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Power, Land and AI: Unlocking the Data Centre Opportunity

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Jon Page, Head of Asset Development UK

AI technology is fast becoming a feature of everyday life, both inside and outside work. The driving force behind AI’s compute is energy. Data centres depend on huge amounts of electricity to fuel their computing power – electricity demand will grow with data centre demand. The power sector is therefore inextricably linked to the rollout of data centres, but also provides further potential synergies that can foster interdependence through co-location.

Dark blue infographic with teal accents shows the headline "AI is outpacing the grid", a small label "What's the problem?", and stylized white server racks topped by teal lightning icons.
Teal heading "The solution" and white text "Bring data centres and energy infrastructure together." sit on a dark blue background above illustrations of a white industrial chimney and electricity pylons with a teal lightning-bolt icon.
A teal-to-blue gradient infographic titled "How it works" displays three large numbered headings: "1 Smarter use of sites", "2 Existing energy infrastructure", and "3 Faster planning approvals", each with brief descriptive text and a small lightning-bolt icon.
Teal panel with "The vision" heading and the text "RWE is unlocking these benefits through its former Didcot A Power Station." plus small server icons.

The opportunity

Global data centre demand is forecast to more than triple to ~170 GW by 2030 to fuel this. In Europe, the UK is well placed to benefit and is forecast to capture over 10% of European data centre demand. The UK Government has recognised this, setting out its AI Growth Plan in 2025 followed by the announcement of various different AI Growth Zones to support data centre development.

AI has applications within the power sector but, more than that, AI and energy infrastructure share similarities that lend themselves to co-location. There are major constraints on data centre rollout, with new facilities looking for fast grid connections, local capabilities, existing footprints and the availability of attractive sites. This is where existing power generation sites can provide a package of benefits, providing both the power needed to power data centres and land with necessary infrastructure to quickly deploy new data centres.

This is at the crux of RWE’s offer. We are beginning to see this come to fruition in the UK, with the purchase of a data centre development project, comprising land, planning consent and grid connection, by a hyperscaler at RWE’s former Didcot A Power Station to develop four data centre buildings, marking a new chapter for the site that will bring billions of pounds of investment to the local area. However, while there are obvious opportunities, they don’t naturally arise and complexities require concerted effort from both sides of the equation, plus government, to address.

Land and planning

The rapid increase in data centre demand for electricity comes while we are revolutionising our energy grid, changing the shape of power generation from a system with a small number of big fossil fuel plants to many diversified onshore and offshore renewable sites. The phaseout of coal, and reduced reliance on gas, present an opportunity for AI. Our Didcot team chose to do something innovative.

Co-location with energy infrastructure can also provide consenting benefits. Data centres are fundamentally good neighbours: they are quiet, have limited impact on local resources and compare favourably to power stations on visual impact. Data centres’ new status as critical national infrastructure does not, however, preclude challenges in the consenting regime. Recognition of the economic importance of date centres in the Government’s National Planning Policy Framework, reforms through the Planning and Infrastructure Act and proposals for streamlined planning through the AI Growth Zones hold promise, but this needs to translate to having the desired effect in practice.

Electricity

The biggest potential boon for co-location is the availability of electricity itself. Large fossil power station locations have a huge amount of existing high voltage infrastructure and are usually connected to the transmission system, making obvious candidates for data centres.

  • Both power capacity and the energy itself are important. Capacity is vital in providing the necessary infrastructure to enable the flow of significant amounts of electricity. Securing a grid connection is one of the most significant limiting factors for new projects, with NESO offering grid connections towards the back end of the 2030s. Locations that maximise synergies with existing energy infrastructure can alleviate this, with the potential to unlock significant revenue many years earlier. Furthermore, transformers fitted inside local substations can power data centres directly, massively simplifying connecting data centres to the grid.

    Data centres’ power requirements go beyond a simple connection to the grid: they require “Tier 3 connection architecture”, requiring access to two grid connections as well as onsite emergency back-up generation. Back-up infrastructure is the same for a power station as for a data centre, providing obvious synergies. Equipment can be housed on site and data centres can benefit from the knowhow and experience of power stations in using such kit.

  • In terms of the actual energy transfer, RWE can connect data centres via a power purchase agreement (PPA). There is, however, an interesting alternative. It is possible for operational power stations to supply data centres with power directly, “behind-the-meter”. All this requires, in effect, is a wire running between the two. There are technological and regulatory challenges but this is possible and would have wider system benefits, avoiding adding congestion to the transmission system.

    These projects can yield real economies for the consumer, the generator and the grid. But there are less than a handful of examples of such schemes in the UK due to compliance complexities. Unlocking this potential ought to be a key consideration for the UK Government’s AI Energy Council, as a genuine win-win solution.

Cooling and heat

Power stations and data centres also share huge cooling requirements. The effectiveness of data centre power usage can be enhanced where water supply is local. The “power usage effectiveness” of data centres is the ratio of total electricity consumed to the amount of electricity consumed in driving IT infrastructure. The latter is the key output – excess power usage increases costs and reduces efficiency. Local cooling infrastructure, which power stations have, can therefor reduce inefficiencies and equate to big savings.

There are also alternative avenues for data centres’ rejected heat. While not a focus in the UK, Germany requires waste heat to be used. Again, there are clear synergies through co-location with power generation, with power stations able to make use of this heat on site.

What now?

The synergies between energy and AI infrastructure are clear and can yield competitive advantages. However, there are barriers to exploiting them. Government has made a welcome start in recognising the opportunity – the prize on offer is potentially huge. RWE is planning to lead the way in maximising the benefits of these interdependent industries.

To find out more about the services RWE can provide in this area, please contact Jon Page.

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