Britain Is Racing to Build Data Centres. Can It Build Them Sustainably?

Artificial intelligence has been evolving so rapidly that its current iteration was unthinkable five years ago. What began as a rudimentary technology has matured within the last few years into a technology capable of reshaping entire industries and is slowly being integrated into every aspect of life. Whether this genuinely amounts to geopolitical power, or simply the appearance of it, is a matter of debate. For some, the country that controls the most powerful iteration of AI is not simply a technology leader, it is a geopolitical one. For others, that dominance says more about a country's tolerance for capital, risk and environmental cost than it does about power itself. That is to say, a show of strength rather than a source of it.

With the latest news that the most advanced AI model in existence has been hosted on American soil, (and only just recently been released for foreign use after a long embargo) the US has established itself as the dominant force in what many governments are now openly describing as a global AI arms race.

That dominance is not accidental. It is in large part a function of infrastructure, capital, and a willingness to disregard environmental and social risk. The United States has built data centres at a scale and speed unmatched anywhere else, giving its tech companies the computing power needed to train and deploy the models that currently define the frontier.

The global race to build AI infrastructure has now put a once obscure piece of plumbing at the centre of economic policy, the data centre, and the UK government wants Britain to be a leading destination for this build out, setting out plans to expand the country's data centre capacity many times over by 2030.

However, the practical question for the UK is the same one membership bodies face with any infrastructure boom. Can this be built without breaking the country's climate commitments, or does growth have to come at sustainability's expense?

How Big Is the Build-Out?

The scale of what is being proposed is considerable. According to the National Energy System Operator (NESO)'s Clean Power 2030 plan, UK data centre electricity demand is expected to roughly quadruple this decade, from around 5 terawatt-hours today to 22 TWh by 2030. Additionally, according to the evidence that NESO gave Parliament, data centre developers have lodged grid connection requests totalling more than 70 gigawatts through to 2039, against roughly 5 GW currently expected to actually connect by 2030.

Not only is this shift an expensive one, requiring £100 billion in private investment, it is also an energy intensive one. A single 500 MW hyperscale facility (standard size for the largest data centres) consumes roughly 4.4 terawatt-hours of electricity a year, which according to Ofgem is enough electricity to power 1.7 million UK homes.

Set against that, data centre developers have already lodged grid connection requests totalling more than 70 gigawatts through to 2039. Therefore, the pressure on the system is not hypothetical or distant, it is slowly becoming our reality.

Solutions to the Water and Energy Crisis.

Data centres are both energy and water intensive, and in the UK both pressures are converging fast. Data centres in the UK now consume around 6% of national electricity, and the 140 proposed data centre schemes currently in the pipeline could require 50GW of electricity, which is 5GW more than the UK's current peak demand and which regulators warn poses a serious threat to grid decarbonisation.

At the same time, 84% of proposed UK data centres are set to be built in areas that are already water stressed or projected to become so by 2040, much of it because facilities default to drawing straight from mains drinking water.

But solutions to both problems already exist and are proven at commercial scale. Direct-to-chip immersion liquid cooling sharply cut the electricity needed for cooling compared with conventional air conditioning, while captured waste heat can be reused rather than vented. With regards to water, 51% of surveyed English data centres already use waterless, closed-loop cooling systems, and as a result 64% of sites consume less than 10,000 cubic metres of water a year.

Borehole systems offer one route to easing pressure on mains water by drawing directly from underground aquifers, bypassing the energy intensive treatment process that mains supply requires. This is not without risk, as groundwater levels across many parts of Europe are already in decline, driven by a combination of climate change and increased abstraction. This is why the industry standard should be to make the use of boreholes conditional to water safety and aquifer levels and exposure to climate change, thanks to rigorous, site-specific groundwater assessments, so that water is only drawn where local recharge rates can genuinely support it.

Geothermal "cold thermal storage" systems point in a similar direction, storing water underground during off-peak periods and pumping it back up when needed, cutting both water consumption and peak electricity demand without placing additional strain on stressed water sources.

So, the gap here becomes a regulatory issue. Only two-fifths of UK operators currently even track their water use, and turning these existing technologies into mandatory standards, rather than optional best practice, is what would let the UK's data centre sector keep growing without exacerbating the country's energy and water strain, already increasing hugely because of climate change and the global energy crisis.

The EU Model.

The UK does not need to invent a solution to this from scratch, because a working model already exists within the EU.

