Industrial, Logistics & Data Centres
Data Centre Research 2026 www.iceniprojects.com iceni-projects iceniprojects
Data Centres Research 2026
Executive Summary Welcome to Iceni’s annual Industrial, Logistics and Data research 2026 – unpacking critical insights and myth busting around robust case making for data centre development. Every cloud transaction, AI query, online purchase, financial payment, healthcare record and business application relies on data centre capacity. Demand is growing rapidly and is expected to accelerate further as artificial intelligence, digital services and cloud computing become increasingly embedded within the economy. The key challenge facing developers, planners and decision makers is translating growing market demand into an evidenced planning need for data centre development in a specific location. What are the headlines?
Demand Is Growing at Unprecedented Pace Digitalisation is increasing across all sectors of the economy. Cloud computing continues to replace traditional on-site servers. Artificial intelligence is emerging as the fastest-growing source of data centre demand. Government forecasts indicate that UK data centre capacity may need to increase significantly by 2030.
But not all data centres serve the same purpose
Geography Matters
Data centres are not a single product. Different facility types, including hyperscale, colocation, AI training, AI inference and edge facilities, have different operational requirements and therefore different locational needs. Fibre connectivity, latency, resilience, customer proximity and power requirements all influence site selection.
Unlike many forms of development, data centre demand cannot necessarily be met anywhere. Capacity within one availability zone may not satisfy demand arising in another. The specific role of a facility within a wider digital network is therefore a critical consideration when assessing need.
Power Is Becoming the Critical Constraint
National Policy Support Has Never Been Stronger
Where does this take us for development case making?
The biggest challenge facing the sector is no longer demand. It is deliverability.
Data centres are now recognised as Critical National Infrastructure and play an increasingly prominent role in national planning, industrial and AI policy.
Access to power is increasingly determining where data centres can be developed, influencing both investment decisions and planning outcomes. Locations capable of accommodating substantial electrical loads are becoming strategically important infrastructure assets in their own right.
Government initiatives including AI Growth Zones, grid connection reforms and emerging planning policy all point toward a more supportive environment for development, provided proposals can demonstrate a clear need and suitable location.
The planning justification for a data centre cannot rely on market demand alone. A robust case must demonstrate: • What is driving demand • What type of capacity is required • Why that capacity must be located in a particular market area or availability zone • Whether existing and committed supply can meet that requirement • How power, fibre and infrastructure constraints affect deliverability
Data Centres Research 2026
This report proposes a practical framework for moving from demand to need. Our conclusion is simple:
What This Research Does This research explores: The drivers of future data centre demand.
The growing importance of power infrastructure.
How different data centre typologies influence locational requirements.
The role of AI Growth Zones.
Existing and emerging patterns of UK data centre development.
How need can be evidenced for planning and development purposes.
The UK clearly needs more data centre capacity. The challenge is demonstrating what type of capacity is required, where it must be located and why that need cannot be met elsewhere. That distinction between demand and need will increasingly sit at the heart of successful policy-making, site promotion and planning applications.
Data Centres Research 2026
Introduction
This is the sixth year of Iceni’s annual research under the banner of industrial, logistics and data. Our sector group has picked up the highly topical matter of data centres specifically considering the justification of need in the context of demand, locational suitability and a changing policy environment – not least the current consultation on the cost and queuing commitments for the power queue as well as wider controversy surrounding data centres.
The purpose of this research is therefore to provide a clearer framework for moving from demand to need. It examines: f Demand for different typologies of DC f What is really driving demand f Current patterns of DC – and where they are
emerging including growth zones f The problem of power
Iceni’s work in DCs has significantly expanded across our disciplines in the last 2 years. This year’s publication focuses specifically on the case for data centre development and, in particular, how growing market demand can be translated into an evidence-based assessment of need. The subject is increasingly important as developers, planning authorities and decision-makers are asked to consider proposals involving substantial land, power and infrastructure requirements, often in locations where data centres have not historically been planned for or accommodated
f How to assess and justify need in the
planning system With digital service demand increasingly underpinning economic and social activity, focus on data centre development has never been higher. Manufacturing, logistics, life sciences, financial services, healthcare and education are becoming more dependent on automation, real-time monitoring, data processing and resilient digital systems. Existing facilities cannot keep up with market demand,
and demand for new types of data centre space is constantly expanding as technology evolves. Artificial intelligence is accelerating and reshaping this demand. AI training and inference require different forms of computing infrastructure, and these functions have different locational needs. Training facilities can potentially operate in locations where latency is less critical, provided that substantial power, land and connectivity are available. Inference and other real-time functions may need to be closer to users and established networks. These differences could support the growth of new regional hubs while reinforcing the role of existing clusters for latencysensitive and resilience-critical services. Data centre development is strongly supported by the UK Government. The Government’s Industrial Strategy highlights the importance of data centres, and they are designated as Critical National Infrastructure (CNI). Data Centres are now included within the scope of the Nationally Significant Infrastructure Planning (NSIP) consenting regime on an optional basis, and allowances have been made to
link ancillary energy generation facilities via preferred planning consenting regime, enabling a wide choice of planning strategy. The concept of AI Growth Zones – proposed clusters of AI data centre development in energy-rich regions – has been championed by Government and includes generous support for developments including accelerating grid connections, reducing energy costs, and reducing planning barriers. The new National Planning Policy Framework (NPPF) introduces specific supports for data centre developments in both planand decision-making policies. The data centre and AI boom has served to significantly raise the public profile of the land use. Perceptions of data centres can be negative, with concerns raised around energy and water use, and impacts on carbon emissions at a time of demonstrable climate change, amongst other issues. Public engagement is increasingly emerging as a key early step for data centre developers during the development process, to ensure that local concerns are appropriately addressed.
