Industrial Strategy 2025: What it means for the Energy Infrastructure and Digital Tech Sector
techUK sets out a summary of the Industrial Strategy published on Monday 23 June. Click here for our analysis of the Digital and Technologies sector plan.
Wired for Growth: Rewiring Britain’s Industrial Strategy through Energy Reform
Britain’s ambitions for global technological leadership hinge not only on talent and innovation, but also critically on kilowatts. On 23 June, the UK government published its refreshed Modern Industrial Strategy, a document that outlines a vision for sustainable growth through technological advancement, green transition, and increased productivity. Yet, as techUK’s recent reports and policy responses underline, this strategy risks faltering if the UK’s energy infrastructure is not dramatically reformed to support a digital-first economy.
At its core, the strategy champions innovation, infrastructure, and inclusive growth. But while the document speaks of “seizing the AI opportunity” and building a “resilient digital economy,” it says little about the underlying energy system that such a transformation depends on. Without cheap, abundant, and accessible power, delivered swiftly and reliably to where it is needed, Britain’s tech economy could be powered down before it ever gets fully online.
The Energy Trap
The UK currently suffers from some of the highest industrial electricity prices in Europe. For digital infrastructure providers especially data centres, which underpin everything from cloud services to AI training models, energy is not just another input cost; it’s the heartbeat of their operations. The high cost of energy and grid delays are the greatest barriers to investment in the UK’s tech sector. Delays to grid connections compound the problem: some projects have reported lead times stretching beyond a decade, turning potential £0.5 billion investments into idle blueprints.
These constraints are already dampening innovation. AI applications, which require high-intensity computing environments, are particularly vulnerable. As of November 2022, the UK represented only 1.3% of global compute capacity and had no system in the Top 25 of the Top500. By mid‑2025, it features several systems within the Top 500, most notably ARCHER2 at around 75th place, but none in the top tier. This is an alarming shortfall for a nation that aspires to lead in quantum computing, advanced semiconductors, and AI.
If power cannot be delivered where and when it's needed, capital will go elsewhere. There are signs that this is already happening. We have a very short period of time to be competitive on a global scale.
Gridlock and Grid Reform
The government’s recent Connections Action Plan and Ofgem’s fast-track proposals for grid reform represent steps in the right direction, but remain unclear where demand industries are and will be, especially Critical National Infrastructure.
What is needed is a fundamental reset in the way the UK manages energy infrastructure for digital demand. techUK advocates for a “readiness-based” queue system to prioritise viable, strategically important projects, and the introduction of binding service standards with compensation for missed delivery deadlines. Crucially, the sector demands greater transparency and digitisation across Distribution Network Operators (DNOs), with real-time data on grid capacity and connection timelines.
The Strategic Spatial Energy Plan (SSEP), with its zonal modelling approach, could play a useful role, but will it truly align with the Industrial Strategy, or operate in parallel? Will industrial demand finally be treated with the same urgency as energy supply? So far, there are few reassurances.
Gaps & Concerns
techUK and its members highlight several unresolved policy questions that could determine the success or failure of Britain’s digital infrastructure ambitions:
EII Classification: There is no mention of data centres in the eligibility criteria for any energy relief, despite their energy intensity and high economic value.
Grid Access Timelines: The Connections Action Plan is a start, but it lacks teeth. Will operators continue to face 5–7 year delay risks in the absence of enforceable service levels?
Planning Clarity: Reform of Nationally Significant Infrastructure Project (NSIP) criteria could accelerate deployment. But when, and how, will this be delivered in practice?
Policy Fragmentation: There is a conspicuous lack of a unified digital infrastructure strategy. How will planning, energy, AI, and industrial policy finally be integrated into a coherent whole?
Transparency: No energy pricing forecasts or total cost of ownership (TCO) data have been provided under the new strategy. How can businesses invest with confidence in such opacity?
Accelerated Connections Service:When could industry expect clarity over what would this mean for industries and how would this be implemented in practice?
From Burden to Opportunity
Despite the challenges, energy could yet become the UK’s competitive advantage. By shifting from a passive to a proactive energy planning approach where industrial policy, AI strategy, and energy investment are synchronised the UK can unlock powerful synergies.
