The UK's data centre sector has never been more important. As artificial intelligence, cloud computing and digital services continue to expand, demand for data centre capacity is rising, supported by the UK government’s National AI Strategy.

However, while discussions about digital infrastructure often focus on access to power, the factors determining whether these projects succeed or fail are becoming far more complex as the sector matures.

Speaking during a panel discussion at UKREiiF 2026 hosted by Winvic, experts from CyrusOne, SEGRO, Ridge, Rider Levett Bucknall (RLB) and Winvic argued that the UK data centre market is entering a new phase of maturity - one in which planning, public acceptance, skills, procurement, financing and collaboration are becoming just as important as electricity supply.

The discussion, chaired by The SectorScope editor Karen Fletcher, explored how the industry can navigate these emerging challenges while continuing to deliver the digital infrastructure required to support economic growth.

The Panel

Earning a social licence to operate

One of the strongest messages from the discussion was that data centre developers should not assume public support. Emma Fryer, Director of Public Policy Europe at CyrusOne, highlighted that attitudes towards data centres are changing rapidly, particularly as facilities become more visible within communities.

Drawing comparisons with the United States, where local opposition to data centre development has increased significantly in the past year, she noted: “I think what's been interesting in the United States is the speed with which attitudes have changed. Previously, data centres have had always had a social license to operate. And now they absolutely don't .  In Europe, even though planning regulations are stricter, they've never had that social license operate. We have to earn it.”

This means that European developers must work proactively to earn trust. For Fryer, successful community engagement goes beyond consultation exercises. Developers need to understand local priorities, involve communities throughout the development process and demonstrate tangible local benefits.

As data centres increasingly move beyond traditional industrial locations into more visible urban and semi-rural settings, factors such as architecture, amenity and community value are becoming increasingly important.

“I would say the key thing is to give local people a sense of agency in your project, all the way through development from concept to build, and then also you need to stick around and you need to do that yourself,” added Fryer.

“You need to turn up yourself as a representative of the company and engage. And actually, I've done it for Cyrus One on one of our London sites, and it's been one of the most rewarding processes I've experienced, and the amount we've learned been amazing. So I'd say agency for local communities me is the key thing to bear in mind.”

Andrew Pilsworth, Managing Director of Data Centres and Strategic Partnerships at SEGRO, agreed that the engagement process can be hugely rewarding: “We have a project in Park Royal in north west London. This has been through the planning process, and that can be challenging, but if you really engage in the way Emma's described and you really treat it as a partnership between yourself and the local community, it can be very constructive.”

This need to engage with local residents and planning committees is becoming more important as UK data centres move away from their traditional locations. They are are no longer hidden pieces of infrastructure operating out of sight, or within specialist campuses. They are becoming significant components of local economies and communities, and public expectations are evolving accordingly.

Following demand, not just power

One of the reasons for the wider geographical spread of data centres is the government’s AI Growth Zones policy. Five have been designated so far, with others potentially on the way. Several panellists welcomed the strategic support, but questioned whether policy is always aligned with market realities.

Andrew Pilsworth stressed that customer demand remains the ultimate determinant of data centre viability, overriding the driver of government incentives. He notes that the AI Growth Zones are supply led – locating data centres where there is land, power and the need to encourage local economic growth. But there are other important drivers to consider.

“I welcome government support for data centres and that they are now considered critical infrastructure. But I think the problem for me with the AI Growth Zones is how those areas have been selected.

“At its best, the policy would be demand-led which would lead to support, for example for Slough Trading Estate, which we own and manage, to be one of the AI Growth Zones because there is a lot of customer demand. But the policy is supply-led because the government wants to see certain areas benefit from the growth potential of data centres, which is understandable.”

He pointed out that over time it’s likely that other areas will see data centre growth, but there is a reason that Slough Trading Estate has grown to be the UK’s largest data centre campus (and second-largest in Europe).

“The clustering effect is often underestimated. The data centres share infrastructure and they talk to each other. Those clusters tend to be close to the population centres and the end users.”

Fryer agreed: “People must think that data centre operators are mad, because we keep buying land in Slough which is probably among the most expensive in the world by now and where there are planning and power challenges. But there is a reason for that and it’s because that’s where the market is driving us.”