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A national increase in demand does not mean that every proposal represents the same type of need, and not every location is suitable for data centre development. The sector encompasses enterprise, colocation, wholesale, hyperscale, AI and edge facilities. Their locational requirements vary according to their users, workloads, latency tolerances, availability-zone relationships and resilience requirements. Access to high-capacity power and fibre is fundamental, while land availability, water, environmental effects and opportunities for heat reuse may also influence location and design.
Figure 1.1: Total global data centre workloads Source: --
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This creates a distinctive planning challenge. Unlike more conventional forms of commercial development, data centre demand cannot necessarily be displaced to another available site or administrative area. A site outside the relevant availability zone may not meet the latency, operational or resilience requirements of the demand it is intended to serve. Equally, a substantial consented pipeline may provide limited reassurance if projects cannot obtain viable grid connections
or meet the technical requirements necessary for delivery. This publication does not seek to identify a single national requirement that can be applied uniformly to every proposal. Instead, it argues for a structured and place-specific assessment. Such an assessment should define the relevant market geography, identify the type of capacity required, examine demand and supply, test infrastructure and deliverability, and explain why the requirement needs to be met in the proposed location.
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Data Centre Types and Drivers
Locational Needs The locational needs of data centres depend on their workloads. Optimal location is primarily a function of fibre connection needs, location and type of end users, availability of power supply, and land requirement. Other factors, such as opportunities for waste heat reuse, are becoming more important.
depending on workloads and operational systems. Data centres operate subject to strict agreements with energy providers. The UK’s electricity grid is severely constrained by historic infrastructure, and planned upgrades are anticipated to take significant time to implement. As such, power supply is increasingly a key factor in locating data centre development.
Latency There are a wide range of data centre types and these have different locational drivers including how function influences latency (response time) and customer proximity, as well as availability zone interaction. Principal Data Centres typologies In a nutshell, data centres are buildings that store servers which perform functions for digital and online services. Banks, hospitals, universities, media companies, and – increasingly – small and medium enterprises all use data centres to support their workloads. The functions performed within data centres varies significantly depending on the operator and end-user. These variations result in different types of data centre facilities including: Enterprise: Privately owned by single organisations for internal use.
Hyperscale: Large scale facility usually owned and operated by large multinational corporation.
Co-Location: Shared multi-tenant facilities for enterprise workloads.
AI training: Large-scale AI infrastructure without the need for fast end-user connections.
Retail: Offer services to multiple individual customers.
AI inference: AI infrastructure facility which requires fast connections to end user.
Wholesale: Lease space and power capacity to a single tenant.
Edge: Smaller facilities close to users to support specific high-speed connections.
Data centres need access to high-speed fibre optic cable routes which facilitate internet connections. Fiber optic cables run below the ground and on the seabed, linking markets across the world. The characteristics and location of the end-user have an impact on fiber proximity requirements. The closer a facility is to fiber infrastructure or an enduser, the quicker connection speeds are – this speed is known as latency. Low latency means high connection speeds. Certain data centres require very low latency in order to perform their function effectively – such as data centres supporting stock exchanges, or self-driving cars. Other data centres can be located more remotely because latency is not crucial to their workload – such as data centres facilitating AI training.
Power Data centres require access to high-capacity, resilient power supply. Data centres tend to use a lot of power, with the overall requirement
Availability Zones Cloud-based digital services are provided by colocation or hyperscale operators. These operators tend to form local networks of data centres known as ‘Availability Zones’ (AZ) which feature low latency between multiple facilities, to ensure efficiency and security of service. Due to the widespread reliance on such data centre services and the resultant impacts of system failure, maintaining a high standard of service is crucial. The current industry standard for distances between connected data centres within an AZ is c. 20 km, leading to the development of data centre clusters in certain areas.