Under the EU's recast Energy Efficiency Directive, every data centre in the block with at least 500 kilowatts of installed IT capacity has had to publicly report its power usage effectiveness, water usage effectiveness, energy reuse and renewable energy factor every year since 2024. This data will feed into a common database the European Commission is now using to build an EU-wide sustainability rating scheme, expected sometime next year.

Ireland, the EU country most exposed to data centre growth, has gone further still. Its energy regulator's December 2025 decision requires new data centres to source at least 80% of demand from additional Irish renewables within six years of connecting, as a binding condition of grid access rather than a voluntary pledge.

This matters for UK policy because Britain is already moving to align more closely with EU environmental frameworks elsewhere. Following the May 2025 UK-EU summit, both sides agreed to work towards linking their emissions trading schemes, with negotiations beginning in January 2026 on the principle of "dynamic alignment", the UK committing to keep pace with evolving EU carbon market rules, in part to avoid the EU's carbon border tax, worth up to £800 million a year to UK exporters.

It is now time to start extending similar thinking to data centre energy and water standards as they continue to be built at a rapid pace which would be the logical, next step for the UK.

How to Contain the Damage.

The development of AI is in no way sustainable. It puts additional strain on a carbon budget that close to being exhausted, on water that’s under increasing and concerning pressure from climate change, on energy systems which need to allocate new renewable energy to existing demand, not new demand, and on a grid that’s already struggling to support the electrification of end-uses (from industry to households).

However, considering that the race is happening regardless and that AI is developing faster than regulation can keep up, the UK needs to adopt a damage containment strategy, to avoid AI being the final straw to break the camel’s back.

First, the UK needs to consider its position in the AI race and distinguish which kind of projects make sense to develop and which ones should be avoided. Where the “avoid, shift, improve” sequence applies to energy, debates on AI tend to focus on “improve” only even though there is significant margin for maneuver in the other strategies. To avoid building data centres altogether, government needs to consider must-haves vs. nice-to-haves. We recommend a three-tiered approach to identify whether it makes sense to build on UK soil: 1) onshore and UK-controlled for defense, intelligence and critical infrastructure, 2) jurisdictional control but flexible location for regulated sectors e.g. health, finance and 3) everything else e.g. consumer-facing genAI. Then there is the training vs. inference lens, where data sensitivity, strategic importance and the case for jurisdictional control and geographical location may also vary.

It is also questionable whether the UK should host non-essential compute alone, given the scale of resources the race demands as UK energy costs could be several times those of the Nordics. There is a case for securing non-essential computing power through Europe instead: the EU's AI gigafactory programme entered procurement this year. Thankfully, this is an avenue that the UK is already actively pursuing, by hosting an AI Factory Antenna linked to the EuroHPC network — an existing hook for deeper coordination.

Last but not least on avoidance, model size and application can also determine the necessary computing power and the number of data centres that should go with it. When it comes to improving AI’s footprint, what's missing isn't new technology or policy innovation, it's the political will to make sustainability requirements mandatory while the rules are still being written.

Mandatory reporting of energy and water performance already applies to data centres across the EU. Introducing the same transparency in the UK would impose little extra burden while giving regulators, investors and communities information they currently lack. Likewise, attaching renewable energy requirements to AI Growth Zone and Nationally Significant Infrastructure Project status, rather than relying on voluntary developer commitments, would be a modest policy change, not an overhaul.

The opportunity is to act now, while the National Policy Statement for data centres is imminently being consulted on. Embedding sustainability from the outset is far less disruptive, and far less exposed to legal challenge, than retrofitting it once facilities are already built and connected.

For associations, this is a familiar challenge playing out in a new context. Infrastructure is growing rapidly to meet real economic demand, but sustainability standards are struggling to keep up. Developers need certainty to plan and invest, communities have valid concerns about the pressure on energy and water resources, utilities need years to prepare for future demand, and the country needs to stay on track for its Nationally Determined Contributions (NDC) under the Paris Agreement, a target it is not currently on course to meet. Balancing these competing priorities isn't straightforward, and that's where associations can help.

Associations are well placed to help members track emerging good practice, contribute to consultations on planning reform and Growth Zone policy, and show that enforceable standards deliver investor certainty and environmental protection together, not as competing goals, but as mutually reinforcing ones.

This is one of the core goals of Climate Action for Associations (CAFA), the global resource and network dedicated to net zero and sustainability for the membership sector which can provide the necessary support membership bodies need. By joining our free membership, you can access the frameworks and support to guide members into leaders. Join us today.