Yalena Coleman, director of digital strategy and transformation at Buro Happold, explores the current pressures on urban infrastructure and planning systems, alongside the major potential opportunities if data centre demand is navigated properly
Artificial intelligence is rapidly changing the scale of demand for digital infrastructure. Language models are powered by mass volumes of data, making data centres one of the defining pieces of infrastructure supporting the modern economy. As the UK pursues its ambition to become a global AI leader, London, which is already home to around 80% of the country’s data centre capacity, sits at the centre of this ecosystem.
A new evidence-based report Buro Happold developed in collaboration with the Greater London Authority (GLA), London’s Data Centre Future Growth Forecasts and Strategic Insights, shows the sector is estimated by TechUK at £4.7bn GVA today and holds a further £44bn potential to be unlocked by 2035 across the UK. If it follows the trend in demand, London is well positioned to become a global leader in AI. The mayor of London’s ambition is for London to be a global leader in sustainable data centre innovation, whole-city coordination, climate resilience, responsible AI, housing protection and benefits for communities.
The report noted that this sector’s projected demand creates unprecedented pressure and requires coordinated infrastructure planning. So how do we unlock the opportunities data centres provide in a sustainable, balanced way?
London’s evolving AI demand
As a global centre for business, finance, and technology, London sits at the heart of many of the workflows underpinning the AI economy. Data centres are well served in dense urban environments by established fibre networks and connectivity, yet these same areas face growing pressure on land, energy, and water resources, escalating competing tensions.
Urban areas already have high and growing energy, water, and land use demands, before adding the requirements of increasing digital infrastructure to the mix. The first-of-its-kind report sought to understand data centre demand in London to provide an evidence base for future data centre policy development in the GLA area, offer an outlook on expected utility growth, and inform local area energy plans.
The power problem
One of the most significant resourcing constraints is electricity infrastructure. Data centres run high-performance, high-density servers around the clock, which requires significant power. Cooling and security also demand further energy to ensure safe, reliable operation.
London’s electricity infrastructure is emerging as a major bottleneck. Existing facilities operate on around 1GW of power capacity, yet projected demand could potentially require a further 8-11GW by 2050 – a tenfold increase. While major European cities with more dispersed demands have grid connection queues of 3-7 years, London’s now span from 7-13 years.
System-level challenges
The power problem is only one piece in a complex puzzle – in fact, the crux of the challenge lies in the layered urban systems underpinning digital infrastructure. Data centres depend on multiple physical systems operating together beyond electricity: access to suitable land, fibre connectivity, and water resources. Good planning needs to be at a regional scale, because the interaction between fibre routes, grid access, cooling, transport corridors and employment land cannot easily be resolved site by site.
Each of these systems is managed through different regulatory frameworks and sectors. If coordination between utilities, planning authorities, and the data centre market remains fragmented, we risk inefficiency and reduced London’s potential for AI output, and may also create constraints in other areas such as housing or logistics. Without adequate coordination, positive outcomes such as data centre waste heat for uses in areas such as housing or urban agriculture may be overlooked or poorly planned. Whether cities can attain sustainable, long-term digital growth will depend on their ability to align infrastructure systems.
London’s infrastructure potential
The capital’s data centres are currently concentrated along an East-West corridor stretching from the Isle of Dogs and extending west beyond Greater London, towards Slough. These clusters have developed in areas which have already seen decades of investment in fibre connectivity, electricity infrastructure, industrial land, and digital ecosystems. The Isle of Dogs, for example, was developed around telecommunications infrastructure and international connectivity, whilst West London has access to strategic power assets and connectivity along the M4 corridor.
Today, projected growth includes these existing corridors as areas for further development. The scope for this rising industry in London is promising, but it needs coordinated, systems-level planning.
A more coordinated approach
As data centre demand grows, planning decisions should not be made on a site-by-site basis alone. The report highlights growing competition, particularly within Strategic Industrial Land designations in key growth areas, such as Hayes and Park Royal, where vacancy rates remain extremely low.
In addition, the Environment Agency has already classified Greater London as ‘seriously water stressed’, adding another layer of complexity to planning for data centres.
Data centres sit at the intersection of multiple, independently functioning systems. To avoid blind spots, utility companies, planners, and developers need to work in tandem and align on priorities and timescales.
The GLA is spearheading this coordinated approach in its draft London Plan. Drawing on the report’s findings, it proposes a clearer planning framework that encourages boroughs to proactively identify suitable locations for data centres, support development where sites meet strategic criteria, and work collaboratively across London and neighbouring authorities to accommodate future demand. This both provides greater certainty for operators and acknowledges the need for resilient infrastructure and long-term capacity planning.
It’s also critical to ensure new data centres deliver wider benefits through heat recovery, energy and water efficiency measures, renewable power integration, and community investment. If executed well, London can be a leading case study for major cities facing similar concerns about sustainable data centre growth.
Support for sustainable growth
This London-led report offers a methodology for calculating demand and its impact on infrastructure that cities navigating AI-driven growth will need to consider. As demand accelerates, the challenge around data centres is increasingly about aligning the infrastructure systems needed to support them.
The most successful projects and cities will be those that can identify opportunities to coordinate energy, land, water, and digital infrastructure to capture AI’s economic opportunities. Taking a long-term approach to data centre growth is critical to ensure planned, sustainable growth.
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