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Drivers for Growth
There is a broad sense of understanding ‘why’ we need data centres, with demand driven by scrolling social media, online purchases, AI agents and professional and businesses services. Here we unpack some of the historical and projected trends across those themes. The growth in demand for data centres reflects a combination of structural trends that are increasing the volume of data generated and the level of computing power required to process it – this includes continued digitalisation of economic activity, migration to cloudbased services and the rapid emergence of AI and machine learning applications. Alongside increased demand for computing power, greater emphasis is being placed on resilience, security and business continuity. Cloud provides
2.0 GW 3.3–6.3 GW Current UK capacity
Potential capacity by 2030
require geographically distributed infrastructure to maintain operational resilience. Preliminary analysis for the government found that UK data centre capacity could rise to between 3.3 GW and 6.3 GW by 2030 , with current capacity sitting around 2.0 GW.
01
Digital Economy
02
Cloud Computing
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Artificial Intelligence
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Resilience and Continuity
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1.1 %
Digital Sector GVA, 2024
of total UK GVA
Digital Sector growth 2023-24
Wider Economy growth 2023-24
Figure 2.1: Indexed Gross Value Added by Sector (2010-23)
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Source: ONS 2025 Information & Communication Life Sciences All Sector Advanced Manufacturing Transport & Storage
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The figure below shows that the economic output of the Information and Communication sector has grown significantly faster than the UK’s other key sectors. By 2023, the sector’s GVA was around 2.5 times its 2010 level, compared with an all-sector average increase to around 1.2 times the 2010 baseline. Continued and resilient growth of the digital sector drives demand for operating software, data processing, hosting, telecommunications, digital platforms, cyber security, AI and storage capacity, in turn requiring data centre capacity.
3.3 %
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The scale and growth of the UK digital economy is a key driver of demand for digital infrastructure including data centres. The Department for Science, Innovation and Technology estimates that the UK digital sector accounted for £177.2 billion of GVA in 2024, equivalent to 6.8% of total UK GVA, with the digital sector growing 3.3% between 2023-24, compared to the wider UK economy at 1.1%.
6.8 %
2010
Expansion of the Digital Economy
£177.2 bn
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12 %
35 %
Businesses using at least one AI technology in 2023
Businesses using at least one AI technology in 2026
Figure 2.2: Percentage of business that used artificial intelligence technologies for any purpose, by sector 2025/26 Source: UK Business Data Survey 2026
Total Growth of the data centre demand is not solely driven by the digital sector itself, with traditional sectors seeing increased digitalisation. Manufacturing and logistics are becoming more dependent on detailed systems, automation, robotics, sensors and real-time monitoring. Other sectors such as life sciences and financial services have become more data-intensive, requiring low-latency systems, high levels of resilience, securing and processing ability. The Government’s Industrial Strategy identifies life science, digital and technology and advanced manufacturing among its growth driving sectors, reflecting the importance of supporting these high-value parts of the UK economy.
Information and Communication Professional, Scientific, Technical Finance and Insurance Arts, Entertainment and Recreation Administrative and Support Services Human, Health and Social Work Other Service Activities Education Manufacturing Hotel/Catering Real Estate Construction Mining, Energy, Water Wholesale and Retail, Repair of Motor Vehicles
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Transport and Storage 0%
Data from the ONS indicates that use of at least one AI technology in UK firms increased from 12% to 35% from 2023 to 2026. Larger businesses (+250 employees) see a much higher adoption rate of 49%. The figure below shows the highest adoption rate within the ICT and Professional Services sectors and above average rates in finance, health and education.
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£10.5 bn UK cloud services spend in 2024 ~30% spending growth since 2020
Figure 2.3: % of businesses using data storage infrastructure (2024 vs 2026)
Held/managed by Third Party or Web Solution Private Cloud Provider Servers Owned in Rented Space in Data Centre Services Provided by Outsourced IT Services Company
35%
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25%
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None of the Above 15%
In the UK around 30% of business use a public cloud provider such as AWS, Microsoft Azure or Google Cloud; 22% used third-party cloud-based software; 19% private-cloud provider. It is notable that just 27% of businesses still use their own servers – this has reduced from 35% in 2024. This rapid adoption of cloud-based data storage has contributed to the expansion of hyperscale facilities designed to support cloud platforms.
Servers on Your Premises
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In 2024 UK customers spent £10.5 billion on cloud services, with spending growing by nearly 30% annually since 2020 .
A Public Cloud Provider
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Organisations increasingly prefer scalable cloud solutions rather than maintaining dedicated onpremises IT infrastructure, with benefits including reliability of power and temperature control, dedicated back-ups at multiple locations, increased security and efficiency in cost and energy.
