Dear Londoners — You might've seen them around the city, though you probably wouldn't know it. From Ealing to Dagenham, data centres built to serve our ever-increasing AI needs have been springing up in all their boxy glory, placing an increasing demand on the capital's power supply. But while it's obviously a new gold rush, we were left with some burning questions. Why are they appearing all over the capital, when it's home to some of the most expensive real estate in the world? And is it true that much-needed house-building is having to be put on hold due to their hunger for energy? We pulled the data below, and in doing so answered everything you always wanted to know about London data centres (but were afraid to ask).
“OF COURSE YOU GET CURIOUS”, shouts Will Drury, an engineer at the Verne data centre in Farringdon. We’re standing in a windowless grey room between rows of blinking servers and yellow cables, refrigerator-sized cooling units blasting air out sideways. Will struggles to raise his voice above the din of the 10 locker-sized units that house the NVIDIA AI processing chips, each server shrieking like a high-pitched steam train.
Yet the engineers here know little about what each £250,000 server is powering, beyond that many of their customers work in the pharmaceutical industry and financial services. How they use their computing power is down to them. One thing is clear, though: all across London, a gold rush is underway.
Companies are racing to build giant warehouses full of the servers and chips which will provide the computing power to fuel the AI age. But as more and more data centres connect to the grid, the capital’s energy supply is straining. In 2023, data centres were responsible for 75% of all electricity usage on the Isle of Dogs. A 256MW data centre, one of the largest in the country, has recently been approved in Ealing — guzzling enough energy to power every household in Birmingham. And by 2030, the energy that London’s data centres consume is expected to quadruple.
As billions of pounds of investment pours into London’s data centre boom, some are starting to worry. Is the city’s power supply built to withstand this? Why are these centres clustering here, taking up some of the most expensive land in the UK? And how can London manage its new battle for power: between data centres and new homes?
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It might seem strange that roughly half of the UK’s 500 or so data centres should be in the capital, where rent is expensive and space is scarce. Over in the US, most of the behemoths of the data centre world — those used for cloud storage and training AI, able to quickly offer more computing power to new customers — are far away from cities.
But there’s a key difference. In America, electricity is priced locally: it’s much cheaper when you’re close to power sources (like solar farms or nuclear power plants) and when you’re in a place with low demand (in rural areas far away from cities). These incentives don’t exist in the UK, because our energy is priced nationally. It costs roughly the same to power a 20MW data centre in densely populated Ealing as it would next to a remote Scottish wind farm.
Of course, the land still costs more — yet often this is off-set by the considerable advantages to being in the capital. For the City, milliseconds can mean the difference between profit and loss in financial trades, and even servers supporting streaming and AI work quicker the nearer they are to users. Tapping into the fibre-optic communications cables which run beneath the capital — and across the Atlantic to the US — allows companies to minimise delays (known in the industry as “latency”).
When you map these centres out, you start to notice a trend — many of the existing and planned sites sit along the path of the Elizabeth Line. When the line was built, over 250km of optical fibre was routed through the new tunnels, providing some of the UK's fastest connectivity. That's a big part of why there are so many clustered in west London, and out towards Slough.
But there’s another reason we’re seeing a rush of new centres. In September 2024, the government officially designated data centres as critical national infrastructure. That made it easier and quicker to secure planning permission, and ensured that data centres are prioritised alongside hospitals and street lights in the event of blackouts. It’s brought a flood of proposals, including a cluster at the Park Royal industrial estate near Willesden Junction and the Honey Monster factory in Southall. It is, unsurprisingly, where Sugar Puffs used to be manufactured, and now Texan company Cyrus One has submitted plans to replace it with a £1.4bn complex of 12 data centres.
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To power these, the National Grid has begun building new grid supply points specifically to service data centres. The new Uxbridge Moor substation needs around 1.8GW of new capacity purely for nearby data centres — more than was required to power all the data centres in the UK combined in 2024 — and the energy equivalent to “adding a mid-sized city to the grid on the outskirts of London”, as the National Grid put it in a press release last year.
Business and property developers around the capital are anxiously watching these efforts to expand the local energy supply. Many west London substations are already at capacity and will be until at least 2030. The National Grid has promised an additional 7GW across west London by 2037, says Andrew Dakers of local consortium West London Business, through upgrades to the transmission circuits and building new substations. “Our message to National Grid is very simple,” Dakers says curtly. “That is not fast enough”.
As data centres proliferate, the desire for AI supremacy is colliding with other priorities in the city. In 2022, Scottish and Southern Electricity Network, the company responsible for distributing electricity in most of west London, began to notify developers in Ealing, Hounslow and Hillingdon that their buildings — which were then either under construction or already completed — might have to wait until 2037 to connect to the grid.
Over 5,000 homes were directly impacted, says James Small-Edwards, chair of the planning and regeneration committee at the London Assembly. After spending the last few months investigating whether data centres’ thirst for power has slowed housebuilding in the capital, he found that their strain on the grid has caused major delays for new homes, and endangered the prospect of other new projects starting.
There is one answer being offered by the energy sector: the “ramping solution”. Essentially, this means that distribution networks have been reconfigured to allow low power developments to connect to the grid in incremental stages, allowing house-building to happen more gradually. But that doesn’t work for the big schemes.
