The rapid growth of “energy-hungry” data centers is delaying the construction of new homes in London, with London's housing crisis at its “worst point”, a new report has warned.
Data centers are giant warehouses filled with powerful computers used to run digital services such as streaming and artificial intelligence.
However, they require large amounts of electricity from the National Grid to continue operating.
According to report of the London Assembly Planning and Regeneration CommitteeSome new housing developments in west London have been temporarily delayed after the grid reached full capacity.
Committee chairman James Small-Edwards said energy capacity was a “real constraint” on housing and economic growth in the city.
In 2022, the General London Assembly (GLA) began investigating delays in housing developments in the boroughs of Ealing, Hillingdon and Hounslow – after it received reports that completed projects had been told they would have to “wait until 2037” to receive electricity connections.
There were fears that areas may have to “pause new housing construction entirely” until the problem is resolved.
But the GLA found short-term solutions with National Grid and energy regulator Ofgem to ensure the “worst-case scenario” did not happen, although several projects were still delayed.
The strain on parts of London's residential sector has highlighted the need for “long-term planning” for the grid's future capacity, the report said.
He added that while data centers accounted for less than 10% of total UK electricity demand last year, this figure is expected to rise to 600% between 2025 and 2050.
It was estimated that the energy consumption of one typical data center was similar to that of approximately 100,000 households.
Figures courtesy of BBC News In August it was revealed that there are currently around 447 data centers in the UK, with this number set to increase by around 100 over the next few years.
More than half of new data centers are planned to be built in and around London.
Andrew Dakers, chief executive of industry body West London Business, told BBC News the area prides itself on hosting “so much digital technology and investment” but there are challenges.
“National Grid is currently planning to try to provide 7GW of additional capacity in west London by 2037,” he said. “Our request is that this happens faster… 12 years is too far away. The demand is here and now.”
Rhodri Williams, technical director of the Home Builders' Federation, told BBC News it was “very important” the government made sure there was “adequate investment” in the supply chain to support housebuilding.
Among its list of recommendations, the committee suggested introducing a separate scheduling category for data centers to allow for better coordination of energy use.
A government spokesman told BBC News it was exploring “tailored options”, including through the AI Energy Council, to support data centers and the housing sector.
The report also calls on London Mayor Sir Sadiq Khan to include a dedicated data center policy in the next London Plan.
A spokesman for the mayor told BBC News they were working to include in the next London Plan “how best to meet the need for data centers in London” and would “carefully consider” the report's recommendations.
“Under Sadiq we have seen more new council houses being built in London than at any time since the 1970s, and before the pandemic more new homes were built in London than at any time since the 1930s,” they added.
Additional reporting by Jess Warren.