As Pilsworth added:  "Like all development, if you don't have a customer willing to take that on terms that are going to work for both parties, you can talk about planning and power and all the other things as much as you like, but ultimately this is only going to be a successful scheme if you have a customer."

The unintended consequences of policy

The AI Growth Zone strategy has created several challenges for the data centre sector. Without clear selection criteria, it is difficult for developers and investors to really understand what’s driving decisions – and it has created an unwanted incentive to boost land values through power connection applications.

Emma Fryer highlighted what this means for responsible developers: “Cyrus One is a developer-operator, so wherever we are, we will be there for twenty five years. Once we have  built data centre, we then operate it on site. The AI Growth Zones policy has created a lot of hot air, but not much action. I think the problem is that the government hasn't specified what the criteria are for those Growth Zones, and they haven't said when they're going to stop announcing them.”

As a result, there has been a move in the land market to upgrade values in areas that might have the potential to win Growth Zone status. “We’ve seen a colossal new ballooning of the connection demand queue, which is now 126GW, almost none of which are genuine data centre projects,” explained Fryer.

But there is sympathy for why the government has opted for the Growth Zone approach: “I understand why any government or any policy maker would want to try and control the distribution of data centres, because they inject Foreign Direct Investment (FDI) into an economy faster than anything else. So it is an incredibly attractive thing to try and spread that around.”

Building relationships

Another challenge with government support for the data centre sector is that national strategy is not always delivered at the local level. Although data centres have recently been recognised as critical national infrastructure, panellists suggested that planning processes remain a major source of uncertainty.

Rennie Dalrymple, Partner at Ridge, welcomed the government's supportive stance but cautioned against assumptions that projects are becoming easier to deliver.

“There's lots of talk around,  ‘let's Abandon the Town and Country Planning Act and let's go down the DCO development consent order route. Let's look at LDOs.’ But there's still a tremendous amount of work that goes into putting those types of applications together,” he said.

In addition, new requirements, evolving legislation and the increasing use of on-site generation add layers of complexity rather than removing them.

“The reality is I can't see much fast-tracking going on at the moment. Add in factors such as self-generation of energy to over come grid availability issues and that’s an extra layer of complexity to the planning process. It's still a lot of work to navigate planning,” said Dalrymple.

Importantly, several panellists noted again that, as with community engagement, successful planning outcomes depend on early discussion with local authorities.

Rather than being a barrier, planning can become an enabler when developers invest the necessary time and effort in building relationships and understanding local priorities. Pilsworth noted that this has been a priority for SEGRO across Europe.

“We have a strong pipeline of projects across Europe and I set a criterion that we are only going to have sites in our pipeline where we have our Industrial and Logistics teams on the ground. We are already seeing a huge benefit.

“Those teams are not experts in data centres, but they have the local relationships in bringing powered land through the planning process. And that is that is the same process; whether it's for a data centre or logistics hub, the same criteria apply.”

Along the supply chain – the need for transparency

As data centre pipelines expand, delivery at the sharp end comes into focus. Here, the arrival of major projects at the same time has created a bottleneck for some specialists.

Danny Cross, Head of Data Centre Delivery at Winvic, said that although the UK construction market is strong, there are gaps: “Data centres rely on heavy MEP integration and commissioning skills, and that talent pool is limited.”

It’s difficult to avoid the topic of power accessibility at this stage as it’s so fundamental to project progress. Cross argued that the challenge is not necessarily an overall shortage of people. Instead, it is the concentration of multiple large-scale projects competing for the same specialist resources at the same time.

“As a result of that, the contractors and specialists are prioritising schemes that have the power on the sites, that are clearly funded and actively progressing and built around realistic programs. As a result, some projects can struggle to attract the right calibre of delivery teams,” explained Cross.

Cross also warned that unrealistic delivery programmes remain a persistent issue. This includes a lack of clarity on what stage the project has reached at the point that Winvic is approached as a main contractor.

“The engagement of the contractors at the right time is either oversubscribed or happening too early.”

His solution was straightforward: earlier engagement, stronger partnerships and more realistic planning: "We should be working with contractors as strategic partners rather than through a transactional process."

This theme of collaboration and transparency is one that united every panel member. Louisa Curcio, Partner at RLB, argued that the industry often talks about collaboration without fully embracing what it means in practice.

