One of the themes that came from the Connected North conference in Manchester in April was the rise of data centres across the UK. That growth is driven by increasing demand for digital infrastructure and a desire for data sovereignty and security in the current global climate. The growth of data centres looks set to continue given the increases in cloud computing, the internet of things and, even more significantly, the Government's plans to be a world leader in AI and the selection and identification of AI Growth Zones ("AIGZs").
From a real estate perspective, the growth of data centres will inevitably involve land acquisitions, planning and development disputes, easements and wayleave issues and potential nuisance or disturbance claims. The plans for AIGZs are designed to streamline the planning process for relevant developments, and provide relevant infrastructure, such as access to the necessary power connections.
The power problem
Data centres require a significant amount of energy, which is a challenge in circumstances where the power grid capacity is finite and the integration of sufficient renewable energy is yet to be achieved. Increased energy costs are also an issue – in 2023, according to the International Energy Association, Britain apparently has some of the highest industrial energy prices, globally; electricity prices for industrial use in the UK were almost 50% higher than in France and Germany.
A possible solution?
Until energy prices are more competitive and the power grid has a higher capacity, developers will need to be cautious about how to power and run data centres. It seems that some savvy data centre developers are taking matters into their own hands and seeking to erect on-site energy solutions which bypass the electricity grid entirely, by seeking to build their own dedicated gas-fired power plants. In order to do so, developers are exploring connecting to the gas network instead. Such connections can be secured within a relatively short period – as little as 6 months – at a much lower cost, and without the problem of limited capacity in the electricity power grid.
Comment
Whilst on-site gas power may seem like a solution to the power problem for data centres, it comes with its own potential pitfalls. There are environmental concerns and issues with carbon emissions, and the potential for nuisance claims as a result of noise, smoke, fumes etc. It will also likely present additional planning challenges. While data centres are generally supported by planning policy, on-site gas-fired power plants will raise issues such as climate change policy and landscape and visual impacts, and may add costs and delays into the consenting process by triggering the need for an environmental impact assessment and increased local objections. One alternative way to mitigate the impact of data centres and the energy they require appears to be in "green data centres" where the data centres are located alongside renewable energy projects. As the growth in data centre development continues, novel solutions to mitigate its impact will need to be found.
If you are a developer, investor or commercial landlord dealing with data centre related issues, or you have any questions about how these issues may impact you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies contact.
