Executive Summary
- CEO of VIRTUS data centres, Adam Eaton, explores what the next decade of UK data centre development looks like and what it needs to grow.
- UK data centre demand growth isn’t a single spike increasing; it’s a permanent shift in how organisations of every kind store, process, and act on information.
- Busting myths – it’s widely believed that data centres burden the grid and rely on high-carbon energy, when actually they go straight to high voltage grids and bypass domestic ones. Another myth is that they’re choosing between building data centres and building houses: they’re not. Operators are encouraged to regenerate sites instead of competing with housing.
The UK data centre market is in good shape by most measures. Private investment is flowing at a scale the industry has not previously seen. The government has designated data centres as critical national infrastructure, AI Growth Zones are being established to accelerate development, and the pipeline of planned projects stands at approximately £36.4 billion spanning nearly 100 developments nationwide. The fundamentals of demand are strong and getting stronger.
And yet the conditions that will determine whether that pipeline can be delivered are not yet fully in place. Grid connections, planning timelines, energy costs, and workforce availability are all areas where the gap between current reality and what the market needs is wide enough to matter. For an audience that works in and around this industry, the question is not whether the opportunity is real, it is whether the UK will execute well enough to take full advantage of it.
Demand is structural not cyclical
The growth in data centre demand that the UK is currently experiencing is not a spike driven by a single technology trend. It reflects a fundamental and permanent shift in how organisations of every kind store, process, and act on information. Cloud adoption across enterprise and public sector is deepening rather than plateauing, AI workloads are additive to existing demand, not a replacement for it, and the digitisation of physical systems, from energy grids to transport networks to healthcare infrastructure, is creating new categories of data that require processing and storage at scale.
For data centre operators and developers, this means the investment case is not dependent on a single use case, maintaining momentum. The demand base is broad, diversified across sectors and geographies, and underpinned by long-term structural drivers that are not going to reverse. The challenge is not demand, it is supply – specifically the ability to bring new capacity online at the pace the market requires.
The grid is the critical path
Outside of the data centre industry, it widely believed that data centres burden the grid and rely on high-carbon energy. However, this is not the case. Although data centres have substantial power requirements, they typically connect directly to high-voltage transmission networks that are not suitable for domestic use, thereby bypassing local distribution grids.
And as for relying on high-carbon energy, the opposite is happening. The sector is rapidly transitioning toward renewable energy. Many major operators are working toward 100% renewable electricity supply through Power Purchase Agreements (PPAs), including direct contracts with offshore wind projects.
In the UK, data centres are actively supporting national net-zero objectives by procuring large volumes of green energy and implementing on-site efficiency improvements that reduce their overall carbon footprint. Rather than creating an energy problem, they are helping to accelerate renewable deployment by offering reliable, long-term demand for new wind and solar developments.
But what is true is that that grid connection timelines are the single biggest brake on the industry’s ability to respond to demand. Queues stretching beyond a decade in some areas are not a manageable inconvenience. They are a fundamental barrier to development that, if not addressed, will redirect investment to markets where connection timelines are shorter.
The reforms announced in early 2026 are a genuine step forward. Prioritising projects with clear strategic value and delivery timelines, and removing speculative applications that have clogged the queue, will help. The deeper requirement is investment in the transmission and distribution infrastructure itself. The grid that exists today was not designed for the loads that AI infrastructure will place on it over the next decade, and queue management alone will not solve a capacity problem.
Planning reform needs to go further
Another broadly believed myth to be busted is that the choice is between building data centres and building homes. It is true that applications to build data centres rose by 63% in England and Wales in 2025, and local authorities are indeed grappling with competing land use priorities and limited specialist capacity to assess complex infrastructure proposals quickly. However, brownfield and industrial land is increasingly used and encouraged for new data centres to regenerate sites rather than compete with housing. This is where the planning case is strongest and where the industry should continue to focus.
Sites with existing grid connections, established road access, and a legacy of industrial use present fewer planning objections and stronger economic regeneration narratives than greenfield alternatives. The VIRTUS Data Centres Saunderton Campus, transforming a former tobacco machinery factory derelict for fifteen years into a 78MW AI-ready development, demonstrates what is achievable when the right site, the right operator, and the right planning approach come together.
The gap between policy intent and planning reality needs to close. Data centre development proposals that meet the criteria for critical infrastructure status should move through the system on timelines that reflect that status. That requires both clearer national guidance and additional resource at local authority level to process applications competently and promptly. The AI Growth Zones framework is a useful model, and extending its principles more broadly across the planning system would help.
What the next decade requires
The UK data centre market has the private investment, the demand fundamentals, and the policy framework to be Europe’s leading market for digital infrastructure development over the next decade. Realising that potential requires execution on several fronts simultaneously.
Grid reform needs to deliver real reductions in connection timelines, backed by genuine investment in transmission and distribution capacity. Planning processes need to move at a pace consistent with critical infrastructure status. Industrial energy pricing needs to be addressed as a competitiveness issue. Workforce development needs to be treated as a sector-wide priority rather than an individual operator concern. And regional development needs the active support of a policy framework that recognises data centres as anchors for economic regeneration rather than planning problems to be managed.
The industry’s role in all of this is not passive. The operators, developers, and investors who engage proactively with the policy agenda, demonstrate genuine commitment to local economic benefit, and build the workforce and energy capabilities the market requires are the ones who will shape the conditions in which the whole sector operates. The next decade of UK data centre development will be determined as much by how the industry shows up as by what government does. Both matter, and both need to get it right.