Source: UK Business Data Survey 2024, 2026
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Growth in Cloud Computing
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of global data centre workloads in 2023
of global data centre workloads estimated by the end of 2026
of global data centre workloads estimated by 2030
Figure 1.1: Total global data centre workloads
AI Inference AI Training Traditional Workloads
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37% AI Inference
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AI and machine learning workloads differ from conventional cloud workloads, shifting demand from centralised clusters to distributed regional hubs. This will heavily impact the geographic distribution of data centre demand, moving away from key clusters in London and towards other regions with available land, electricity and water infrastructure capacity. This will intensify competition for power-enabled, fibre-connected sites and allow new regional hubs to be established.
50 %
2011
Artificial Intelligence and machine learning is the fastest growing demand driver for data centres, requiring accelerate-heavy compute, highthroughput networking and large-scale storage. As of 2023, AI accounted for 13% of global data centre workloads, however this is expected to increase to 28% of total demand by end of 2026 . Knight Frank estimate that AI will represent 50% of data centre workload by 2027 .
28 %
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Artificial Intelligence and Machine Learning
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What is Latency? Latency is the time it takes for data to travel from a user to a data centre and back again. The closer the data centre is to the user, the lower the latency and the faster the response.
Transatlantic Latency 70 - 90 ms
Demand for Low Latency, Resilience and Continuity Data centre operators function across multiple availability zones to ensure resilience, load balancing and continuity of service. Growth in the digital economy therefore requires not only additional computing capacity, but also geographically distributed infrastructure capable of providing redundancy.
National Latency 10 - 30 ms
Why It Matters
Factors That Affect Latency
Distance Further distance increases latency
Routing Data can take different paths across networks
Congestion Busy networks can add delay
Processing Overhead Time to process requests and responses
Cloud Gaming Smooth, real-time gameplay
Local / Metro Latency
National Latency
Data Centre close to the user, usually within the same city or region 10 ms
Data travelling between cities and regions in the same country 10 - 30 ms
Video Calls Clearer, more natural conversations
Financial Trading Faster decisionmaking
Real-Time Control Responsive control of devices and systems
International Latency Data travelling between countries 70 - 90 ms
Demand for low-latency is strongest where applications require real-time response or highquality user experience such as autonomous vehicles, remote healthcare, advanced manufacturing automation, fintech, streaming and content delivery and real-time logistics and supply chain management. Demand for low-latency drives demand for edge data centres, closely located to the end users and devices it serves to cut down response times and reduce network traffic. These requirements are geographically specific, with alternative availability zones unable to meet demand.
The clustering of data centres around London is becoming an increasing challenge to resilience, placing demands on the energy and water network. Building up data centre capacity in other UK regions will mitigate these risks whilst satisfying demand for capacity.
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UK Data Centre Stock Understanding existing patterns of supply is an important step in assessing future data centre need. Unlike many forms of commercial development, demand for data centre capacity cannot necessarily be met in any location. Technical requirements relating to power supply, fibre connectivity, latency and resilience have resulted in the emergence of distinct data centre clusters and availability zones across the UK. Examining where existing capacity is located, and how that pattern is changing, provides important context for understanding future growth opportunities, infrastructure requirements and the assessment of need.
Whilst the UK has a substantial stock of data centres already, it is rapidly evolving and patterns are changing to respond to typology specific requirements. There are strong clustering patterns and whilst new centres are emerging, intensification of existing locations and zones is anticipated. As of the end of 2025, the UK hosts 348 live data centre sites equating to around 2.0 GW capacity, with 318 of these sites located within England (90% of stock), with only 14 in Scotland, 12 in Wales and 9 in Northern Ireland. There are 117 distinct operators, however the top 10 largest operators account for around 3/5 of operational capacity.
Existing Proposed Under Construction Converted
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AI Growth Zones
The previous chapters have demonstrated the strong drivers of future data centre demand and highlighted the changing locational requirements of different facility types. Whilst historical growth has been concentrated in established availability zones, particularly around London, future development patterns are likely to be influenced increasingly by power availability, strategic infrastructure investment and Government intervention. AI Growth Zones represent the clearest example of this shift, signalling where future capacity growth may be directed and providing insight into the locations best positioned to accommodate the next generation of data centre development. AI Growth Zones represent the clearest example of this shift, signalling where future capacity growth may be directed and providing insight into the locations best positioned to accommodate the next generation of data centre development.
