The evolving energy landscape

Despite the UK’s steadily growing population, energy demand has been declining annually since 2005. A number of factors are driving this trend, including milder weather patterns, improved building insulation, widespread adoption of LED lighting and more energy-efficient household appliances. A significant contributor is changing consumer behaviour—particularly among households, which accounted for approximately 34% of electricity consumption in 2024.

Yet this trend is set to reverse with the likes of electric vehicles (EVs) and heat pumps increasing our energy usage once more. In addition, data centres, which are integral to the evolution of AI, will put significant pressure on the National Grid. Data centres currently account for roughly 2% of the UK’s electricity demand, but this is expected to rise significantly, reaching 10% by 2050. With all of these technological advances, electricity demand in the coming decade is projected to grow three times faster than during the 1980s and ’90s, requiring rapid scaling of clean energy sources to keep the country on track for its net zero targets. This projected surge presents challenges for the already creaking National Grid, which must prioritise additional energy comes from new supplies of low- and no-carbon sources.

AI and data centres driving energy growth

Data centres have existed since the 1950s, evolving from mainframe computers to commercial facilities. The 1990s saw rapid growth with the rise of the internet, followed by the introduction of cloud computing in the 2000s. More recently, hyperscale data centres have emerged to support global cloud services, and the explosion of AI has accelerated demand even further, with over 100 new UK sites currently planned.

While digital alternatives to physical products are generally less energy-intensive, the expectation of instant access offered by data centres increases energy demand. Data centres require substantial electricity from the moment construction begins. Once operational, they need continuous power for servers, storage, networking equipment, backup systems and cooling infrastructure – all of which is deeply energy intensive.

National Grid reforms and regulatory shifts

Data centres need around-the-clock access to national energy systems, but their ability to do so is subject to a number of regulatory changes. One key development was the government’s Infrastructure Strategy published in June 2025. This strategy brought forward reforms to the National Grid’s long-standing queuing system. Previously, connections were processed sequentially, and changes that were arguably material did not result in a redesignation as a new project, leading to backlogs and delays of up to 15 years. Ofgem’s April 2025 reforms, however, introduced a prioritisation method based on readiness and alignment with the 2030 clean power plan, removing 64% of stalled ‘zombie’ projects.

Previously there was a great degree of flexibility with respect to changes to an existing connection or connection offer. In the event a change, for example repurposing demand to a data centre, this would tend to be navigated by way of a bilateral conversation with the National Grid Electricity System Operator (NESO). A Modification Application (Mod App) would be submitted and, provided it was an allowable change, the project would continue without being taken out of the queue.

However, industry awareness of this fact increased and calls for greater clarity over the magnitude of a change that would be considered material (which result in the project going to the back of the queue), which is in the process of being addressed. Opinion differs, but the prudent view is that if you want to change your battery storage project to a data centre then this may require a reapplication. As a result, we may see a shift away from projects being repurposed for data centre usage which in turn could lead to a problem with meeting the increasing energy demands of data centres.

Micro grids: a viable alternative

One emerging solution is the adoption of off-grid micro grids: privately owned electricity networks that can power anything from a single building to an entire community. A successful example is the Isle of Orkney, which has operated its own grid since 2008, supplying 95% renewable energy to 22,500 residents and businesses.

Micro grids offer flexibility and reliability but come with significant upfront costs. Designing, building and maintaining micro grids requires expertise and land. For data centres, which are already capital-intensive, return on investment is a key consideration. Regulatory frameworks, still largely designed for centralised systems, remain unclear.

Micro grids can operate independently or in conjunction with the National Grid. While this hybrid approach improves reliability, it doesn’t guarantee 100% renewable energy. Regardless, micro grids offer significant advantages and have the potential to play a significant role in the UK’s energy future, supporting the 2030 clean power targets and easing pressure on the national infrastructure.

How we can help with your renewables business

We have extensive experience working with clients in the renewables and cleantech sectors and are committed to supporting businesses in the industry. We understand the challenges of working in this dynamic environment and can help you respond to the challenges and opportunities it presents.

Our renewable energy team is made up of industry specialists, renewable energy consultants and other experts who offer maximum insight and value throughout the project lifecycle of your renewables business.

If you would like to discuss the impact for your renewables business, please contact Sheena McGuinness.

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