Power-hungry data centres are delaying new homes in London
New residential developments in London have been delayed and made more expensive due to concerns over growing demand for electricity from large-scale data centres.
This is according to a report by the London Assembly’s Planning and Regeneration Committee, which found that the increasing number of large data centres has put pressure on the electricity network, competing with new housing for limited supply of energy.
Conflicting demand for electricity due to the advent of large data centres has led to a delay in connecting new homes, slower development, and higher building costs for new homes in the capital.
The scale of this problem was most starkly seen in 2022, when the Greater London Authority (GLA) was alerted that parts of West London’s electricity grid had reached capacity.
Alarms were raised as new developments were told they could not connect to the grid until the 2030s and developers feared they would need to pause new housing altogether in certain boroughs.
Since then, the GLA worked with partners to deliver short-term fixes and reform their management of connections, but the Committee’s report shows capacity constraints still have a lasting impact on local growth and housing delivery.
Data centre energy demand to grow by up to 600%
Data centres are a key factor in the growing demand placed on London’s electricity grid. A modern data centre requires the same power as tens of thousands of homes, and the electricity demanded by data centres is forecasted to grow by between 200% and 600% by 2050.
In West London boroughs measured by the report, data centres already account for 18% of all demand on the electricity network.
The Committee said that as the data centre sector expands, it will add pressure to local parts of the grid and create challenges for connecting new developments. This pressure will make it harder and more costly to bring forward new homes, hampering London’s economic growth and ability to meet housing targets.
To tackle the growing electricity demand from data centres and ensure London is able to continue building and connecting more housing to the grid, the Committee recommended that the government introduce a separate energy use class for data centres that will allow for their demands to be planned for in a clearer way.
The report also urged the GLA to include a dedicated data centre policy in the next London Plan to address their significant energy demands.
“London is at a critical moment, with energy capacity becoming a real constraint on both housing delivery and wider economic growth,” said London Assembly Planning and Regeneration Committee Chair James Small-Edwards.
“Through this investigation we heard from councils, developers and residents about the delays, uncertainty and long-term risks posed by ongoing grid constraints.”
“The recommendations we’ve set out are an essential step towards managing these pressures fairly and ensuring London has the infrastructure it needs to support new homes and a growing economy,” he said.
