A new report warns that the rapid growth of “energy-hungry” data centers is causing delays in new homes in London, just as its housing crisis is “at its worst”.
Data centers are huge warehouses filled with powerful computers that are used to run digital services like streaming and artificial intelligence.
However, they require large amounts of electricity from the National Grid to keep them running.
Some new housing developments in west London were temporarily delayed after the electricity grid reached full capacity, according to a report by the London Assembly Planning and Regeneration Committee.
Committee chair James Small-Edwards said energy efficiency had become a “real constraint” on housing and economic development in the city.
In 2022, the General London Assembly (GLA) launched an investigation into housing development delays in the boroughs of Ealing, Hillingdon and Hounslow – after it was reported that completed projects were being told they would “have to wait until 2037” to gain connection to the electricity grid.
There were fears that cities might have to “pause new housing altogether” until the problem was resolved.
But the GLA found short-term solutions with National Grid and energy regulator Ofgem to ensure the “worst case scenario” did not happen – although many projects were still put on hold.
The report said the strain on parts of London’s housing highlighted the need for “long-term planning” around future grid capacity.
It said data centers accounted for less than 10% of total UK electricity demand last year, but this is expected to grow by 600% between 2025 and 2050.
It was estimated that the energy usage of a typical data center was approximately the same as that of 100,000 homes.
Data shared with BBC News in August shows there are currently an estimated 447 data centers in the UK, with that number set to increase by around 100 over the next few years.
More than half of the new data centers are planned in and around London.
Andrew Deckers, chief executive of industry body West London Business, told BBC News the region is proud to host “so much digital technology and investment”, but it has come with challenges.
“At the moment National Grid is trying to get an additional 7 GW of electricity into west London by 2037,” he said. “We say this needs to be done quickly… 12 years is a long way away. The demand is here and now.”
Rhodri Williams, technical director of the Home Builders Federation, told BBC News it was “essential” that the government ensured there was “sufficient investment” in the supply network to support housing growth.
In the list of recommendations, the committee suggested introducing a separate planning category for data centers to ensure better energy coordination.
A government spokesperson told BBC News it was exploring “bespoke options”, including the AI Energy Council, to support the data centers and housing sector.
The report also called on London Mayor Sir Sadiq Khan to include a dedicated data center policy in the next London plan.
A spokesperson for the Mayor told BBC News that they are working to include “how best to address the need for data centers in London” in the next London Plan, and will “carefully consider” the report’s recommendations.
He added: “Under Sadiq, we have seen more new council homes started in London than at any time since the 1970s and, before the pandemic, more new council homes built in London than at any time since the 1930s.”
Additional reporting by Jess Warren.
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