Data centres' energy consumption: A looming threat, but also a golden opportunity to heat the nation

14 April 2025, 07:20

The International Energy Agency’s sobering warning last week - that the world’s data centres could consume three times the UK’s annual electricity by 2030 - should jolt us into action.

But let’s not mistake this challenge for a dead end, it’s a chance to finally fix the systemic energy waste holding Britain back.

Every day, we squander vast amounts of renewable energy and lose enough heat to warm millions of homes. Data centres, those power-hungry engines of the AI revolution, epitomise this paradox.

They guzzle electricity, yet their servers blast out heat that vanishes into thin air as operators pay billions for cooling. It’s madness.

Heat networks are the missing link. These are pipes under our streets, redirecting surplus heat from data centres, factories and power plants to homes.

Denmark already heats 70% of homes this way. The UK? Just 2%. Scaling up could unlock £100bn in investment by 2050, slash bills and create skilled jobs nationwide.

But progress is glacial. The Government must accelerate planning, funding and delivery of this infrastructure.

No more half-measures.

Today, when the grid strains under peak loads, we pay gas plants to fire up. But what if we paid data centres (and their neighbours) to flex instead?

These hubs, often clustered in tech corridors, could store excess renewable energy in batteries or shift non-urgent computing tasks to off-peak hours, easing grid pressure.

But outdated market rules shackle this potential. Right now, only energy giants profit from balancing the grid. We need policies that let factories, hospitals and yes, data centres, trade stored energy in real-time markets.

If we get this right, households could save £375 annually by 2040 and data centres could evolve from energy hogs to smart grid partners. The tech exists.

Critically, the transition demands collaboration between the public and private sectors. Tech giants like Google and Microsoft, which operate vast data centres, have pledged to achieve net zero by 2030.

These commitments present an opportunity for the UK to broker partnerships where companies co-invest in heat networks as part of their sustainability goals.

In Stockholm, data centres contribute excess heat to the city’s district heating system, cutting emissions and costs and in the UK new developments such as Old Oak and Royal Oak are being designed with data-centre powered heat networks in mind.

The Government will be empowering Metro Mayors to “zone” areas for integrated energy communities where data centres, renewables and heat networks are planned in tandem.

This is an economic strategy that will ensure every region benefits from the AI boom rather than bearing its environmental burden.

The IEA is right, AI’s hunger for power is unprecedented. But they could be a national asset. Data centres, concentrated in urban hubs, could become anchors for local heat networks.

Tech firms, under pressure to go green, could partner with towns to build them. But none of this happens without leadership. Ministers must stop tiptoeing.

Set binding targets for heat network rollout, reform markets to put consumers, not conglomerates, in control and redirect subsidies from fossil fuels to flexibility schemes.

This will unleash a market that works for people and planet. The equation is simple: waste less, save more, grow faster. The heat beneath our feet, the power in our grids, it’s all there. Now, let’s use it.

Caroline Bragg is CEO of the Association for Decentralised Energy

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