Established EOI / Bids Submitted
In this regard, the Government is increasingly involved in shaping data centre futures, as it sees these as essential facilitators of the future economy. The 2025 AI Opportunities Action Plan recommended the establishment of AI Growth Zones (AIGZ) to facilitate the build out of AI data centres. In January 2025, Culham in Oxfordshire was selected as the pilot AIGZ, establishing a delivery model for future zones. Further AIGZ selected since include: f North East (September 2025) f North Wales (November 2025)
Lanarkshire
North East Hartlepool & Darlington
Dumfries & Galloway
Lancaster
Hull & East Yorkshire
York &North Yorkshire
North Lincolnshire
Liverpool City Region North Wales
Greater Manchester
Doncaster & South Yorkshire
f South Wales (November 2025)
Norfolk & Suffolk
f Lanarkshire, Scotland (January 2026)
Over 200 local authorities and developers submitted expressions of interest across the UK and applications remain open and it is expected that further AIGZ will be announced.
South Wales
Culham
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The Problem of Power Historically, fibre and proximity to users shaped the geography of data centres. Increasingly, power availability determines where development can occur. Access to power is increasingly becoming the defining factor in data centre site selection and delivery. Whilst we have explored in the previous chapters the strong demand for additional capacity and identified emerging locations for growth, the ability of individual sites and regions to secure timely grid connections is now a critical determinant of whether development can proceed. Understanding power availability is therefore essential not only for assessing where data centres can be located, but also for evidencing the need for development in particular locations. Access to power is fundamental to data centre development. In 2025, data centres were estimated to consume around 2.5% of the UK’s electricity. The sector’s electricity consumption was expected to rise four-fold by 2030 .
Despite record renewable energy generation consents, access to power remains the single biggest obstacle to unlocking data centre sites in the UK. Over the past year, the situation has worsened rather than eased. A combination of high demand and creaking grid infrastructure has resulted in predicted wait times of near to a decade for grid connections in some locations. The scale of the problem is now measurable. Demand connection applications in the UK rose from 41GW to 125GW between November 2024 and June 2025 – a threefold increase in under a year, with at least 80GW (95%) attributable to data centre projects . Set against a grid where the average operational UK data centre draws around 20MW but the average queue entry is several times that, the queue plainly contains more ambition than deliverable capacity. Industry commentary at the Data Centre Series conference put the data centre queue alone at roughly 1.5 times the grid’s current maximum capacity, alongside candid concern about a ghost market of overstated investments.
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Government, Ofgem and NESO have converged on a three-pillar programme for demand connections — ‘Curate, Plan and Connect’. The ‘Curate’ limb, spearheaded by Ofgem, seeks to remove speculative, non-viable, or stalled projects from the grid connection queue. In July 2026 Ofgem opened consultation on data centre connection reforms. Projects will need to demonstrate credible end-users, procurement of electrical equipment with long leadin times, and financial and technical capability to develop a data centre. In addition, the consultation introduces a Data Centre Commitment Fee, proposed at between £237,500 and £712,500 per megawatt (roughly 2.5% to 7.5% of average project cost), applying to schemes at or above 40MW. The fee is payable on acceptance of a connection offer and refundable on energisation. The fee would be forfeited on early exit from the queue due to project termination or failure to comply with relevant requirements. Alongside that initiative sits data centrespecific queue management milestones requiring evidence of financial capability, commercial maturity and procurement activity to retain a queue position.
The practical consequence is that a grid connection requires an evidenced programme, with load profile, site readiness and phasing all needing to stand up to scrutiny — and capital committed early. AI Growth Zones offer a preferential route, with reserved grid capacity, streamlined planning support, permission to build private high-voltage infrastructure, and locational electricity discounts of £24/MWh in Scotland, £16/MWh in Cumbria and £14/MWh in the North East. The Planning and Infrastructure Act 2025 also provides helpful tools. Data centres can opt into or out of the NSIP regime irrespective of statutory thresholds, energy generation can be co-located and consented through the same route, and the Secretary of State can intervene in connection agreements. The awaited data centre National Policy Statement should sharpen thresholds and decisionmaking further. The assessment of need for data centre capacity cannot be considered independently of power availability, with locations capable of accommodating
significant electrical loads becoming increasingly strategic within the national market.
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The Need Framework: From Demand to Need The preceding chapters have identified the principal factors shaping data centre development, including the drivers of demand, the differing requirements of particular data centre typologies, existing and emerging patterns of development, and the critical influence of power and fibre availability on location and deliverability. Bringing these factors together, this chapter considers how demand for data centre capacity can be translated into an evidence-based assessment of need within a particular market area or location. Although there is no prescribed methodology for data centres, the Planning Practice Guidance on housing and economic needs assessments establishes a series of techniques and considerations for understanding
future business requirements. These provide a useful starting point for developing an equivalent approach to data centres, adapted to reflect the sector’s distinct market geography, measurement of capacity and technical and infrastructure requirements.
