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On 18 March 2026, we hosted the latest seminar in our Chasing Zero – Energy Transition series, focusing on one of the fastest‑growing and most strategically important sectors in the UK infrastructure landscape: data centres.
The seminar was chaired by Irina Akentjeva (Partner, HSF Kramer) and brought together expert insights from Matthew Harris, (Chief Financial Officer, Kao Data) Giles Newton (Managing Director, Arcform), Robbie McColl (Investec) and Ben Worth (Counsel, Global Switch), who discussed the rapidly evolving pressures on power availability, grid capacity, financing and sustainability within the UK data centre market.
The panel explored the growing opportunities and pressures facing developers and operators amid accelerating demand from cloud, AI and other digital services, with several key themes emerging:
- Power availability and grid capacity
The panel highlighted that securing reliable power remains the key barrier to data centre development in the UK. Long grid connection queues, uncertainty around energisation dates and high electricity prices continue to affect investment confidence. The UK has some of the highest power costs in the OECD, and developers with viable projects remain trapped in queues behind speculative applications.
While reforms are under way, the UK grid is not yet able to accommodate the scale and speed of demand being driven by AI and digital infrastructure.
- A shifting geographic landscape
Grid constraints in the South East are prompting developers to consider new regions, including Manchester and the North East. However, international comparisons show that other jurisdictions such as the US, Nordics and France benefit from faster grid delivery, lower costs or naturally lower‑carbon power sources, making them increasingly competitive destinations for large‑scale deployments. That said, the UK remains attractive for AI investment, given the customer base, connectivity, and the low-latency requirements of iterative AI workloads that need to be geographically close to end users.
- Financing considerations
From a financing perspective, grid connection risk remains a central concern (lenders strongly prefer projects where the connection element is substantially progressed) and performance across sustainability markers is becoming central to underwriting decisions. Lenders are paying close attention to the certainty of grid connections, long‑term power strategies and environmental credentials such as PUE and renewable energy sourcing.
Developers, in turn, are adopting more sophisticated approaches to power procurement, including long‑term energy contracts, private wire options and on‑site generation.
- Supporting net zero goals
The discussion acknowledged the tension between rising digital demand and the UK’s net zero commitments. Although renewable generation is growing, delivery timelines and network constraints continue to create challenges. The panel emphasised the importance of innovation and policy support to ensure that data centres can grow sustainably while contributing to the UK's wider decarbonisation ambitions. For example, data centres are increasingly being integrated into regional energy networks and can help provide flexibility to the grid, as well as contribute waste heat to heat networks.
- Emerging solutions
A range of potential solutions were discussed, including greater use of private wire and behind‑the‑meter arrangements, co-located flexible generation, battery storage and increased digitalisation across the grid. While not a silver bullet, such arrangements are proving attractive in markets like Singapore, the US and the Netherlands. These represent important tools in easing pressure on the network and supporting future growth.
Conclusion
Despite the challenges, the panel remained optimistic about the UK’s position as a leading market for digital infrastructure. Once energised, the British grid is generally considered very stable. The panel noted its inherent conservatism - while the grid may not push tolerances as far as some would like, it delivers reliability. Continued regulatory reform, innovation in power strategy and close industry–government collaboration will be crucial in ensuring the sector can expand responsibly while supporting national net zero goals.
Our next event in the series will explore the future of gas, examining the key developments shaping today’s market. The discussion will focus on the factors driving change across the sector. Please stay tuned for further details.
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