Electricity supply holding up new UK datacentre developments

Access to power the ‘single biggest constraint’ in building

The CEO of one of the UK’s largest property developers says constrained grid capacity is holding up the supply of new datacentres.

David Sleath of FTSE 100 firm Segro told Times Radio his firm would invest “hundreds of millions and more” in datacentre development if they could secure electricity supply.

In some cases, Sleath said his teams had been waiting “years” for local substations to be upgraded with more capacity. With that capacity Segro could build more than the 35 datacentres it currently operates around the country.

Sleath called access to power “the single biggest constraint” in the way of new datacentres.

He added, “It’s been a perennial problem and it’s a real issue right now because it’s holding up the investment in these critical sectors that the government knows are important to the UK success story.”

He said the process for getting a connection to the electricity grid is “rather archaic” and limits building.

“You have to join a queue if you want to get an energy connection and you may, or may not, be able to get it when you want it. It’s a particular bottleneck that everyone is faced with at the moment. It’s all about where you are in the queue."

Chancellor Rachel Reeves acknowledged the low supply and high cost of power in her Budget speech this week. She announced an extra £3.9 billion in 2025-26 for various projects intended to decarbonise industry, and £2.7 billion to continue the development of Sizewell C nuclear power station.

The Labour government recently moved to classify datacentres as critical national infrastructure, joining other such services as the emergency services, energy and water supplies.

That also means they will have an easier time securing planning rights, helping to expand the UK’s capacity.

A spokesperson for National Grid said it is “committed to connecting viable projects to the grid as quickly as possible,” and is working with developers, Ofgem and the government to reform the process.