London’s £10bn data centre boom accelerates amid AI power crunch
London’s data centre sector is entering a new phase of expansion, with three major schemes worth over £10bn revealed in the past week.
The projects, all located in and around the capital, aim to serve the growing computing needs of the City, tech firms, and the broader UK economy, particularly AI workloads.
The developments are primarily hyperscale data centres, high-capacity facilities designed to handle AI and other advanced digital applications
Major projects announced
Colt Data Centre Services confirmed it has received planning approval from Hillingdon council to expand its Hayes digital park campus in west London, according to The Standard.
The £2.5bn project will add three new hyperscale data centres and an innovation hub, boosting the available IT power at the site by 97 megawatts.
The site, replacing the former Hayes Bridge retail park, is expected to create 500 permanent jobs.
Construction is set to commence in mid-2026, with the first data centre expected to come online in early 2029.
Meanwhile, Ark Data Centres also announced a £2bn project near Watford, located at a former Mercure hotel site. Plans include up to six two- to three-storey data centres on a campus with a total capacity of up to 200 megawatts. Public consultation on the project has already begun.
These new projects come as tech giants increasingly compete for reliable power supplies.
Microsoft recently highlighted the issue, lamenting “having chips but no electricity”.
National Grid UK chief executive John Pettigrew said data centres now account for more than half of new electricity connection applications, with 19 GW of new facilities planned over the next five years, roughly a third of the UK’s current peak electricity demand.
Grid under pressure
The surge in demand for power has exposed vulnerabilities in the UK electricity system.
Ofgem, the UK’s national regulator, reported that contracted grid connection requests have jumped from 41 GW to 125 GW since November 2024, with transmission demands increasing by 80 GW.
Regulators warned that many speculative applications from data centre developers are causing congestion, delaying projects that are ready to proceed.
Screening measures are now being introduced to ensure only viable projects enter the queue.
Meanwhile, a recent poll of 50 UK data centre developers by consultancy Roadnight Taylor found that more than three-quarters are exploring sites abroad, citing grid connection delays of up to eight years.
Half of all projects have already relocated due to these issues, with North Africa and parts of Asia emerging as alternatives.
National Grid planning reforms
National Grid Group is investing £30m to expand and modernise electricity networks in England and Wales over the next four years, in what is being called the ‘great grid upgrade.’
Seventeen large-scale projects, including new substations and enhanced grid connections for renewable energy and data centres, are planned.
The initiative aims to prioritise viable projects, as well as remove unviable ones from the connection queue, and support facilities that can come online before 2030.
The UK government is working with the Grid and energy regulators to ensure critical AI and digital infrastructure projects are not delayed by energy bottlenecks.