Britain's AI datacenter plans face energy, planning, investment challenges

Significant hurdles stand in the way of the UK government's push to become a global AI superpower, including energy constraints, planning difficulties and the datacenter investment required for it all.

Meanwhile, the wider EMEA bitbarn market is thriving, with capacity up 21 percent in a year and the build pipeline up by 43 percent.

A report by law firm Pillsbury Winthrop Shaw Pittman says that ambitious plans from Britain's Labour government offer "encouraging signs for stakeholders in the nation's datacenter and AI sectors."

It notes the AI Opportunities Action Plan announced in January that recommended a range of policies and actions for the government to take. These included building out sufficient datacenter infrastructure through the establishment of "AI Growth Zones" and a drive for greater AI adoption throughout the economy.

According to Pillsbury, the Department for Science, Innovation and Technology (DSIT) is set to publish a long-term plan for the UK's AI infrastructure needs and will define a 10-year roadmap. The focus is expected to be on security concerns, sustainability and energy, supply chain resilience and the pursuit of "sovereign" AI compute to ensure national capability and strategic independence.

Those "AI Growth Zones" will focus AI infrastructure development into strategic locations within the UK. As reported previously by The Register, these aim to streamline datacenter planning processes, while offering fast-tracked regulatory approvals and priority access to clean energy – with power being a thorny issue.

Energy is one of the "greatest areas of skepticism" in the whole strategy, Pillsbury notes, with the UK having some of the most expensive energy prices in the world, and aspirational net-zero targets, which it claims have been labeled as unrealistic.

To tackle the challenges, the government formed the AI Energy Council, co-chaired by the Technology Secretary and the Energy Secretary, and largely made up of energy companies and the big three cloud operators.

The aim of this is to guide energy policy investment and "devise innovative energy solutions," we are told, but while it has to date met twice since its formation, all requests by The Register to find out what was discussed or decided at those meetings have been met with a wall of silence.

Pillsbury also mentions that planning permission for datacenters has often been held up by delays and hurdles to new developments, and that the government moved to address this in its National Planning Policy Framework. It will also include bit barns in the Nationally Significant Infrastructure Projects (NSIP) consenting regime, which "streamlines" the consenting process.

"Streamline" here means that developers can apply to a central government planning body for permission, bypassing local authorities and any objections from local residents, as we previously reported.

In terms of investment, the report says the government has taken a "front seat approach" to channeling private sector funding into new AI datacenter projects, including over £25 billion ($34 billion) committed last year.

However, the sums involved are modest compared to rival nations, with Pillsbury pointing to the $500 billion "Stargate" project in America and the €109 billion ($112.6 billion) investment in the AI sector announced by France earlier this year. The European Commission also detailed plans to pump €200 billion ($207 billion) into AI projects.

The report concludes that until DSIT publishes its long-term compute strategy, there is uncertainty over how the government's aspirations will translate into actionable change for developers, investors and operators, but advises these to prepare now to be ready to take advantage.

At the same time, a snapshot of the EMEA datacenter market from commercial real estate biz Cushman & Wakefield says the total operational capacity available in the first half of 2025 grew by 21 percent in a year to reach 10.3 GW.

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It claims there is a "strong development pipeline," with more than 2.6 GW of capacity already under construction in the region, and 11.5 GW in the planning stages - an increase of 43 percent year-on-year.

The report finds that London continues to lead the region, with 1,189 MW currently operational and a further 1,678 MW in the pipeline – which would more than double its capacity. It is set to be the first locale in EMEA to pass 2 GW within the next three to five years, it forecasts.

However, it says that emerging markets outside the established FLAPD (Frankfurt, London, Amsterdam, Paris and Dublin) metro areas are reshaping the datacenter landscape, with locations such as Oslo, Helsinki, Berlin, and Lisbon rising rapidly.

Most bit barn markets in the region are grappling with stringent sustainability requirements, plus land and power constraints. These factors are driving up costs, extending project timelines, and creating considerable uncertainty for both operators and investors, according to Cushman & Wakefield. ®