After spending years trying to attract data centre developments, Scotland is now seriously discussing whether to stop approving them. So, what’s really going on? 

The Scottish Greens want a moratorium on new data centres above 50 MW until a national strategy and specific guidance for councils are in place. Ross Greer, the co-leader of the Scottish Greens, put that proposal directly to First Minister John Swinney in June, before the SNP’s National Council backed a temporary moratorium in principle.

That leads developers in Scotland in an awkward position. While Scotland has not yet moved forward with banning data centre developments, the debate has moved beyond campaign group opposition and angry residents. Now it’s at the stage where Scotland’s party of Government is now actively considering whether some of the largest infrastructure projects in the pipeline should be paused. 

Could New York’s ‘ban’ provide a template? 

To get a view on what that could potentially look like – we can just look across the pond. After all, on July 14, New York became the first US state to impose a state-wide moratorium on data centre developments. 

Like the proposed moratorium in Scotland, New York has targeted facilities capable of consuming at least 50 MW, but the ‘ban’ comes as part of a pause in certain incomplete state environmental permit applications while regulators carry out a wider assessment of the sector.

That assessment will examine energy, water, air quality, noise and impacts on disadvantaged communities. New York is also exploring how developers should contribute to grid upgrades and whether large facilities should bring dedicated clean generation or battery storage. 

It’s essentially a regulatory timeout, as many argue that the technology behind hyperscale and AI infrastructure has moved faster than the Government. 

What does it mean to be ‘green? 

Scotland appears to be reaching the same conclusion as New York, but it faces an awkward problem. National Planning Framework 4 gives ‘green’ data centres an important position in Scotland’s planning system. They are included within National Development 12, the Digital Fibre Network. But what is a ‘green’ data centre? 

That’s the argument that ultimately led to the demise of a data centre earmarked for the former RBS HQ site in Edinburgh. While it stated that it was going to be a ‘green’ data centre, campaigners argued that there was no evidence to robustly back those claims – especially given there was no national definition on what a green data centre actually was. 

While the Scottish Government has previously pointed towards renewable power, energy efficiency, lower water consumption and heat reuse, it has also stated that its new AI strategy will provide further guidance. The problem is that guidance is still being developed while major projects are already entering the planning system.

This creates a complicated situation for planners, as the Government has effectively declared ‘green’ data centres nationally important before properly defining what that means.

That isn’t a major issue if we’re talking about a 5 MW enterprise facility, but when you’re talking about several gigawatts of potential data centre demand – it’s probably best that you plug the policy gap. 

While no one knows exactly how much will be built in Scotland, Greer told Parliament that applications in the pipeline could require up to 6 GW. That’s a scary figure especially considering when you look at existing operational data centre capacity in Scotland, it’s small – totalling around 30 MW across 15 facilities. 

Greer’s figure may be inaccurate, however. As we’ve found for the whole of the UK, what’s in the queue doesn’t necessarily reflect reality – and we’re likely to land somewhere in the middle. For its part, SPICe, the Scottish Parliament’s research service, has stressed that there is no single official inventory of existing and proposed Scottish data centres, meaning the true scale of the pipeline is difficult to pin down.

A Scottish ‘ban’ probably would not be a ban

We need to be clear upfront that while the media may want to throw around the word ‘ban’, in reality what Scotland is proposing isn’t a ban. 

SPICe has concluded that a data centre moratorium is possible in principle and pointed to Scotland’s approach to coal extraction and fracking. Under that type of model, applications can still be lodged and considered. However, national policy provides no support for the development.

A notification direction can add another layer. Scotland already requires certain coal extraction applications to be flagged to Ministers and prevents councils from granting permission without first going through the notification process.

Scottish Ministers also possess powers to call in planning applications where significant national issues are at stake. It’s easy to see how that could work for hyperscale data centres.

The Government could establish a temporary policy of no support for projects above, say, 50 MW, which is what is being suggested by Greer. Councils could continue processing applications, but would be required to notify Ministers before granting permission.

That would give Holyrood visibility of the national pipeline and an opportunity to intervene in projects with significant implications for infrastructure or planning policy. It would be less of a ban and more of a ministerial handbrake. For developers though, the practical difference may feel academic.

Why 50 MW?

Interestingly, the Scottish Greens and New York have arrived at the same threshold. That must lead you to think – why 50 MW? No, it’s not some scientifically proven dividing line between a sustainable data centre and an environmental menace – it’s a policy choice. 

In New York, 50 MW was likely chosen to avoid upsetting local businesses, as it didn’t really have many hyperscalers that sited their large data centres in the state anyway. Instead, many hyperscalers have opted to build in New Jersey instead. The problem was, as AI boomed, companies started to look outside of their typical geographical clusters – and that meant New York was suddenly facing an onslaught of large projects. 

