The UK Government has set out plans to slash costs for artificial intelligence (AI) data centres –saving companies as much as £80 million per year.
Campaigners said the plans were a “gut punch” to people struggling with the cost of living.
In a policy paper called Delivering AI Growth Zones , the Department for Science, Innovation and Technology said that AI data centre companies should be rewarded if they help to bring down so-called “constraint costs”.
The paper sets out how large energy consumers can offset the costs associated when the level of energy generation in a certain region – for instance, Scotland – is greater than the grid is capable of handling.
The document said: “When data centres locate in Scotland and the north of England, they can harness this generation, and reduce the overall cost of our electricity system.
Mock up of a proposed AI data centre in Ravenscraig (Image: Apatura)
“Where data centres in AI Growth Zones facilitate these savings, they will receive a commensurate discount on electricity costs.”
This would be up to £24 per megawatt hour in Scotland.
The document went on: “While the precise approach will be determined following consultation, data centres in eligible AI Growth Zone projects will be exempt from paying a portion of the costs that they pay into the electricity system.
“This approach will demonstrate that where projects locate in strategic areas that strengthen the grid and lower system costs, government will support and incentivise that choice.
“It will also help rebalance investment across the UK, encouraging growth in regions with available clean energy – and the design of the approach means there will be no additional cost for other electricity billpayers.”
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Kat Jones, the director of the Action to Protect Rural Scotland (APRS) campaign group, said: “It’s shocking that the UK Government can reduce energy costs for data centres coming to Scotland but cannot reduce energy costs for ordinary people who are struggling.
“We are in a cost of living crisis and energy costs are especially acute for many people. Hearing that the UK Government can lower these bills for data centres, is a huge gut-punch.”
Donald Campbell, advocacy director at the tech justice pressure group Foxglove told The National: “It’s astonishing that the Government is proposing to give multi-million pound energy discounts to some of the wealthiest companies in the world. The likes of Amazon and Google are hardly short of cash – should they really be given discounts on their bills to encourage them to build yet more data centres?
File photograph of the Amazon logo (Image: PA)
“Ministers claim that these measures mean data centres will use wind energy which the grid can’t currently handle. But there’s a serious question here about what happens on the days when the wind isn’t blowing, and that extra electricity isn’t there – are the tech giants going to switch off their data centres, or are they going to rely on energy from other, dirty sources like gas or diesel?”
He argued that because the electricity grid is not fully decarbonised, adding yet more demand will mean more emissions and will prolong reliance on gas.
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Campbell added: “Instead of hand-outs for Big Tech, the Government should be insisting that no new data centres are built unless the developers also build new, renewable energy to power them.”
There are concerns that AI data centres could push up electricity prices for consumers, a phenomenon which has been observed in America .
However the industry has pushed back on this, saying that because Scotland in particular uses more energy than it consumes that this could actually bring down bills for households.
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It comes as families were warned on Wednesday to expect further energy price rises down the line .
Research from Cornwall Insights predicted that bills will slightly decrease by £22 per year in January but rise again by £75 next April due to increased standing charges.
And the boss of GB Energy was unable to tell MPs whether Labour would come good on their promise to slash bills by £300 by 2030 .
Asked about the election promise, which Keir Starmer doubled down on after coming to power, chief executive Dan McGrail said: “It’s a much wider programme. Big parts of that are down to Government policy, wider Government policy and it’s not for me to comment on.”
The UK Government was approached for comment.