Plans to significantly expand data centre infrastructure has been highlighted as a growing factor in the delaying of housing delivery in London, according to a new local government report.
In a new report, the Planning and Regeneration Committee of the London Assembly warned that rapidly growing electricity demand in London, driven substantially by the expansion of data centres, is delaying promises to deliver new housing.
The report notes that since 2022 parts of London, in particular West London areas such as Hillingdon, Hounslow and Ealing, have been at full electricity grid capacity, prompting a temporary halt in new housing developments.
Responding to this, the London Assembly has been working with stakeholders including National Grid and Ofgem to secure short-term fixes.
Though progress has been made, energy-intensive data centres are set to contribute to a forecasted 200 – 600% increase in long-term electricity demand in the UK capital.
The committee has therefore called for a series of policy reforms to balance long-term energy development needs in London, including a recommendation that the government introduces a separate use class for data centres to aide coordination in planning.
Other recommendations include the Greater London Assembly’s Infrastructure Coordination Service (ICS) publishing the results of data centre forecasts promptly and the Mayor of London prioritising retrofit funds for social housing and key infrastructure to reduce energy cost burdens on low-income households.
“London is at a critical moment, with energy capacity becoming a real constraint on both housing delivery and wider economic growth,” said James Small-Edwards, chair of the Planning and Regeneration Committee.
“Through this investigation we heard from councils, developers and residents about the delays, uncertainty and long-term risks posed by ongoing grid constraints. As demand for power rises, particularly from large energy users like data centres, we need a clear, strategic and long-term approach.
“The recommendations we’ve set out are an essential step towards managing these pressures fairly and ensuring London has the infrastructure it needs to support new homes and a growing economy.”
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