Power shortages are holding back data center growth in the UK and Europe

Construction of new data centers in the UK and Europe is being delayed due to insufficient power supplies. Utility companies in the US are also struggling to meet demand.

According to The Times, David Sleet, chief executive of development giant Segro, said that ideally it would invest “hundreds of millions or more” in building new data centres. “The biggest obstacle is access to power,” he told the publication.

Segro, which operates 35 data centers in the UK, had to wait “several years” for infrastructure upgrades that would increase capacity before proceeding with the planned development.

A National Grid spokesman told The Times the company was bringing data center projects online “as quickly as possible” and a government spokesman said efforts were being made to move forward with stalled projects. The spokesman added that National Grid is working with energy regulator Ofgem to update its grid connection process.

Power shortage: a serious problem

Power shortages are a major concern for data center companies around the world, including North America, as it makes it harder for them to secure capacity. A report from Bain and Company says utilities in the US will have to increase energy production by up to 26% of the 2023 total to meet projected demand in 2028.

Indeed, by 2030, U.S. data center energy consumption will more than double current levels, according to the Electric Power Research Institute.

Sleat added that the issue in the UK is in its infancy but is becoming increasingly important as the government seeks to make the country technologically competitive with countries such as the US and China. This is the vision of a “British success story”.

Indeed, there is evidence that the country’s technology sector is currently stagnating. The number of tech start-ups founded in the UK has seen a “marked decline” this year for the first time since 2022, research has found. There were only 11,368 new tech companies in the third quarter of 2024, down from 13,073 in the first quarter. decrease by 11%.

SEE: UK Government announces £32m funding for artificial intelligence projects

UK considers data centers critical, increasing strain on grid

Demand for data centers is growing rapidly around the world as it facilitates artificial intelligence training and expands cloud services that host models. In September, the government announced that data centers are now considered critical national infrastructure.

The government has hinted that the change was made to help improve the country’s security as they become increasingly critical to the smooth running of essential services, as evidenced by the CrowdStrike outage in July.

However, according to Ishmael Bourdo, the civil servant responsible for the government’s Net Zero strategy, it also means planning restrictions surrounding their development have been relaxed so more projects can be given the green light.

According to The Register, he said the designation allows the government to “overcome local opposition to data centers,” which is typically based on their electricity and water consumption, noise and environmental disruption.

Shortly after, the government announced that four US tech companies had pledged to invest £6.3 billion in UK data centres, providing the country with the “essential infrastructure to train and deploy next-generation artificial intelligence technologies”.

WATCH: Microsoft makes big bet on UK artificial intelligence with $3.2 billion investment

Government demands could derail Europe’s environmental goals

Failure to meet the power demands of data centers could spell doom for the environment. A September report from Morgan Stanley said these businesses will produce 2.5 billion tons of carbon by the end of the decade, three times more than if the generative AI boom had never occurred.

WATCH: Sending one email using ChatGPT is equivalent to consuming one bottle of water.

In July, Google said its expansion of data centers to support its artificial intelligence efforts contributed to the company’s 14.3 million tons of carbon dioxide equivalent output in 2023. This is 48% more than in 2019 and 13% more than in 2022.

The EU has a target of cutting the region’s greenhouse gas emissions to at least 11.7% lower than forecast in 2020 by 2030, and becoming climate neutral by 2050. However, these goals may well be thwarted; A report published by McKinsey this week says demand for bit barns in Europe will triple by 2030, increasing their share of total energy demand in the region by 3%.

Like the UK, Europe also faces challenges when it comes to producing the electricity needed for data centers.

“These include limited sources of reliable energy supply, sustainability issues, insufficient infrastructure for access to electricity, land availability issues, shortages of power equipment used in data centers, and a shortage of qualified electrical engineers to build facilities and infrastructure,” they write. McKinsey analysts. .

Data centers don’t just need electricity to power servers: a significant amount of energy also goes into cooling systems to manage the heat generated by dense equipment. AI chips generate even more heat because they require extreme processing power, so developers are asking hardware suppliers to lower the temperature of the cooling water.

Michael Winterson, chairman of the European Data Center Association, told CNBC this week that falling water temperatures would “fundamentally return us to the unsustainable situation we were in 25 years ago.”