Potential implications of the data centre covenant

Ministerial control centre

The government will establish a new ministerial control centre for considering supportive action for strategic data centres. This will be chaired by the minister for AI and supported by other ministers and departments. It's intended to use the power of the state to accelerate power connections and speed up the planning process for the most strategic data centres.

Credible commitments and sustainability

“Data centres will … be expected to make credible commitments for the grid capacity they request, support security of supply, investment in clean power and net zero, use resources responsibly and support an efficient, flexible, and resilient energy system.”

We haven't seen any detail on what this may mean yet, but it suggests greater policy support for requirements monitoring development progress and carbon offsetting obligations among other things.

Prioritising power connections for strategically valuable data centres

For sites that demonstrate sufficient strategic value the government will:

• Prioritise strategically important demand projects, including data centres, by reserving future capacity and reallocating capacity released when other projects leave the connections queue – in effect, this could move some data centres into a "fast lane".

• Work with NESO and the network companies to identify locations where capacity may be available before 2030 and (possibly) use Planning and Infrastructure Act powers to enable strategically important data centres and other strategically important projects to access this capacity – this could make the ‘fast lane’ faster.

• If needed (ie if other measures don’t speed up power connections for strategically important data centres enough), facilitate transfer of pre-2030 data centre connections contracts to strategically important data centres – essentially this amounts to a "queue-jump" in favour of some data centres.

• Develop a framework for "exceptionally strategic projects" to permit temporary on-site power generation to bridge the gap to grid connections.

“The government will set out further details in due course on the definition of strategic data centres and the additional criteria such projects will be expected to meet.”

Other power related measures include:

• “Strategic alignment of data centre grid connections to regional infrastructure targets beyond 2030, informed by the ALIGN spatial planning tool, to secure vital capacity while balancing the needs of the energy system and other relevant constraints including water and land.”

• Supporting “implementation of Ofgem’s data-centre commitment fee and queue management measures to deter speculative demand, and free up connection capacity for viable projects.”

• Supporting “greater choice for developers to self-build connection infrastructure.”

Local benefit plan for NSIP data centres

“Communities that host nationally important infrastructure should share directly in the rewards. Strategic data centres should agree a local benefit plan that commits to substantial investment, developed with the local community and linked to the development’s size.”

In general, the data centre covenant policy states that the term “strategic data centre” will be defined in more detail in due course but, in the context of local benefit plans, that reference to “nationally important infrastructure” suggests the term is intended to refer specifically to any data centre which is developed under the national significant infrastructure project (NSIP) regime rather than via the traditional planning application route.

The policy suggests data centres that go via this consenting route will be required to make extra contributions/commitments to benefit the local community –

“Developers must already meet planning requirements such as Section 106 and the Community Infrastructure Levy, which fund local infrastructure needs like transport networks and other community assets. Strategic data centre developers will be required to go further…”

This is accompanied by a draft national policy statement for data centre NSIP applications.

Data centre national policy statement

The government has published a draft data centre national policy statement (NPS) for consultation, which sets out the decision-making framework for data centre projects seeking development consent through the NSIP regime. The draft NPS identifies the assessment principles for applications considered to be nationally significant to receive development consent through the NSIP process and outlines the generic potential impacts and considerations for applications.

In theory, the NSIP consenting regime is meant to be quicker and more streamlined than the traditional planning route, with reduced scope for successful third party challenge.

Energy/water efficiency

• A minimum energy efficiency standard – “New facilities designed to achieve a power usage effectiveness of 1.3 or better”

• A requirement to minimise water demand – “Minimise demand for public water supplies by using technologies such as closed loop water systems”

• Local heat networks – “Design projects to capture and reuse waste heat where there is a viable local user”

• Reporting – “Strategic data centres should report annually on their energy and water use, efficiency, emissions, heat reuse and participation in flexibility services, and we will strongly encourage existing operators to do the same”

AI growth zones

Although it isn't a new commitment, the government is re-committing to the continued delivery of its five AI growth zones in Oxfordshire, South Wales, North Wales, North Tyneside and Lanarkshire to accelerate planning and infrastructure delivery for AI capacity.

Jobs and prioritising UK suppliers

“Developers should create good, well-paid jobs that last beyond construction. They should recruit locally where possible and invest in apprenticeships, colleges and universities. Where roles cannot currently be filled locally, they should invest in education and training to enable more local people to access these opportunities in the future.”

This suggests an extra emphasis on local employment and training strategies/requirements in planning conditions and s.106 agreements.

“The most strategically important data centres will be expected to make a meaningful contribution to the development and deployment of British AI hardware in the UK.”

We haven't seen any detail on what this may mean yet.

Strengthening UK data security

• “Provide secure and reliable access to compute the UK needs, including for our NHS and other public services.”

• “Work with the relevant national technical authorities… to enhance resilience against cyber and hybrid threats”

• “Provide secure, resilient UK access to compute for critical services and national priorities.”

• “As critical national infrastructure, operators should share relevant information with government and technical agencies, meet current and future cyber resilience standards and work with the relevant national technical authorities to strengthen security and resilience further.”

These appear to be operational requirements rather than planning requirements linked to data centre consenting, but they may have an impact on design and specification requirements.