Data centres and battery storage: Real estate planning challenges and policy trends in the UK

As the UK continues to digitise and decarbonise, real estate developers and investors are seeing growing demand for land and infrastructure to support data centres and battery energy storage systems (BESS). However, planning policy and local authority responses have not always kept pace with the technical and locational needs of these emerging asset classes.

This article explores the UK government’s evolving stance and the implications for real estate planning and development.

Data centres: Planning pressure meets policy reform

Locational needs and site constraints

Data centres require highly specific site conditions: proximity to fibre optic networks, grid capacity, and low flood risk, alongside good physical access and security. However, many sites, particularly around London, face severe planning and grid constraints. In outer boroughs and the Thames Valley, speculative schemes have stalled due to a lack of available electrical capacity and resistance from local planning authorities unfamiliar with the sector’s requirements.

Planning classifications and development rights

Currently, data centres do not benefit from any bespoke planning use class or permitted development rights. Local planning authorities can have different views on whether data centre use falls within Class B8 (storage and distribution) of the Town and Country Planning (Use Classes) Order 1987 or whether it is sui generis (ie, falls outside of any of the existing use classes), which creates uncertainty during the planning process, especially for mixed-use schemes. Developers often need to apply for bespoke planning permission for data centre use or otherwise justify the use, which slows down project timelines.

To address this, the government has begun to signal support for treating data centres as critical digital infrastructure, encouraging local authorities to take a more supportive approach. The London Plan 2021 recognises the importance of digital infrastructure, and reforms to the National Planning Policy Framework (NPPF) have explicitly required councils to identify suitable locations for data centre development.

Policy recognition in the revised NPPF

Historically, the NPPF did not explicitly mention data centres, leading to uncertainties in planning decisions. However, the revised NPPF, published in December 2024, has started to acknowledge their significance:

• Strategic importance: The updated NPPF recognises data centres as critical to economic growth and digital infrastructure.
  
  
• Planning support: Local planning authorities are now encouraged to identify suitable sites for data centres in their local plans and to support such developments in decision-making processes.
  
  
• NSIP consideration: While data centres are not yet formally included in the Nationally Significant Infrastructure Projects (NSIP) process, the government has indicated openness to this possibility in the future.

Land value and competition

The real estate market is also adjusting. Land suitable for data centres is becoming increasingly competitive, particularly in green belt-adjacent industrial areas. In regions like Slough and West London, traditional logistics developers are now competing with tech investors, driving up land values and prompting discussions around "zoning" reform.

Battery storage: Planning bottlenecks in the energy transition

Land use and location planning

Battery energy storage systems (BESS) are now a critical component of the UK’s net zero strategy. From a planning perspective, these projects are often located on agricultural or brownfield land near substations. While technically modest in built form, BESS schemes can still trigger local resistance due to safety, environmental, or visual concerns.

There is no dedicated planning class for BESS. These schemes are generally determined at the local level unless they exceed 50MW in England or 350MW in Wales, in which case they fall under the Nationally Significant Infrastructure Projects (NSIP) process. However, the 2020 amendment to the Planning Act 2008 has eased this threshold, encouraging more battery storage projects to proceed through the typical planning route. The Planning and Infrastructure Bill, which is currently making its way through Parliament, also includes more powers to disapply the need for development consent to allow use of the typical planning route.

Continued ambiguity in national policy

In contrast to data centres, BESS still lack explicit mention in the NPPF:

• Indirect inclusion: The NPPF discusses renewable and low-carbon energy developments, but it does not specifically reference BESS.
  
  
• Planning challenges: This omission leads to inconsistencies in how local authorities handle BESS applications, often resulting in delays and varied requirements.
  
  
• Calls for clarity: Industry stakeholders have advocated for clearer national guidance on BESS to streamline planning processes and support the UK’s net-zero goals.

Planning risks for developers and landowners

Planning risks remain a key consideration for landowners entering option agreements or leases with battery developers. Issues such as fire safety concerns, community objections, and lack of planning precedent can delay or derail schemes. Landowners should seek legal advice on termination rights, timeframes for achieving consent and provisions for decommissioning and reinstatement.

A growing number of local planning authorities are now producing local guidance notes for energy storage, but a more unified national approach would provide certainty for both developers and real estate stakeholders.

Policy momentum and opportunities for real estate professionals

The National Infrastructure and Service Transformation Authority (NISTA) and the Department for Energy Security and Net Zero are pushing for a more integrated infrastructure planning strategy. For real estate, this opens opportunities in site assembly, promotion and long-term investment. The Planning and Infrastructure Bill, which enters the report stage from 9 June 2025, aims to encourage the rollout of Long Duration Electricity Storage (LDES) installations through a cap and floor revenue support scheme. This scheme, jointly developed by the government and Ofgem, is designed to help developers manage the substantial capital investment and extended construction timelines typically associated with LDES projects.

Key policy trends to watch include:

• Formal recognition of the strategic role of data centres in the revised NPPF.
  
  
• Ongoing ambiguity around BESS and the need for clearer national guidance.
  
  
• Integration of digital infrastructure into Local Plans, particularly in growth corridors and enterprise zones.
  
  
• Standardisation of planning conditions for battery schemes to reduce variation between local authorities.
  
  
• Grid connection policy reform, which will affect development feasibility and timing.

Conclusion

Real estate planning for data centres and battery storage schemes sits at the intersection of energy, technology, and land use policy. As the UK seeks to modernise its infrastructure, planning policy and the statutory framework underpinning it must continue to evolve to accommodate and plan for these emerging asset classes. Developers and landowners should stay ahead of policy developments and engage early with planning authorities to mitigate risk and unlock the full potential of this fast-growing market.

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