DATA CENTRES
Sector continues to grow while reducing risk and improving sustainability
The data centre market continued to grow in 2024 with demand for capacity at a high level because of increased pressure for AI and cloud computing.
There is a relatively small pool of contractors equipped with the experience and technical ability to deliver data centres in the UK. In an environment of geopolitical unrest, recent rises in inflation, increased lead times for long-lead equipment, environmental regulations and contractor insolvencies, main contractors are unwilling to take on risk as they may have in the past. We are seeing risk-sharing measures being adopted such as price escalation and inflation clauses, increased package contingency allowances carried in contracts, and reduced retention allowances.
Companies like AWS, Google Cloud and Microsoft Azure are driving the significant growth in the UK, with green data centres becoming a priority. Many operators are focusing on renewable energy sources and increasing energy efficiency. Power constraints in London are increasing focus on other regions, driven by improved connectivity to infrastructure and renewable energy. As a result, we are now seeing a move to emerging hubs such as Cardiff, Manchester, Newcastle and Scotland.
In September 2024, the government announced that data centres would be designated as ‘critical national infrastructure’. Shortly after, it published its new industrial strategy with a focus on high-growth sectors such as digital and technology. The combined effect of these recent government initiatives should prove to be a positive one for the sector.
INSIGHT
Data centre growth seen in scaled schemes and retrofits
As demand for computing power rises, developers are turning to options from hyperscale data centres to smaller urban schemes as well as retrofitting suitable commercial and industrial space. According to a recent Rider Levitt Bucknall (RLB) report, the data centre sector’s energy consumption is considerable – and still growing.