It’s a similar situation in Scotland. The country has never been a particular hotbed for data centre activity. That was typically reserved for areas like Slough or London, but as demand has increased and capacity has become constrained in those markets, developers have sought sites elsewhere. Like New York, that has meant Scotland was facing an onslaught of large projects – such as ILI Group’s 600 MW hyperscale data centre. 

That’s why 50 MW probably makes sense for the Government. After all, the largest data centre currently in operation in Scotland is in Lanarkshire and is just a measly 12 MW. The problem, however, is if Scotland does adopt 50 MW – how are they measuring it? Is it IT load? Grid import capacity? Maximum campus demand?

They would also need to deal with phased developments.

New York’s order aggregates facilities on the same or contiguous sites. Scotland would need similar safeguards if it wanted to avoid a 200 MW campus becoming four conveniently separate 49MW projects on paper.

This is precisely why a moratorium without detailed follow-up rules would be pointless. Scotland does not need another vague data centre term to sit alongside ‘green’.

Then there is the grid problem

New York wants to examine whether developers should pay upfront towards electricity network upgrades and protect ordinary consumers from stranded infrastructure costs. Scotland can’t simply copy that policy.

Electricity generation, transmission, distribution and supply are reserved matters. The Scottish Government’s own AI strategy acknowledges that grid connection policy sits at UK level.

While Holyrood has enormous influence through planning, it doesn’t control the UK’s electricity regulatory system. That means a Scottish moratorium promising to redesign grid charging would rapidly collide with constitutional reality.

That’s probably why thus far the moratorium is calling for ‘a national strategy’ and ‘specific guidance’, because while the Scottish Government can’t force developers to pay for grid upgrades, it can demand far better evidence through the planning process. 

That means developers need to get ready for the very real possibility of a more detailed process. Rather than simply stating that you’re a ‘green’ data centre, you may be asked: How much power does a project actually require? When? What infrastructure is associated with the development? Is there on-site generation or storage? What happens to demand during periods of system stress?

The same applies to water. Scottish Water says Scotland’s 13 operating data centres currently use an average of around 97 cubic metres of water a day – approximately 0.006% of the water supplied to homes and businesses. While the debate has often tried to portray the data centre industry as water-hungry, the reality is Scotland’s existing data centres are not exactly drinking the country dry – and that’s the story playing out elsewhere in the UK too. 

The real question is what happens after the ban

Okay, so let’s say the Scottish Government has gone ahead and hit the pause button – data centres above 50 MW will no longer get national support. It then uses that time to develop a robust national framework and answers the questions that it’s trying to answer. Finally, it decides to lift the moratorium. 

As part of its AI Strategy 2026-2031, the Scottish Government said that Scotland should become a leader in sustainable data centre development. Ministers want investment, renewable power access, heat reuse and local benefits – but during that period it hit the pause button. 

A poorly designed moratorium would therefore amount to Scotland putting a large ‘closed’ sign over an industry it was enthusiastically courting five minutes earlier.

Investors would notice. In fact, they already have. Rimkus, the international consulting firm, has already noted that investors are already getting jitters over the mere suggestion of an upcoming moratorium. 

Robert Eadie, Data Centre Director at Rimkus, noted, “Scotland has a genuine opportunity to establish itself as a leading destination for digital infrastructure and artificial intelligence investment, but that opportunity depends on creating the conditions for businesses to invest with confidence. A moratorium on hyperscale data centres would send a concerning signal to the market that Scotland is stepping back from supporting the infrastructure that underpins the modern economy.

“Investors looking to deploy capital into digital infrastructure have choices, and if projects cannot proceed here, they will simply move elsewhere in the UK or Europe.

“Data centres are often misunderstood as standalone developments that serve little purpose locally. In reality, they are fundamental to almost every aspect of modern life, supporting financial, healthcare, government and streaming services, advanced manufacturing, and the AI technologies that are rapidly transforming industries worldwide.

“If Scotland wants to participate fully in the AI revolution and attract the high-value industries of the future, it cannot simultaneously restrict access to the infrastructure those industries depend on.”

But then is the alternative necessarily better? Developers currently face a country that supports ‘green’ data centres without firmly defining them and is struggling to quantify its own development pipeline. They will also be crying out for certainty. 

That means a credible moratorium would need an exit route from day one.

Create a national register of major proposed facilities. Define hyperscale. Define green. Assess cumulative energy and water demand. Set standard evidence requirements. Decide when applications become matters of national rather than purely local significance. Then reopen the planning route.

New York’s biggest lesson for Scotland is not that Governments should ban data centres. It is that, sometimes, a temporary pause is an admission that the infrastructure has become bigger than the rules designed to govern it.

Scotland says it wants green data centres. Before approving several gigawatts of them, it might finally have to decide what that actually means.