01 02 03 04 05
Demand Test What is the scale and nature of demand, and which structural or market drivers support it?
Functional Test What function will the facility perform, which users or workloads will it serve, and what operating requirements follow?
Geographic Test What is the relevant availability region, availability zone or market area, and why can the requirement not be met elsewhere?
Infrastructure Test Are power, fibre, water, land and other infrastructure available at the scale and within the timescale required?
Supply Test What operational, under-construction and committed capacity exists, and how much is realistically deliverable?
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Need for Employment Land Established Methodology
The framework below illustrates how the principles of a conventional employment land needs assessment could be adapted to data centre development. Rather than relying principally on employment forecasts and land take-up, the assessment would draw upon evidence of digital and AI growth, market demand, operational and consented capacity, operator requirements and infrastructure availability. Together, these factors can be used to identify any residual requirement for additional capacity and consider how that need should be distributed between availability regions, availability zones or local authority areas. Data availability will be greater for established availability regions such as London. Assessing the need in new and emerging markets could require analysis and forecasting at a national level, which is then apportioned back down to availability region or zone level based on benchmarks to identify a need within a specific availability zone or local authority area. The emergence of Strategic Development Strategies, Mayoral Combined Authorities and other forms
of strategic planning may provide an important mechanism for undertaking these assessments at an appropriate scale. Given the importance of power infrastructure, fibre networks, availability zones and wider economic geography, data centre need will often extend beyond individual local authority boundaries. Strategic assessments can help identify the most suitable locations for future capacity whilst balancing competing demands for land, infrastructure and investment. A robust assessment must therefore do more than quantify demand at the national level. It should define the relevant market geography, distinguish between the requirements of different data centre typologies, account for existing and committed supply, and consider whether power, fibre and other infrastructure enable the identified demand to be met in practice. This provides the basis for translating broad market growth into an evidenced need for additional capacity in a particular availability region, zone or local authority area.
Need for Data Centres Adapted Methodology
Define a Functional Market Area
Define an Availability Region
Economic Context
Digital Economy and AI Context
Analysis of Market Signals
Analysis of Data Centre Market Signals — take-up, occupancy, pre-lets and reserved capacity
Assess Employment Growth Forecasts
Assess Cloud, AI and Data Growth Forecasts
Historic Take-Up Trends
Historic Completion and Take-Up of Data Centre Trends
Market Consultation
Consultation with operators, developers, utilities
Assessment of Existing Supply
Assessment of Existing and Consented Capacity
Supply–Demand Balance (Ha)
Identify Data Centre Residual Requirement (MW)
Employment Land Required within Local Authority Area
Apportion to Availability Zone / Local Authority
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Planning Policy and Decision-Making The preceding chapter has considered how the different drivers of data centre demand, patterns of existing and planned supply, locational requirements and infrastructure constraints can be brought together to assess need. This chapter considers how that evidence relates to the planning system, including the emerging national and London policy frameworks and the approach taken to need in recent appeal decisions. National Policy and Strategy National Planning Policy Framework The new NPPF was released in August 2026, and includes a more significant and focussed
consideration of data centre projects by Local Planning Authorities, recognising the importance of the sector for future economic growth and security. The NPPF references additional government policies and legislation which support data centre development across the country, including the Government’s Industrial Strategy (June 2025), the recent Planning and Infrastructure Act (December 2025) and a policy paper on Delivering AI Growth Zones (November 2025). Overall, these various policies seek to ensure that administrative and infrastructural barriers are minimised (and are discussed briefly further below). Policy E1 (Providing the Conditions for Long Term Growth) relates to plan making and notes that, when making Local Plans, LPAs will need to set out a clear economic vision and strategy which accounts for the Industrial Strategy and AI Growth Zones. The Industrial Strategy identifies priority sectors including digital and technology businesses, with the other priority sectors fundamentally underpinned by related digital
technologies and supported by data centres. The policy states that LPAs should allocate suitable sites for these uses, taking into account specific locational requirements. Further, LPAs should account for clusters, networks and individual sites for knowledge and data-driven, creative or high technology industries, and for new, expanded or upgraded facilities and infrastructure to support the growth of these industries (including laboratories, campus facilities, data centres and associated generating capacity, and grid connections). Policy E2 (Meeting the Need for Business Land and Premises) relating to decision making notes that substantial weight should be given to the economic benefits of proposals for commercial development which allow businesses to invest, expand and adapt; especially where this would support the economic vision and strategy for the area, the implementation of the Industrial Strategy, and reflect proposals for AI Growth Zones. Data Centres are also now included as ‘essential infrastructure’ with regards to flood risk vulnerability,
meaning that the exception text will only be required in Flood Zones 3a and 3b.
