Data centres are the foundation of AI economies and, as such, will be hugely important for the UK’s AI ambitions. This report sets out how to ensure the UK's energy system can meet the power demands of the technological revolution.
Key points
- AI could contribute significantly to GDP, with estimates of a 7% increase globally over a decade. Generative AI adoption could boost worker efficiency by up to 40%, and it is driving advancements in pharmaceuticals, finance, and other sectors.
- AI relies on extensive computational power, primarily provided by data centres. The UK is currently Europe’s leader in data centres and generative AI start-ups but faces increasing competition.
- There are a number of challenges facing the UK’s AI compute capacity:
- Energy constraints: Electricity grid constraints, high electricity costs, and lack of low-carbon energy alternatives make the UK less competitive.
- Planning delays: The process for approving new data centres is slow, lacks clarity, and faces local opposition.
- Global competition: Countries like Norway, Canada, and Singapore are implementing national strategies to attract data centre investment.
Recommendations
- An energy strategy for data centres: Support Small Modular Reactors (SMRs) and adopt a fleet-based approach to nuclear power for a long-term, stable energy supply. Also, reform the electricity market through locational pricing to encourage investment cheaper energy alternatives.
- Expand public and private investment in AI infrastructure, similar to Canada’s $2 billion AI Compute Strategy.
- Streamline planning regulations: Classify data centres as Nationally Significant Infrastructure Projects (NSIP) to expedite approvals. The government could address local opposition through incentives and better integration of data centres into regional development plans.
These measures will help the UK maintain its status as a global AI leader while ensuring long-term economic and technological resilience.
