Planning for Data Centre Growth and the AI Revolution

Bruce Owen, regional president of data centre operator Equinix recently told the BBC that "If I want to build a new data centre here within the UK, we're talking five to seven years before I even have planning permission or access to power in order to do that”.

It is clear not only that the Government has been listening to complaints about the length of time which it takes to obtain planning permission for development, but also that it sees data centre development as an essential driver of economic growth, which it is determined to facilitate. It is still grappling, however, with the demands that this will place on other infrastructure, in particular, power and water supplies.

More important than the Green Belt?

Much has been made of a series of controversial appeal decisions on individual applications within the Green Belt in which the Government has signalled its intent.

In December 2024, the Government allowed an appeal against a refusal of a planning application for a data centre on a site in the Green Belt at Court Lane, Iver[1] . The Government agreed with the Inspector who heard an Inquiry into the appeal that the need for data centres (and other benefits of the development) amounted to very special circumstances, which outweighed the harm to the Green Belt that would result from the development. The previous Government had refused to accept that very special circumstances existed to allow an appeal for a data centre on a nearby site at Woodlands Park [2] (albeit that the Woodlands Park site comprised open land, whereas the Court Lane site was an industrial estate).

The Court Lane Appeal was decided just before the Government made various changes to Green Belt policy in the National Planning Policy Framework, including the introduction of the concept of “Grey Belt land”. Developments in those parts of the Green Belt that meet the requirements to be classified as Grey Belt land no longer need to demonstrate very special circumstances that outweigh the Green Belt harm to secure an approval. The Government has already utilised this relaxation of Green Belt policy twice to approve planning applications for data centres on sites it considers to be Grey Belt, at Abbots Langley[3] and at Woodlands Park, Iver[4] .The latter site is the one on which the previous Government refused planning permission (albeit that the Grey Belt concept did not exist at that stage and that the proposed data centre was a larger facility).

Of potentially more far-reaching significance, however, are the raft of measures which the Government is bringing forward to ensure that the need for data centres is enshrined within the legislative and advisory planning framework.

A key component of national infrastructure

As part of its consultation on planning reforms (issued within weeks of coming into office) the Government proposed both that data centres could be authorised under the National Strategic Infrastructure Project (NSIP) regime ( outside of the usual planning process) and that national planning policy should be amended to oblige local planning authorities to recognise the need for data centres when setting local policies and deciding planning applications. The changes to national policy were duly included in the revision of the National Planning Policy Framework (NPPF) issued in December. They will support those sites coming forward under the traditional planning regime by making it explicit that the need for data centres must be taken into consideration both when allocating sites in the local plan and when weighing arguments for and against specific applications. The basis on which need is to be calculated has not, however, been specified.

The Government also confirmed last December that it would procced with the designation of data centres as NSIPs. This will transfer jurisdiction for determining applications for planning approval (a Development Consent Order) from the local council to the Secretary of State. It will also enable the promoter to secure orders for the compulsory purchase of land or rights simultaneously with planning approval, if necessary. A new National Policy Statement will outline the environmental criteria for a data centre proposal to be taken forward as an NSIP. These criteria will include the availability of water and power but have not yet been published.

AI Growth

Data centres currently consume around 2.5% of the UK’s electricity, which is startling enough, but the sector’s electricity consumption is expected to rise fourfold by 2030[5] . Official figures for water consumption are not available, and the amount used depends on the size, local climate, and, in particular, the design of its cooling system[6]. One of the main reasons for the anticipated quadrupling of power requirements is, of course, the expected increase in demand for data storage and processing capacity, driven by the mass adoption of AI.

In July 2024, the Government asked the Advanced Research and Invention Agency (ARIA) to develop an AI Opportunities Action Plan. The plan, which was published in January 2025, proposed the creation of AI Growth Zones (AIGZs), within which there would be guaranteed access to supporting infrastructure (in particular energy and water) and an alternative, streamlined planning approvals process to that available under the NSIP regime. The Government has confirmed that it also intends to take this proposal forward with a view to expanding the so called national compute capacity by at least 20 times by 2030.

In February, the Government invited local and regional authorities and industry bodies to submit bids for their areas to become home to an AIGZ Growth Zone. The response has been strong. In April, the Government advised that 200 local authorities had already expressed an interest in their areas becoming an AI Growth Zone.

Conclusion

The Government is striving to ensure that the regulatory and policy frameworks no longer act as a deterrent to future investment; however, there are still very significant headwinds. The seemingly insatiable demand for power has prompted calls for a moratorium on further data centre expansion in other jurisdictions, such as Ireland, where the IT services industry now accounts for 21% of the country’s power consumption and demand from data centres alone is expected to outstrip national housing demand within 2 years.[7] Such concerns are also growing in the UK, where there the Government has declared that there is a national housing crisis which it has committed to resolve. There are large parts of the country where a moratorium on new housing effectively exists due to a lack of the infrastructure required to treat sewage to current environmental standards, and other areas where housing cannot be built because of a lack of water. The expectation is that much of the data centre growth will be located in de-industrialised parts of the country, which have enhanced access to power and water, and generally also a lower demand for housing. However, reconciling the competing demands for resources between these critical sectors will be a formidable challenge .

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