power purchase agreement with Microsoft to provide fusion energy by 2028. This agreement has drawn scepticism since it’s extremely ambitious.
- On-site microgrids: operators such as Pure Data Centres in Ireland are using on-site microgrids, combining cycle gas power, backup diesel generators switchable to hydrotreated vegetable oil and potential alternative sourcing via biomethane.
The UK market: constraints and capacities
The US has a strong foothold in the global market and remains a dominant force because they command around 4,000 data centres and a 40% market share. However, the UK is the second-largest market with a 5% market share, and in the UK’s 1.8 GW capacity, the infrastructure remains hyper-localised. With 1GW of capacity in London and the rest of the UK has 0.8GW, there’s a push to redeploy projects to places like Scotland due to less dense land space and access to low-carbon offshore wind. London does, however, maintain its allure due to its existing skills, infrastructure, fibre optic cable accesses and inference workloads.
The structural high-cost barrier
The UK government encourages deployment via the AI growth zone initiatives, such as targeting brownfield sites and decommissioned coal-fired power stations, but there are intractable structural issues regarding industrial power pricing. The UK charges 26p/kWh, Finland charges 5p per KwH and the US charges 4-5p per kWh. The reason the UK charges more is that UK power prices are coupled to gas and carry baked-in transition and network costs. Because of this, investment is losing ground to where clean power is a lot cheaper, like the Nordics and Spain.
Water scarcity and community engagement
The UK faces an incredible hurdle to its expansion ambitions and that is severe water stress. The Environmental Agency projects an expected shortfall in public water demand of five billion litres each day by 2050.
Older facilities are reliant on heavy evaporative cooling, whilst new AI data centres use closed-loop liquid cooling, a decent 70% reduction in water plus it shifts away from using fresh, potable water and recycles wastewater. However, indirect water consumption remains high through steam-driven power generation turbines and rinsing semiconductor chips.
Furthermore, there is no coordination between utility providers and planning authorities, with UK water companies failing to account for data centre impacts within their national resource plans. Water must be factored in at the earliest possible planning at the forefront and not as an afterthought. Otherwise, the issues of water companies not being consulted about deployments, resulting in their surprise when data centres are in their jurisdiction, will continue, which is a huge divide.
The community narrative
Despite data centres being around much longer, they have rapidly moved into the public limelight over the last two years, as it sparks growing opposition in rural US and rising friction in the UK. Previously, the industry has historically failed in articulating the community benefits of digital infrastructure. An operational data centre creates around 50 to 150 direct jobs, but it also anchors localised supply chains that are necessary for economic growth and AI leadership.
To secure local planning permission, operators must change how they engage residents:
“You’re more likely to get support from residential communities if, for example, you illustrate how waste heat from data centres can be recycled and diverted into residential district heating.”
Watch Adrian’s speech here.
