London Assembly: Data centres slow housing growing

Rising electricity demand across the capital, driven in part by the growth of energy-intensive data centres, is contributing to delays in housing delivery, according to a new report from the London Assembly Planning and Regeneration Committee.

The report, Gridlocked: how planning can ease London’s electricity constraints, highlights ongoing capacity issues in parts of the city’s electricity grid, particularly in West London boroughs such as Hillingdon, Hounslow and Ealing. These constraints led to the temporary suspension of new housing developments from 2022 onward, prompting emergency coordination efforts between the Greater London Authority (GLA), National Grid and Ofgem. More than 12,000 homes have since been connected through short-term fixes, but the report warns that long-term challenges remain.

Data centres, which require concentrated and continuous power, are cited as a significant driver of increased demand. The sector’s energy use is expected to grow between 200% and 600%, with individual sites sometimes requiring the same power load as tens of thousands of homes. These demands can overwhelm local networks, creating delays and additional costs for other developments, including new housing.

The report calls for a strategic shift in how digital infrastructure is planned alongside residential development. Key recommendations include the introduction of a separate planning use class for data centres to better account for their infrastructure impact and a dedicated data centre policy in the next London Plan.

The Committee also urged the GLA’s Infrastructure Coordination Service to publish its ongoing data centre forecasting work ahead of the next London Plan review and called for targeted investment in energy retrofits for social housing to reduce cost pressures on low-income households.

James Small-Edwards AM, Chair of the Committee, said energy capacity is becoming a “real constraint” on housing delivery and broader economic growth. “As demand for power rises, particularly from large energy users like data centres, we need a clear, strategic and long-term approach,” he said.

The report underscores the need for coordinated planning across housing, energy and digital sectors to avoid bottlenecks that could undermine London’s development targets and economic resilience.