Charlie Hesketh, Strategy and Investment Director at Aurora Utilities Limited, explores the changing shape of UK data centres as they strive for carbon neutral status.

In September 2024, the UK government declared that data centres are to be classified as critical national infrastructure, meaning their operations are considered as important as our emergency services or water companies.

The news yet again thrust data centres into the UK media spotlight and public consciousness. This reignited a hot debate on their extreme energy consumption, however a recent report by Bloomberg Intelligence has indicated that the rapid expansion of data centres could actually be a good thing for the world’s net zero goals.

AI and data centre demand impacts renewable growth

The research found that electricity demand from data centres across Europe, which is being driven by the acceleration of AI, is likely to increase by around three times by 2030.

Interestingly, analysts now believe that it is this growth that will likely drive more investment than ever into renewable energy sources such as offshore wind, solar and battery storage.

Combine the fact that interest rates are coming down, with the ambitious clean energy goals of global tech companies, both projects in the renewables sector and data centres are experiencing a spike in investment levels.

For instance, the International Energy Agency (IEA) predicts that the world will add more than 5,500 GW of new renewable energy capacity between 2024 and 2030 – almost three times the increase seen between 2017 and 2023.

Whilst data centres will become a $317 billion market globally by 2026, representing a rise of 107% from the 2020 market valued of $153 billion, according to a Jones Lang Lasalle (JLL) report.

The rapid adoption of AI applications has launched a race to build sufficient capacity to support further digitisation. There is currently 1.7 GW in data centre development, and a further 2.5 GW in the planning stages across the core European markets, according to JLL. The data centre market is thriving, and in the UK, their size and location is evolving too.

Location, location, location

One perhaps unexpected consideration that has arisen in recent times is the changing location of these new data centre developments.

Tier one cities such as London were once considered the prime location for data centres, but that has now evolved. At one time, data centres were primarily focused on supporting key sectors such as banking. Banks need real-time access to online accounts and the ability to process digital transactions at lightning speed the latency of the fibre connection therefore was crucial to their operations. This meant that cities with the fastest fibre connections, such as London, Frankfurt and Dublin were considered key hubs for the location of our data centres.

In today’s market, data centre demand is being driven by the use of AI applications such as ChatGPT. AI functions, especially AI training, require exceptional amounts of data storage and processing thus creating demand for larger, more powerful data centres. According to a Knight Frank report, Microsoft have announced that they intend to invest £2.5 billion to develop AI infrastructures in the UK with Wales being a potential starting point for the company.  

There are 514 data centres in the UK currently, and around 170 of them are in London.  Europe’s largest data centre hub, which features 34 of them with more being built, is located in Slough in Berkshire. There are 26 data centres located in and around Manchester, four in Cardiff in Wales, and three near Edinburgh, Scotland.

In-line with the growth of data centres, the demand for talent has also increased. The industry requires skilled workers to support the design, build, and management of the infrastructure to ensure data security and continuance of service.

London is facing a skills gap currently, specifically in highly skilled roles such as engineering, and a report by Accenture found that hubs in the North West of England are growing an ‘AI talent pool’ as tech experts leave the capital due to rising living costs. Data centre operators are therefore capitalising on this shift to attract talent as they build infrastructure across the UK.

Green giants

This exploding growth across the country is not the only seismic shift. The nature of their critical operations, much like our local hospital or fire station, means data centres are always ‘on’. They require energy 24/7, 365 days a year.

This has always been the case, but what has changed in recent times is the scale of their operations. Firstly, the physical size of the infrastructure has grown to house more severs. Secondly when it comes to capacity, a decade ago 30 MW would have been considered a large campus, now we are seeing development for AI request 250 MW upwards.

McKinsey believes that by 2030, as much as 65% of AI workloads in Europe and the United States will be hosted by hyperscalers.

Regardless of size, all data centres are required to comply with the UK’s 2050 Net Zero Strategy, which means they must have a plan to become carbon neutral. This includes working towards 100% renewable energy use, meeting high energy efficiency standards, and reducing water use for cooling.

Sustainable models are a must

As the use of energy-intensive AI-driven programmes continues to accelerate, the need for data centres shows no sign of slowing down. Therefore, data centre operators need to consider strategies for offsetting their emissions so they can continue to expand.

On-site renewable energy installations not only allow data centres to limit harmful emissions, they can safeguard the site from volatile and fluctuating energy prices, helping to run a sustainable business prime for future growth. These power-hungry developments will benefit from supplementary energy sources to ensure resilience such as solar panels on their facilities or wind turbines installed locally dedicated to powering their operations.

Another avenue that data centres can take is the adoption of Battery Energy Storage Systems (BESS), which can curtail rising energy bills and provide grid stability. BESS can be used as back-up power sources in the event of a power outage instead of using diesel generators. This ensures there is no disruption to the service, and helps to manage the volatility of renewable energy as it’s capacity grows. In 2022, Google successful installed its first ever battery-based system for backup power at its hyperscale data centre in St. Ghislain, Belgium.

There are other operators who are setting the example by committing to rigorous carbon reporting to evidence how they are measuring their environmental impact. One such example is the Integrated Carbon-Free Energy score (ICFEn) as developed by nLighten an edge data centre operator. This level of reporting is not limited to the electrical demand but also the waste heat from the servers.

Data centre operators are now under more pressure to improve the local areas in which they operate. One way of achieving this is through sector coupling local heat district networks as evidenced by Nlighten at the company’s Eschborn site.

There is no silver bullet when it comes to making data centres carbon neutral; it will take a flexible and strategic tactics to gradually lower their dependence on fossil fuels. Innovations in renewables and taking a measured approach to grid connections will support their sustainability goals. What is clear is that UK data centres are perfectly positioned as they enter the new digital-first, net zero era.