“We’ve got some really large sites”, says Dakers. “When you’re looking at thousands of homes, the ramping solution isn’t up to it.” Larger developers in the area have stepped back from progressing new housebuilding projects, waiting for both power and clarity over the level of competition for access to the grid.
Vantage data centre in Park Royal, Ealing (Photo: Peter Carlyon/The Londoner)
As a result, local councils are sounding the alarm. In Tower Hamlets, the most recent risk register identifies that data centres pose a “severe” risk that “house building, at scale, is unable to proceed for potentially 10+ years due to lack of available electricity capacity”. Hounslow’s most recent local area energy plan mentions data centres 51 times, with the council hoping to be able to draw waste heat from to warm nearby homes.
And there’s a deeper, economic problem. With data centres drawing billions of pounds in investment, and construction costs for residential buildings being so high, those who could otherwise build houses are proposing data centres. Take the Truman Brewery along Brick Lane. Alongside 44 flats, 11 of which were deemed to be affordable, the Zeelof family’s most recent proposal for the site included a data centre — requiring an additional 4MW of power in an area that’s already at its limits.
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Luftur Rahman, mayor of Tower Hamlets, was furious. He sent seething emails to the planning inspectorate, writing that “it beggars belief that one could be put in the middle of one of the most densely populated estates in London,” and that the development risked squandering a “once in a lifetime opportunity to build desperately needed social and affordable housing”.
'There isn't, as I can see, much strategy there at the minute'
If you start asking about the trade-offs between data centres and housing, sooner or later you’ll hear about the “demand queue”.
This is the list of all the development projects that will need to connect to the grid. As soon as a developer has plans in place, they can get in the queue. Until a few months ago this was a free-for-all, in which prospective builders paid nothing to book their place and were not assessed on their ability to build. Such arrangements unsurprisingly led to long backlogs, of which “data centres account for a significant share”, Ofgem recently wrote.
Now, the management of the queue has been given to the National Energy Systems Operator (NESO) which was set up in 2024 to oversee national and regional energy infrastructure. From a brightly lit control room in Wokingham, not dissimilar from an air traffic control centre, vast screens map out the UK’s supply of energy in real-time.
When I began reporting this piece, I expected authorities would by now have clear policies on how to balance the risk and promise that data centres offer. After all, their disruption to London’s housing stock became clear almost four years ago, and since then they’ve only proliferated.
Yet the picture that has emerged is one of a wild west in which developers are pushing through plans and authorities are scrambling to catch up. There’s no real framework for managing the trade-offs: NESO is responsible for developing regional area plans, but has not yet published one for London. And when I speak to one insider at the authority, they say “almost everyone at NESO is like, ‘we should know more about data centres… and we don’t’”. When I approach Ealing council to speak to a planner responsible for thinking about data centres, I’m asked to consider returning with my questions in a year — at which point they may have a better understanding of how the facilities are impacting local housebuilding. “There isn't, as I can see, much strategy there at the minute,” Small-Edwards tells me.
The 96MW Microsoft data centre in Park Royal in Ealing, due to open next year (Photo: Peter Carlyon/The Londoner)
As resistance to data centres starts to grow, making those decisions about which project gets energy and when is becoming increasingly contentious. Last week, at the Royal Courts of Justice, the legal organisation Foxglove brought the UK’s first legal challenge against a “hyperscale” data centre, both on environmental grounds and because it could overwhelm the local energy supply. The government admitted that it made a “serious logical error” by approving the £1bn facility in Buckinghamshire, and agreed that the planning permission “should be quashed”. The developer, Greystoke Land, intends to appeal.
The companies behind the data centres, for their part, are keen to show how local residents will benefit. On the computerised renderings of Cyrus One’s Honey Monster plant in Southall, the company depicts local residents gathering on a grassy bank nearby to watch a football match projected onto the wall of a giant warehouse.
Hyperscale facilities like in Southall and Park Royal can employ over 1,000 people in the construction phase, and claim to offer hundreds of full-time jobs once constructed. When I visit the Microsoft campus in Park Royal, the area is bustling with construction workers and vehicles — cherry pickers, gravel rollers, dust-stained trucks loaded with steel beams — all pouring in and out of the site.
“Every day, so many deliveries” says a pink-faced man wearing a thermal balaclava, one of dozens of men in lurid orange coveralls who are employed to direct the traffic. His colleague, an Ethiopian man called Temesgen, says he’s been doing the job for a year. He mostly enjoys it, he tells me, though wants to find work as a photographer when the project wraps up next year.
Temesgen, before running off to direct traffic into the Microsoft facility (Photo: Peter Carlyon/The Londoner)
Back in the Verne facility, I look into the six black 1MW power modules in the basement, electrified by two 33kV connections drawn from separate power stations. “If both of those go down, then something’s really going on”, Will says, at which point the site’s backup generators will kick into gear.
Towards the end of my tour, Will and I venture up onto the roof. Snaking across the building are chrome and rubber pipes large enough to crawl through, funneling cold air and water around the facility. “It’s a good industry to be in”, Will reflects, as it starts to rain. “It’s future proof. I’ve got two young children, and I’ll encourage them to get into the industry — it’s going to be something that’s always needed.”
Will they expand the Farringdon centre, then? “Maybe,” says Will, though there’s one problem. Both local substations are at capacity.
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