<\/p>\n
Iain Gilbey<\/a>, Laura Thomas<\/a>, Ian McCarlie<\/a>\u00a0and Ronan Lambe<\/a>\u00a0of Pinsent Masons were commenting after UK chancellor John Healey announced the new data centre covenant in his Budget announcement on Wednesday.<\/p>\n \u201cThe covenant sets out the headline details of a deal the government wants to make with prospective investors in, and developers of, \u2018strategic\u2019 data centres in England, to balance the imperative of delivering the infrastructure the UK needs to take full advantage of AI with community impact concerns,\u201d said Gilbey, a planning law expert. \u201cThe covenant is a precursor to the government publishing a new \u2018national policy statement\u2019 (NPS) for data centres, which will guide applications for development consent for such \u2018nationally significant\u2019 data centre projects in future \u2013 it opened its consultation on a draft NPS<\/a> on Wednesday.\u201d<\/p>\n Under the covenant, the government has pledged to support the development of \u201cstrategic\u201d data centres through a variety of steps that broadly focus on facilitating their speedy connection to Britain\u2019s electricity grid.<\/p>\n For example, it said that for sites that demonstrate sufficient strategic value, it will use powers under the Planning and Infrastructure Act \u201cto prioritise strategically important demand projects, including data centres, by reserving future capacity and reallocating capacity released when other projects leave the connections queue\u201d. It said it will also use powers to ensure \u201cstrategically important data centres and other strategically important projects\u201d can access any new capacity that can be found in the system.<\/p>\n The government has further pledged to \u201caccelerate connections before 2030\u201d and enable developers behind \u201cexceptionally strategic projects\u201d to temporarily operate on-site generation to power their data centre operations, under a new \u201ctightly controlled\u201d permitting regime it plans to develop, until such time as the projects can be connected to the grid.<\/p>\n To access this support, the government expects data centre developers to meet a range of \u201ctests\u201d, including around community benefit and sustainability.<\/p>\n For example, developers will need to cover \u201cany energy costs they create\u201d, \u201cprotect nature, minimise water use and publish annual energy and water consumption reports\u201d, and \u201ccapture the heat they produce for nearby homes, schools, hospitals or businesses wherever practical, rather than letting it go to waste\u201d. They will also need to agree a \u201clocal benefit plan\u201d with the local community committing the developer to make a \u201csubstantial investment\u201d, commensurate with the size of development, that \u201ccan be spent on local priorities, like transport, parks and town centres\u201d.<\/p>\n Developers will further be expected to create local jobs that last beyond construction, invest in paid apprenticeships and training, and \u201cmake a meaningful contribution to the development and deployment of British AI hardware in the UK\u201d through their supply chain arrangements. Data centres built in England will also be expected to \u201cprovide secure and reliable access to compute\u201d for the NHS and other \u201ccritical services and national priorities\u201d in the UK.<\/p>\n The government said it plans to define what constitutes a \u2018strategic\u2019 data centre in due course and to specify \u201cthe additional criteria such projects will be expected to meet\u201d.<\/p>\n Laura Thomas, who advises on data centre projects, said: \u201cThe data centre covenant can strengthen market confidence among international investors and developers looking to build and operate data centres in the UK. By setting clear expectations around environmental standards, skills development and local investment, the government is sending an important signal that the UK is committed to supporting growth in the data centre sector while ensuring communities share in its success.\u201d<\/p>\n Energy project specialist Ian McCarlie of Pinsent Masons said: \u201cThe pledge within the data centre covenant to address grid connection challenges builds on the government\u2019s announcement last month<\/a>\u00a0to establish Great British Grid as a new branch of Great British Energy. Those plans, however, appear more long-term in their aims, as they envisage Great British Grid serving as a competitive driver of investment in the new electricity network infrastructure desperately needed to modernise electricity transmission and distribution in Britain and permit more data centre capacity along with significant new renewable energy capacity.\u201d<\/p>\n \u201cThere remains a need to improve the grid connections process in the short-term, amidst problems with the implementation of reforms overseen by the National Energy System Operator (NESO). While the government has alluded to taking a more interventionist approach to use powers under the Planning and Infrastructure Act to facilitate grid connections for strategic data centre projects, developers will want much more detail on this, to get comfortable that what it is planning will have a meaningful impact on timelines for securing grid connection offers,\u201d he said<\/p>\n Ronan Lambe, who also specialises in energy projects, said: \u201cThe plans to allow data centre developers to build on-site generation appear to envisage potential relaxation of electricity licensing and\/or consenting rules. While this is an interesting development, it does not appear to represent a significant new benefit to data centre developers. Current consenting and licensing rules allow data centre developers or third parties to do this \u2013 and indeed some are. What are more significant are the plans Ofgem is currently consulting on<\/a>, which float giving large energy users such as data centres permission to build transmission infrastructure themselves and then transfer it to the transmission owner in due course \u2013 a bit like what happens under the regime that applies to offshore transmission owners.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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