Data Centre National Policy Statement A key document which is still awaited, and which will provide much of the finer detail, is the data centre National Policy Statement. This was expected to be published in Spring 2026, but much delayed not least with a new prime minister, but should set out the sector’s strategic priorities, establish clear thresholds for what constitutes national significance, and provide a consistent framework for decision-making.
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The London Policy Response The draft London Plan represents a strategic shift in data centre policy, elevating data centres from an “emerging activity” within the industrial sector to a standalone strategic priority through Policy GLE3. It effectively repositions data centres from an employment land use competing for industrial capacity to strategic infrastructure requiring its own spatial planning framework. The policy seeks to meet growing demand in suitable locations while managing impacts on utility networks, the environment and local communities. There are two fundamental changes: f In-principle support for data centre development
in suitable locations.
The policy also creates a pathway for data centre development in the Green Belt, including Grey Belt sites and land adjoining Broad Locations for Growth. This applies where brownfield opportunities have been exhausted and proposals facilitate local heat-network infrastructure. It appears intended as a tightly controlled exception rather than a broad relaxation of Green Belt policy. In practice, developers will face more rigorous technical requirements. London’s Data Centre Future Growth Forecasts and Strategic Insights study provides relevant evidence underpinning the draft London Plan and for planmaking authorities to consider.
f The explicit exclusion of data centres from the
definition of industrial land use. The second change may be particularly significant. By removing data centres from the industrial land framework, the draft Plan distinguishes them from traditional industrial and logistics uses and aligns them more closely with London’s wider infrastructure requirements.
Overall, the draft Plan establishes a dedicated planning framework which separates data centres from traditional industrial land policy and embeds them within London’s infrastructure, energy and decarbonisation objectives. This provides greater in-principle certainty but introduces a substantially more prescriptive set of locational, environmental and operational requirements.
What the Draft London Plan Changes
Data Centres
Standalone Strategic Priority: Policy GLE3
Planning Status
Location
Infrastructure
Separated from traditional industrial land policy
In-principle support in suitable locations, with a controlled route for some Green and Grey Belt sites
Greater emphasis on utilities, heat networks, energy, decarbonisation and technical requirements
Greater in-principle certainty, but more prescriptive locational, environmental and operational requirements.
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Assessing Need in Appeal Decisions Recent appeal decisions provide practical examples of how need for data centre development has been assessed in the absence of a prescribed national methodology. Successful cases have brought together many of the factors considered in this report, including the strategic importance of digital infrastructure, evidence of growing demand, the role of availability zones, requirements for low latency and resilience, access to power and fibre, and the availability of suitable alternative sites.
The recurring considerations are:
Although the weight attributed to individual factors will depend on the circumstances of each proposal, the decisions indicate that the assessment of need is most effective when market demand is connected to the specific function, location and infrastructure requirements of the proposed development.
f the deliverability of existing and committed supply;
Recent decisions suggest that the most persuasive cases connect strategic importance and market growth to the specific requirements of the proposal.
f the national and economic importance of digital
infrastructure; f evidence of rising and unmet capacity requirements; f availability-zone, latency and resilience
requirements; f access to power and fibre;
f the availability of reasonable alternative sites; and f the consequences of failing to provide capacity in
the relevant market area. General market evidence is therefore necessary but not sufficient. The case should explain why the proposed capacity is needed, why it must operate within the relevant geography, and why alternative or pipeline provision cannot meet the requirement.
Summary Taken together, the emerging policy framework and recent appeal decisions demonstrate that general evidence of national market growth is unlikely to provide a complete assessment of need on its own. A robust planning case should connect that demand to the proposed facility’s function, the geography of the relevant market or availability zone, existing and committed capacity, infrastructure availability and the suitability of alternative locations. This reflects the central conclusion of this research: data centre need must be understood not only in terms of how much additional capacity is required, but also what type of capacity is needed, where it can function effectively and whether it can be delivered.
Data Centres Research 2026
Moving From ‘Need’ to ‘Demand’ in Decision Making The evidence considered in this research points to a clear conclusion: the UK will require substantially more data centre capacity, but that capacity cannot be planned for or delivered on the basis of national growth projections alone. Demand is being driven by long-term structural changes. Economic activity is becoming increasingly digital, businesses are moving from on-premises systems to cloud infrastructure, and artificial intelligence is creating new requirements for computing power, storage and connectivity. Data centres also provide the resilience and redundancy required to maintain the digital services on which businesses, public services and communities now depend. The practical planning question is therefore not whether there is demand for more capacity. It is how
that demand translates into a need for a particular type of facility within a particular geography. That translation requires an understanding of function. Hyperscale, colocation, AI training, AI inference and edge facilities are not interchangeable. Some depend on close relationships with customers or other facilities within an existing availability zone. Others may be capable of operating in new regional locations where suitable power, land and fibre can be secured. The relevant assessment area must consequently reflect the technical and commercial geography of the capacity being proposed, rather than defaulting to administrative boundaries. It also requires a realistic understanding of supply. Existing capacity, schemes under construction and consented projects should all form part of the assessment, but pipeline capacity should be tested for deliverability. In a market increasingly constrained by electricity infrastructure, a planning permission or grid application does not necessarily equate to capacity that will be available to meet demand. Power, fibre, land, water, programme, operator commitment and
funding are integral to the supply assessment, rather than secondary matters to be considered after need has been established.
