The Data Centre Covenant - How Government intends to supercharge the development of the UK's AI infrastructure

Following on from designating data centres as Critical National Infrastructure and creating five AI Growth Zones around the country, the UK Government has signalled as part of its recent budget measures the steps it is prepared to take to encourage additional data centre capacity construction in the UK, as it estimates the UK will require 6GW of AI data centre capacity by 2030, and retain AI computing power nationally through the publication of its Data Centre Covenant.  

In doing so, the Government has identified that the period between now and 2030 will see big leaps in the development of AI technology and an increase in data centre infrastructure will be required to protect the UK’s national interests and stop AI companies seeking capacity abroad whilst also recognising the challenges the UK currently has with demand for grid infrastructure.  Building on Governmental powers in the Planning and Infrastructure Act 2025, the Minister for AI and the Treasury will be able to earmark projects for accelerated approvals and will have the power to:

• reserve and re-allocate grid connections and capacity ensuring that significant data centre projects have access to the necessary grid capacity at the earliest opportunity;
• work with network companies and the National Energy System Operator to identify additional capacity available for projects in advance of 2030 and enable projects to the take advantage of that capacity;
• facilitate the transfer of pre-2030 data centre connection contracts to strategically important data centres; and
• in exceptional circumstances, ensure access to temporary power supplies where grid connections are not available through permissions for on-site generation, provided that developers can in return demonstrate their projects have “sufficient strategic value”.

The Government has yet to publish full details of how it will define a project with ”sufficiently strategic value”, but some initial tests have been created which developers will need to meet to qualify for Governmental assistance.  Some of these tests follow the same logical underpinning as the Government’s proposed changes to the Procurement Act 2023 and build on the Government’s desire to achieve growth in every postcode of the UK, namely:

• covering the energy costs they create to avoid cost to domestic taxpayers and providing support for investment in energy supply particularly in renewables;
• agreeing a local benefit plan to ensure that local communities which host and approve critical infrastructure share in the upside of that investment.  We might expect to see enhanced Section 106 obligations being placed on developers to meet this requirement;
• commitment to environmental standards around water usage, environmental protection and energy consumption with minimum energy efficiency requirements and stringent annual reporting requirements;
• creation of jobs and apprenticeships throughout the lifecycle of a data centre through construction and into the operational phase and contributing to the overall health of the UK’s AI industry, research and development; and
•  support the UK’s growing compute capacity and critical infrastructure needs, particularly for the NHS, defence and other critical services.

We can expect further tests to be developed which build upon the Government’s stated aims to create well-paid sustainable jobs, re-industrialise parts of the UK to encourage growth and safeguard critical infrastructure.  The Government is also currently seeking views on its draft National Policy Statement for Data Centres (Draft National Policy Statement for Data Centres - GOV.UK), which will enable data centre developers in England to seek development consent through the Nationally Significant Infrastructure Project regime. This consultation closes at 11:59 pm on 8 January 2027. Views from data centre operators and developers, infrastructure providers and experts, local planning authorities and strategic authorities, local communities in areas where data centre development exist or are being considered and any other stakeholder groups with an interest in data centre development are particularly sought for this emerging national infrastructure planning framework specifically designed for data centres. The Government must ensure though that connection infrastructure is available quickly and cost-effectively for developers, with alternatives such as self-build connections being available to avoid UK AI developers seeking capacity outside the UK.