Executive Summary

• The AI revolution and the energy debate are shaping data centre geography. With London and Slough full to the brim, developers are moving away and forming new AI belts.
• Scotland is a gold mine for its energy and cooling. Wind generation in Scotland exceeds the grid’s capacity, resulting in “constraint costs”. As developers build in Scotland and the North of England, they’re helping to harness the generation and reduce the overall cost of the electricity system.
• With 24 mega facilities applications in Scotland, there has been community pushback, understandably, with the predication that the infrastructure will consume 1.5 times the electricity as Scotland’s current peak domestic use.
• In this new AI revolution, the regions holding the renewable resources, open spaces and supporting the communities will hold all the cards.

For years, the internet has lived on the outskirts of London and Slough, but now these areas are like an overloaded kitchen plug socket; they’re at capacity, there’s no space to add just one more plug into the extension lead. So instead of forcing more power into London or facing several years of delays to be operational, companies are not following new industrial ‘flyways’: migrating along the country’s energy lines and flocking to the North East and Scotland, where the resource currents are the strongest.

The internet is migrating

London is full; it’s become an overcrowded nest with no space left. The capital city is expected to take up 189MW, which is the fifth year in a row that the take-up is higher than new supply and this is the breaking point now. By the end of this year, SBRE predict a vacancy rate of 5.9%, which is a record low. Whilst it made sense to build where the people are, this will have to shift as data centres will flock to the flyways as the energy debate is actively redrawing the map.

New AI belts

In the next few years, we will see huge shifts in geography and new AI belts emerge as tech companies chase the current. Normal internet activities that need to happen instantly will remain near London, it’s more about the AI training that doesn’t give a hissy fit over a millisecond delay but is hungry for unfathomable amounts of power.

To avoid a London grid collapse as companies establish AI belts elsewhere, the government launched “AI Growth Zones,”  which are tech oases outside of London that incentivise operators to develop and deploy infrastructure there with the promise of fast-tracked planning and power guarantees. The AI Growth Zone Delivery paper states that wind generation in Scotland exceeds the grid’s capacity, resulting in “constraint costs”. So as developers build in Scotland and the North of England, they’re actually helping to harness the generation and reduce the overall cost of the electricity system. On top of these irresistible perks is that data centres receive a commensurate discount on electricity costs, so, for example, for a 500MW data centre, this works out to:

• £24/MWh in Scotland
• £16/MWh in Cumbria
• £14MWh in the North East

Right now, the emerging hotspots are Teesside and Newcastle in the North East, where they’re converting heavy-industrial sites into tech hubs and Wales and Oxfordshire, with both offering vast spaces directly next to major power lines.

Scotland is a gold mine for cooling solutions

Scotland is a fast-growing hub that’s quickly becoming a good strategic move to deploy in, due to their wind generation and cool climate. Not only this, but government policy is more progressive than that of other countries, which is a large bottleneck for industry growth.

The country’s strategic advantages are the renewable energy sector and its progressive government policy. In 2022, Scotland generated 113% of its electricity consumption from renewables, with hydro and wind being the primary sources. Furthermore, the Scottish Government’s National Planning Framework 4 (NPF4) designates green data centres as national developments, which enables them to streamline planning and receive strong policy support, which supports the fast digital infrastructure growth that AI demands.

Tech giants are already getting ahead of the game with the planning of mega-facilities like the Cato project in Fife and the Rufus project in Kilmarnock. However, there is pushback from communities because of the scale of these projects, particularly because there have been 24 proposals for new sites and how, if they are deployed, they could consume 1.5 times the electricity as Scotland’s current peak domestic use.

The New Balance of Power

In the past, wealth and tech power were solely held in London, but the AI era is drastically changing how the industry works. The landscape that it was is no longer. In this new AI revolution, the regions holding the renewable resources, open spaces and supporting the communities will hold all the cards.