relevant availability zone, the need for latency and resilience, the availability of power and fibre, and the realistic alternatives.
This is particularly important as the geography of the sector evolves. Existing availability zones, especially those around London, will remain important because of their established fibre networks, customer base and operational relationships. However, power constraints, AI-related workloads and Governmentbacked AI Growth Zones are creating opportunities for additional regional clusters. New locations will need to demonstrate that they can perform a defined role within the national data centre network, rather than relying solely on the availability of a large site.
A robust data centre needs case should therefore address four connected questions:
The planning system is beginning to recognise these issues more explicitly. Policy support for data centres reflects their economic and strategic importance, but it also places greater emphasis on identifying suitable locations and understanding infrastructure requirements. Recent appeal decisions reinforce the importance of connecting broad market evidence to the proposed scheme, the
What is driving demand? This should establish the scale and nature of growth arising from digitalisation, cloud services, artificial intelligence and the needs of data-dependent sectors. What type of capacity is required? This should identify the proposed facility’s function, customers, workload and operational requirements. Where must that capacity be located? This should define the relevant availability region or zone and explain the significance of latency, fibre, resilience, power and customer proximity. Can existing or committed supply meet the requirement? This should test capacity, timing and deliverability, including infrastructure constraints and the suitability
Data Centres Research 2026
of alternative sites. The assessment of need is therefore not a single forecast or headline capacity figure. It is a body of evidence that connects national and sectoral growth to a specific functional requirement, identifies the appropriate market geography, accounts for deliverable supply and demonstrates why additional capacity is required in the proposed location. For local planning authorities, this provides a basis for preparing proportionate evidence, identifying suitable locations and responding to a rapidly changing infrastructure sector. For strategic planning bodies operating across wider functional geographies, it may also provide a framework for considering how future data centre requirements should be accommodated spatially. Given that availability zones, power infrastructure, fibre networks and patterns of demand frequently extend beyond individual local authority boundaries, strategic assessments may help identify the most appropriate locations for future capacity
whilst balancing competing demands for land, infrastructure and investment. For developers and operators, it provides the foundation for site selection, engagement and the planning case. In all contexts, the quality of the evidence will depend upon bringing together planning, economics, energy, property, technical and environmental considerations. The key conclusion of this research is ultimately straightforward. There is a strong and growing demand for data centre capacity, but not every data centre can operate in every location. The planning case must demonstrate the relationship between demand, the type of capacity needed, the geography it must serve and the infrastructure required to deliver it. That is the route from demand to an evidenced and location-specific need.
Data Centres Research 2026
Industrial, Logistics & Data Centres Research 2025
References
(1)
Iceni analysis of ONS UK input-output analytical tables: industry by industry (2022 table)
(2)
Assuming that as job growth is higher, productivity growth is somewhat lower than forecast by Experian, meaning that the uplift in GVA is only half as much as the policy-on jobs scenario would otherwise suggest.
(8)
techUK, Foundations for the future: how data centres can supercharge UK economic growth, 4 November 2024
(9)
DSIT, UK Compute Roadmap: evidence annex, 17 July 2025, p13-14
(10) HL8423, 26 June 2025 (3)
https://www.gov.uk/government/publications/newtowns-taskforce-report-to-government
(4)
https://www.knightfrank.com/research/article/202110-21-how-much-space-is-needed-to-servicethe-lastmile-and-where-is-consumer-demandgreatest#:~:text=%22Based%20our%20analysis%20 of%20e,centres%20or%20in%2Dstore%20fulfilment.
(5)
https://www.knightfrank.com/research/article/202401-18-consumerdriven-demand-changing-lifestyles
(6)
https://www.savills.co.uk/research_ articles/229130/380332-0
(7)
Data centres: planning policy, sustainability, and resilience, Adam Cark, August 2025
(11) BBC News, Data centres to be expanded across UK as concerns mount, 15 August 2025 (via Data Centre Construction Projects: The Surge in the UK - Barbour ABI https://barbour-abi.com/whats-driving-the-surgein-data-centre-construction-projects-in-the-uk/)
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