UK data centre spending to surpass GBP £10 billion a year by 2029

Spending on new data centres in the UK is projected to exceed GBP £10 billion per year by 2029, according to new analysis from construction data analysts Barbour ABI.

This marks a significant increase from the current annual expenditure of GBP £1.75 billion. Market growth is being driven by heightened demand for data processing to support technologies such as artificial intelligence and the Internet of Things.

The latest Barbour ABI report indicates that nearly 100 new data centres are currently in the planning stages across Britain. It also predicts inward investment of which could exceed GBP £25 billion over the next five years as the market expands and diversifies beyond traditional regions.

Regional shifts

Data centre development, historically concentrated in London and the Southeast, is now extending to areas in the North and Wales. This shift is attributed to the pursuit of lower land costs, cooler climates advantageous for data centre cooling systems, increased access to renewable energy, and supportive regional growth policies.

According to the analysis, the largest planned data centre project is located at Northumberland Energy Park in Blyth, with a proposed value of GBP £10 billion. The development is being backed by US asset management firm Blackstone.

Government initiatives, such as AI Growth Zones intended to streamline the planning process and support infrastructure delivery, are also credited with supporting market expansion. Regions including the Northeast, East of England, and Wales have become more attractive for new facilities, partly in response to the increasing need for high-performance data centres to manage new AI-driven workloads.

Sustainability and reporting

"With exponential growth of this kind, sustainability must be at the forefront of industry strategy if we are to avoid an environmental disaster," said Ed Griffiths, Head of Business and Client Analytics at Barbour ABI.

Griffiths highlighted that, "Data centres are now recognised as Critical National Infrastructure. However, given the immense power they consume, operators will come under growing pressure to adopt greener practices."

He added, "But while many firms are pledging to use 100% renewable energy and implement energy-efficient technologies, there is currently no requirement to report energy usage publicly, so it will be difficult to hold them to account."

Infrastructure demand

Driven by the development of AI, operators and investors are increasingly focusing on building hyperscale facilities outside urban settings. These sites are designed to handle significant computing workloads, reflecting the ongoing integration of AI platforms into operational processes.

"The impact of AI is one of the most significant trends shaping the future of the data centre industry," said Griffiths. "As AI technologies become integrated into daily operations, the need for high-performance data centres is becoming critical. Operators are investing in hyperscale facilities outside of urban areas, designed to manage immense computing workloads."

The distribution of new projects is also being enabled by greater land availability and policies promoting regional growth. These factors are increasingly important as companies seek efficient locations with the potential to use renewable energy and the advantage of cooler climates.

Challenges ahead

Despite expectations of rapid expansion and continued investment, several issues could impact progress within the sector.

"While the headline story for data centres is one of growth and innovation, the industry faces real challenges. Rising energy costs, constraints on supply and land, planning barriers and a shortage of skilled labour could all affect the pace of expansion," said Griffiths.

The Barbour ABI data centre construction market report will continue to monitor regional shifts, investment levels, and sustainability efforts as Britain's data centre sector evolves to meet technological demand.