Data Centre Covenant sets tests for government support

The government has published a Data Centre Covenant linking support for strategically important developments to commitments on local investment, resource efficiency and energy infrastructure costs.

All data centres are encouraged to meet the covenant’s tests. Strategic projects must meet them to qualify for additional government action intended to accelerate grid connections and planning.

Published on 28 October, the covenant includes a requirement for strategic developers to agree a Local Benefit Plan with the host community. Investment must be substantial and linked to the development’s size, going beyond existing Section 106 and Community Infrastructure Levy obligations. Potential uses include transport improvements, parks and town centres.

The government has grouped its expectations into five areas:

- Energy costs and grid resilience: developers should cover the energy costs they create, make credible commitments for requested grid capacity and support clean power and system flexibility.

- Local benefits: strategic projects should agree community investment plans, giving residents a meaningful say in how benefits are designed and allocated.

- Environmental performance: new facilities should target Power Usage Effectiveness of 1.3 or better, minimise demand on public water supplies and capture waste heat where there is a viable local user.

- Employment and UK supply chains: developers should recruit locally where possible, fund paid apprenticeships and training, and prioritise UK suppliers and technologies.

- Security: operators should support secure UK access to computing capacity and work with national technical authorities to strengthen resilience beyond baseline requirements.

Strategic data centres will also be expected to report annually on energy and water use, efficiency, emissions, heat reuse and participation in flexibility services. Existing operators will be strongly encouraged to publish equivalent information.

In return, a new Ministerial Control Centre will consider support for strategic developments. Chaired by the Minister for AI, it will bring together Treasury, energy and other relevant ministers to coordinate action on power and planning.

Proposed measures include reserving future grid capacity and reallocating capacity released when other projects leave the connections queue. The government will also work with the National Energy System Operator and network companies to identify locations where capacity could be available before 2030.

Where further intervention is needed, the government says it will use Planning and Infrastructure Act powers to facilitate the transfer of pre-2030 data centre connection contracts to strategically important projects.

A separate, tightly controlled framework is planned for temporary on-site generation to bridge the period before a grid connection becomes available. This would be restricted to exceptionally strategic projects where other measures cannot provide capacity in time, and would be subject to conditions.

The government has yet to define strategic data centres or publish the additional criteria they must meet. It estimates that the UK needs 6GW of AI data centre capacity by 2030 to support national interests and secure domestic access to AI infrastructure.

Wider measures outlined alongside the covenant include greater choice for developers to build their own connection infrastructure and arrangements for more flexible connections. The government also plans to consult on a draft Data Centre National Policy Statement for projects seeking consent through the Nationally Significant Infrastructure Project regime.

The covenant’s tests will remain under review, with the government stating that commitments should be proportionate and deliver value to host communities and the wider UK.