Pricing reform is long overdue. While government is in gridlock with zonal and reformed national pricing models, the current regime does not sufficiently reward co-location of generation and demand or investments in low carbon technology/ energy solutions. A forward-looking transmission and network methodology, coupled with incentives for low-carbon, high-impact sectors like AI and cloud computing, would signal that Britain is not just open for tech business but optimised for it.
New pricing mechanisms need to reward high value sectors such as digital for long-term investments in renewable energy and substantial energy efficiency technologies.
Yet uncertainty remains. Will new pricing mechanisms help or hinder high-growth sectors like digital infrastructure?Will decentralisation result in fairer outcomes, or compound existing regional inequalities?
Building the Digital-Energy Nexus
The Industrial Strategy rightly emphasises digital transformation as a growth lever, but it must now move from strategy to system design. As techUK’s Tech 2035 and Foundations for the Future reports show, the future of Britain’s productivity and its climate goals are tightly linked to how quickly it can deploy next-generation infrastructure. This includes supercomputing, photonics, and cloud technologies, but also the energy systems that power them.
To that end, the government should:
Integrate digital infrastructure into energy planning as a priority demand sector, not an afterthought.
Provide clarity over the Accelerated Connections Service.
Include Data Centres in EIIs as an energy-intensive, high-growth sector.
Standardise and digitalise the grid connection process, including binding service levels and transparent pricing.
Incentivise co-location and low-carbon operations through smart tariffs and locational investment signals.
Establish a strategic corridor model that aligns regional growth clusters with energy, connectivity, and water infrastructure.
The Verdict
The Modern Industrial Strategy marks a welcome return to coordinated economic policy. But it is dangerously underpowered if it fails to reckon with the energy foundations needed to support Britain’s digital ambition. As techUK’s analysis makes clear, the issue is not vision it is execution.
The UK stands at a junction: modernise its energy infrastructure in line with its tech aspirations, or watch as global investment flows elsewhere. Energy policy is no longer about keeping the lights on. It’s about lighting the way to growth.
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Teodora’s rich background varies from working in business development for a renewable energy lobbying association in Brussels to the fast moving technology innovation startup scene in the UK.
She has designed the market strategy for a German renewable energy engineering scale up for the UK, listed on Nasdaq private market, and now one of the fastest growing scale ups in the world. Previous experience also includes managing a renewable energy startup in London, which has built a small-scale biomass CHP power plant. Teodora is passionate about cross-industry collaboration and working together with academia to inform the design of future educational models and skill building.
Most recently Teodora has ran the commercial activities and business development at Future Cities Catapult, focusing on innovation in cities, digital health and wellbeing, mobility, and infrastructure. Teodora is a passionate STEM Ambassador and a vocal advocate for women in tech.
Programme Assistant, Data Centres, Climate, Environment and Sustainability, Market Access, techUK
Lucas Banach
Programme Assistant, Data Centres, Climate, Environment and Sustainability, Market Access, techUK
Lucas Banach is Programme Assistant at techUK, he works on a range of programmes including Data Centres; Climate, Environment & Sustainability; Market Access and Smart Infrastructure and Systems.
Before that Lucas who joined in 2008, held various roles in our organisation, which included his role as Office Executive, Groups and Concept Viability Administrator, and most recently he worked as Programme Executive for Public Sector. He has a postgraduate degree in International Relations from the Andrzej Frycz-Modrzewski Cracow University.
Teodora’s rich background varies from working in business development for a renewable energy lobbying association in Brussels to the fast moving technology innovation startup scene in the UK.
She has designed the market strategy for a German renewable energy engineering scale up for the UK, listed on Nasdaq private market, and now one of the fastest growing scale ups in the world. Previous experience also includes managing a renewable energy startup in London, which has built a small-scale biomass CHP power plant. Teodora is passionate about cross-industry collaboration and working together with academia to inform the design of future educational models and skill building.
Most recently Teodora has ran the commercial activities and business development at Future Cities Catapult, focusing on innovation in cities, digital health and wellbeing, mobility, and infrastructure. Teodora is a passionate STEM Ambassador and a vocal advocate for women in tech.
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