She noted: "We need to embrace collaboration as a delivery tool, and not just a phrase that we use to sound positive. It's about looking at that forward commitment and giving that commitment to the market so that it becomes about when, not if. And that is a key thing. "

Curcio noted that there is even a challenge in the language of collaborative working: “I could almost guarantee if I asked everyone in this room, you would have a slightly different definition of what that meant. Because on every project that you've worked on, someone has interpreted that slightly differently. So we're not speaking the same language even though we're using the same words.”

The result can be confusion, misaligned expectations and unnecessary risk. Curcio pointed out that there is a cost to working non-collaboratively: “If there's no genuine incentive there to try to achieve program dates or better your cost, then the contractors are just going to price that risk in anyway because they know that they're not going to get the incentives at the end.”

Several panellists also highlighted the lack of transparency that often exists within the sector. Cross argued that greater visibility around project pipelines would allow contractors and supply chain partners to plan resources more effectively.

“It's having that certainty and understanding around when these projects are coming, so we can allocate the resource to it,” he said.

Dalrymple agreed, noting that confidentiality requirements and risk management considerations can sometimes prevent important information being shared.

“Sitting in the middle as we do at Ridge, working on project management,  cost consultancy and project advisory services, sometimes there just isn't that transparency. As we've mentioned a couple of times, it's the end customers that drive these projects, then the investors, financiers, clients. And so there's a lot of moving parts.”

Curcio suggested that excessive reliance on non-disclosure agreements (NDAs) can sometimes limit the industry's ability to improve collectively.

“We all know what's happening in the market. We all know what is coming and what we're working on, but we can't talk about it. Most importantly, we can't share lessons learned,” she explained.

As projects become larger and more complex, panellists repeatedly returned to the need for greater openness, earlier engagement and stronger long-term relationships throughout the supply chain.

The investor influence

Another factor influencing data centre scheme success is the changing profile of the investors backing the industry.

Rennie Dalrymple explained: “Ten years ago, or even five years ago, data centres were very much an alternative asset class. In many ways a lot of investors were prepared to be more entrepreneurial. In those days, we could take a ‘if we build it, they will come’ approach. So, for example, you could be less specific about location because there was no physical portfolio of data centres.”

Today, he explained that investors are much more mature in their approach: “As Emma said earlier, if you don't have a site that can translate to a customer requirement, then you're not going to get investors looking at that.”

The result is that the way risk is handled will continue to evolve, shaping where risk is placed – which in turn will impact issues such as supply chain collaboration and transparency.

“These schemes require a lot of capital deployment. I think we're going to see funds consider how they place the construction development risk. Land risk and power in one vehicle and then look at maturing that into an operating vehicle. So, looking at those two sort of things separately and looking at risk placement through the whole funding cycle,” explained Dalrymple.

As the market continues to evolve, understanding how risk is distributed across the development lifecycle is becoming increasingly important.

Towards an interconnected delivery mechanism

The most significant conclusion from the discussion was that in the data centre sector, the definition of viability itself is changing. Historically, a viable data centre site was often one that could secure sufficient power and connectivity to site.

But the struggle to obtain access to power can disguise a much broader range of challenges for the sector. As the panellists repeatedly highlighted, successful projects now depend on a far wider ecosystem. Developers must win community support and navigate increasingly complex planning requirements. Successful locations are those where genuine customer demand exists, not simply where power may become available.

And when it comes to delivery, these projects must secure specialist construction and commissioning expertise,  work with resilient supply chains and create procurement models that encourage genuine collaboration rather than risk transfer.

At the same time, investors are becoming more sophisticated in how they assess opportunities. The days of speculative development are giving way to a more mature market where certainty, transparency and demonstrable demand are increasingly important.

What emerged from the discussion was a picture of a sector that is growing up quickly. The UK data centre market remains one of the most attractive in Europe and government recognition of data centres as critical national infrastructure is an important step forward. However, growth will increasingly depend on how effectively the industry can align planning, policy, funding, skills and delivery capability around a common goal.

Power remains fundamental. Without it, none of these projects happen. But once the question of power has been addressed, the industry is discovering that many of the biggest challenges lie elsewhere.

The next generation of successful data centre developments will not simply be those with access to electricity. They will be the projects that can bring together communities, planners, investors, customers and supply chains in a way that creates confidence from concept through to operation.

In that sense, the future of the UK's data centre sector may be determined not by a single constraint, but by how well an increasingly interconnected industry learns to work together.