As London’s appetite for tech innovation and digital infrastructure grows exponentially, the strain on its datacenters is becoming increasingly palpable, posing a massive challenge for developers. The rapid rise in cloud and AI services is driving an unprecedented demand for datacenter construction across the UK. Yet, a recently published report highlights substantial hurdles, such as power constraints, land availability, and stringent sustainability regulations that could hamper these ambitious plans. The EMEA Datacenter Market Update for ## 2024 by Cushman & Wakefield underscores these challenges, revealing that there are 400 GW of outstanding requests for connections to London’s power grid. Ofgem, the Office of Gas and Electricity Markets, alarmingly notes that 60-70 percent of these may never materialize due to feasibility issues.
The Development Surge: Opportunities and Challenges
The concentration of datacenter projects around London is leading to significant delays in connecting to the power grid, a direct consequence of this growing demand. Despite these hurdles, the report indicates a robust development pipeline, with 2.9 GW currently under construction and 8.7 GW in planning across key markets such as Frankfurt, London, Amsterdam, Paris, and Dublin. This represents a year-on-year growth of approximately 16 percent. A notable projection is that London’s datacenter capacity could become the first market to achieve 2 GW within the next three to five years, reflecting an accelerating trend in datacenter expansion.
The demand for Gigawatt-scale campuses continues to rise, influenced heavily by similar trends observed in the United States. This surge in construction activity is set to double existing capacities, fundamentally reshaping the datacenter landscape. While London remains a focal point, emerging markets and remote campuses are gaining prominence. Cities like Milan, Helsinki, and Oslo are becoming noteworthy datacenter hubs, each showing significant growth in both live and planned capacities. As these markets develop, they offer partial relief to London by distributing the load more evenly across the EMEA region.
Power Constraints: A Persistent Obstacle
The future success of London in meeting its burgeoning datacenter needs relies heavily on overcoming significant power constraints. The introduction of a new queue management system by Ofgem in November 2023 aims to prioritize feasible projects by eliminating non-viable ones. This strategic shift from a ‘first-come, first-served’ system is crucial. The accumulated potential from queued projects vastly exceeds the capacity required by the existing British energy system, making selective prioritization essential for progress.
Recent high-profile projects such as an 80 MW facility in Newham and a massive 320 MW mega datacenter in Hertfordshire underscore the ongoing efforts to bolster London’s datacenter infrastructure. Additionally, the Yondr Group’s expansion in Slough reflects a broader trend of enhancing capacity to meet future demands. However, such power-related issues are not confined to the UK. For instance, Germany is facing similar challenges, with demand outstripping its total available power and leading to protracted connection timelines. These examples highlight that the power constraint problems are widespread, affecting various facets of the datacenter industry across Europe.
Navigating Regulatory and Sustainability Hurdles
Another layer of complexity in London’s datacenter growth narrative comes from regulatory and sustainability challenges. The recently introduced AI Opportunities Action Plan by the Labour government aims to streamline datacenter project approvals through special AI Growth Zones. Adjusting planning rules to facilitate quicker grid access is part of this strategy, designed to fend off power constraints. However, the chronic power shortages in London present a formidable barrier to realizing these ambitions, leading to a pressing need for innovative solutions.
This action plan, while a step in the right direction, must contend with the strict sustainability regulations imposed on new constructions. Today’s datacenters are expected to not only support vast amounts of digital data but do so in an environmentally friendly manner. Renewable energy sources, efficient cooling systems, and sustainable building practices are now prerequisites. Balancing these eco-friendly measures with the sheer scale of growth required remains a daunting task, requiring unprecedented collaboration between industry stakeholders and regulatory bodies.
Future Prospects and Solutions
London’s ability to meet its growing datacenter demands hinges on overcoming major power constraints. In November 2023, Ofgem is set to implement a new queue management system to prioritize viable projects and eliminate non-feasible ones, shifting away from the ‘first-come, first-served’ approach. This change is critical as the queued projects’ potential far surpasses the capacity needed by the current British energy system, making selective prioritization vital for progress.
Prominent projects like the 80 MW facility in Newham and the 320 MW mega datacenter in Hertfordshire highlight ongoing efforts to strengthen London’s datacenter infrastructure. The Yondr Group’s expansion in Slough further showcases a broader trend to boost capacity. However, these power-related challenges aren’t unique to the UK. Germany, for instance, also faces similar issues with demand exceeding its total available power, resulting in prolonged connection times. These examples illustrate that power constraints are a widespread problem impacting the datacenter industry across Europe.
