Energy shortage: How data centres are blocking housebuilding

Almost as fast as data centres are built, they’re filled; the vacancy rate in London’s data centre providers is less than 10%, according to Cushman & Wakefield, who analyse the data centre market every year.  

And more data centres are planned for the capital. London tops Cushman & Wakefield’s list of cities where future facilities are planned, with around 425 megawatts of capacity currently under development – nearly 50% more capacity than the second-placed market, Washington DC. Building data centres is quicker than building housing, meaning the situation will only get worse unless infrastructure developers step in.

“A quick and concentrated expansion of demand from a localised growth in data centres, far higher than forecast” is to blame, says a spokesperson for the Energy Networks Association, the industry body representing gas and electricity transmission and distribution network providers. 

 “Data centres tend to build in the same places, so you get high concentration,” Clifford says. “Latency is a huge driver, as is speed of connection. Ultimately, these places are there for data: it’s about how quickly can you move data from one place to another.”

In short, if people want to have ultrafast broadband connections, those data centres need to be close to homes.  

The GLA has advised house builders that they will have to wait a decade to start building again. Scottish and Southern Electricity Networks, which runs London’s electricity distribution system, alongside National Grid, have said they’re working on upgrading the existing electricity network to meet the extra demand that our data-intensive, plugged-in society calls for.  

But the ban on building is particularly problematic because these three boroughs where new housing developments have been halted accounted for approximately one in 10 new homes built in London in 2019/20. The finger has been pointed at data centres hoovering up all the electricity in the area. “Everyone’s trying to use that capacity,” says Flucker. 

Flucker says people may not grasp quite how important it is that those data centres exist. “I think people are very unaware of how much they do depend on data centres, because you’re using your app, and most people are not really aware of what underpins that,” says Flucker. “It’s all of this infrastructure.” 

“It’s like spraying yourself with a water mist. It’s constantly drawing water”

“The grid is old, and the government and country haven’t invested in more power,” says Clifford. Some data centre operators are starting to run their own off-grid sources of power, such as natural gas, exporting the excess energy created to the National Grid.  

As for water, the US Geological Survey suggests that data centres in the United States use 660 billion litres of water a year – a huge problem for a scarce resource. “It’s like spraying yourself with a water mist,” says Clifford. “It’s constantly drawing water.”

Clifford is seeing more local moratoriums on water use that are pushing data centre designers and builders to move their infrastructure elsewhere or to change their design entirely. “You don’t have to use water in the way that would impact the local community,” says Clifford. Although water “reduces your energy consumption and your carbon footprint.”  

Clifford says conversations are taking place about the potential of co-locating data centres near to newly-planned nuclear plant sites to reduce the impact on the grid further downstream, as well as looking at more off-grid solutions. They’re also considering locating data centres closer to where the vast undersea cables that connect us digitally to each other make land, reducing latency there, rather than close to the end user. 

It’s because of end user demand that we’ve previously placed data centres so close to population centres. “It’s easy to create an enemy when you don’t recognise that you’re part of the problem,” says Flucker. “But at the same time, data centres have to curb their consumption. There’s a climate emergency, and we’re all being forced to act more sustainably. And it’s right that we are.” 

Some experts are suggestion the waste heat from data centres should be used to heat homes. “Tower Hamlets... is the data centre capital of the UK,” Antony Meanwell, E.ON’s head of decarbonisation for its City Energy Solutions division told City Monitor. “There’s potentially enough waste heat that could be captured and repurposed to heat the entire borough.” 

In Europe, some countries are attempting just that. In Sweden, Stockholm Data Parks has a goal to meet 10% of the heating needs of Stockholm by 2035, while in the Netherlands, Switch Data Centers is looking to divert 97% of server heat to homes and offices. In Helsinki, Microsoft has partnered with Fortum on plans to heat 40% of its 250,000 customers using a data-centre heating system.

On the Microsoft partnership, Sanna Marin, Prime Minister of Finland, said “The decision to invest in a data centre that also provides surplus heat to our cities and homes is a win-win. The collaboration can serve as a model to other countries and cities looking to achieve the double transformation of climate neutrality and digital competitiveness.”