What will it take to make it easier to build data centres?

Credit: Simon Wiffen Photography

As we wait to see what the government’s industrial strategy has to say about AI over the next few days, I’m reminded of the panel discussion I chaired last month at UKREiiF. “We need to join power, fibre and policy together,” said Rennie Dalrymple, a partner at Ridge & Partners and a specialist in data centres.

Adding data centres to the list of ‘critical national infrastructure’ (NCI) was one of the government’s first actions after the summer election. As such, they are now deemed to be among the elements of national infrastructure which, if lost or compromised, could have a major detrimental impact on essential services, national security or the functioning of the state.

Nonetheless, as the panellists emphasised, deeming data centres critical national infrastructure in the UK does not, unfortunately, help them get built any more quickly. And this is very much a global race.

All the indications are that the data centre sector will continue to grow rapidly throughout this year and beyond. Supply continues to outstrip demand, and the latest figures from JLL forecast that the global data centre market is likely to expand at 15% through 2027, and that the EMEA region is predicted to outpace that global trend by growing at 25% over the next three years.

But some of those EMEA countries have done a better job than the UK of joining up national policy priorities and on-the-ground delivery. Rennie Dalrymple said simply: “Frankfurt is better than the UK at integrating data centres into local communities. In the last 12 months this has been a priority in Germany.” David Ribbands, director – development management at Prologis UK, said France too had upped its efforts to attract data centre developers, with a ‘Choose France’ campaign.

The opportunity is huge, so this competition matters. For all the talk about AI, it still only accounts for around 25% of data centre development at the moment – cloud computing and data storage are make up the majority of current work. But AI is expected to drive the market even further.

This presents opportunities, of course, but there challenges too. Contractors like Winvic, which hosted the UKREiiF panel, say they are ready to bring to the construction of data centres the capability – and the supply chain – they’ve honed building industrial and logistics assets. But as Rennie pointed out, while there are plenty of opportunities for new entrants, the constraints are suitable land and access to power. There are trade-offs to be made.

That’s one reason why it’s so important to join up the statements of intent on AI with what happens on the ground. “A lot of the time when working with local authorities on a data centre project, we have to start from scratch,” said Angela Schembri, senior planning director at RPS Group. “Local policy does not necessarily follow national policy. Government says data centres are important, but we need a firm policy on principle and need.” She’d like to see a national policy statement.

It has been a long time since a UK government has talked as much about infrastructure as it has this month. With its infrastructure and industrial strategies, it now has a chance to join the dots.