Credit: iStock – Andrey Semenov
An On the wire story
Data centre developers have welcomed the UK Budget’s new Data Centre Covenant, but critics say the government has yet to prove that the policy will deliver meaningful change on energy use, water consumption and local opposition.
Chancellor John Healey used the Budget to set out a framework aimed at speeding up access to grid connections for strategically important facilities, while tying that support to commitments on local investment, jobs and the protection of water supplies.
A new ministerial control centre, chaired by the minister for AI, will evaluate and determine which commercial and AI data centre projects qualify as having ‘sufficient strategic value’ under the new covenant framework. (See panel: ‘Proposed measures for strategic data centres’.)
The Covenant sets out tests that all data centres are encouraged to meet, but developers of strategic data centre must meet the new criteria if they want to qualify for proposed government support and assistance.
The tests include data centres absorbing their fair share of energy costs, rather than increasing the burden for households and businesses
Strategic data centres need to agree a Local Benefit Plan that commits funding for the local community. They should also report annually on their energy and water use, efficiency, emissions, and heat reuse. Developers should also create good, well-paid jobs lasting beyond construction
All data centres should use energy and water efficiently, with new facilities achieving PUE of 1.3 or better. Demand for water should be minimised using technologies such as closed-loop water systems, and waste heat should be used if there are local customers.
Proposed measures for strategic data centres
- Reallocating grid capacity from departing projects in grid connection queue to strategic projects
- Reserving future grid capacity for strategic projects
- Identifying pockets of spare capacity and allocating it to strategic projects
- Facilitating earlier connections
- Allowing temporary on-site generation for ‘exceptionally strategic projects’ under a tightly controlled framework.
Legal and industry briefings published alongside the Budget suggest that the details remain unsettled. Pinsent Masons and Tech UK both said the definition of a strategic data centre is still unclear, as is how the government will decide which schemes qualify for priority treatment.
Mehraj Abdal Enus, senior associate – commercial property at law firm VWV, suggests that while the announcement is a positive step to avoid economic missed opportunities, the lack of rules could lead to a ‘wild west’ scenario. He said: ‘In my opinion, the UK needs to grab that surfboard but more rules are required to make sure we do not experience a wipeout.’
Colin Rees, co-lead of consultancy at IES, argues that the Covenant must go beyond voluntary commitments to ensure efficiency. He said: ‘The Data Centre Covenant should attach a clear performance obligation to preferential grid access. Any data centre seeking priority access to constrained electricity infrastructure should have to demonstrate, through independent verification, that it will use that capacity efficiently.’
Rees also said transparency is not enough, stating: ‘Publishing consumption figures alone does not establish whether a facility is efficient. Government should set measurable performance requirements and specify consequences for failure.’
Most of the Covenant measures form part of existing policy and regulatory initiatives and consultations, in particular the Ofgem consultation Accelerating electricity network connections for strategic demand, which the government responded to on the day of the Budget.
References
Main reference: Energy Voice [1]
• This On the wire article was created using Noahwire AI and reviewed by CIBSE Journal’s editorial team
