Report: Powering Digital Infrastructure

The United Kingdom stands at a pivotal moment. The global digital economy is accelerating at an unprecedented pace driven by artificial intelligence (AI), cloud and edge computing, high-performance simulation, and the “fourth industrial revolution”. To reflect this, the UK has set bold national ambitions through its Industrial Strategy and AI Opportunities Action Plan to ensure that this digital wave is not simply one of participation, but of leadership. At the same time, the UK Government has committed to decarbonising the electricity system through the Clean Power 2030 Action Plan. Yet these ambitions are not without challenges. The UK faces ageing infrastructure designed for a centralised system, the highest industrial energy prices in the International Energy Agency (IEA), geopolitical uncertainty impinging on supply chains, and an increasingly destabilised climate adding urgency to questions over how to protect and allocate resources.

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Navigating a path that is fundamentally in the interest of the UK demands a sufficient, resilient, and digital infrastructure architecture, of which data centres and compute capability are the very backbone. Pressures on the energy system are increasing, with load growth outpacing investment, meaning a more strategic approach to allocating capacity is required. In the context of fragile global supply chains and transitioning local energy systems, the UK cannot afford to waste a single Watt.

In this report, techUK examines the intersection of power and digital infrastructure, including the barriers faced by data centre developers and operators in relation to energy costs and grid access. For example, analysis last year found that UK electricity prices for data centres are roughly four times those in the United States and about 46% above the median of 31 IEA countries, driven largely by rises in policy and network costs. This is compounded by the reality for many operators of connection times of up to eight years, often with little certainty and transparency over decisions.

We also highlight the valuable contribution data centres can make to the energy system, helping to drive reindustrialisation and decarbonisation. According to the IEA 2025 report, electricity consumption in the UK rebounded to growth of 2.4% in 2024, driven by data centre expansion and increased electrification (e.g. EVs and heat pumps), following declines in both 2022 and 2023. If industrial energy demand returns or grows in the form of clean electricity consumption, fixed infrastructure costs can be spread over a larger user base. Furthermore, modelling from Aurora Energy Research suggests that data centre growth could provide a “route to market” for up to 19GW of renewables by 2035.

Finally, we set out key recommendations for policy makers to ensure the UK’s energy sector can keep pace with its digital and AI ambitions. These include.

Ofgem and NESO should develop a more comprehensive and appropriate list of Gate 2 Readiness criteria for demand projects to weed out speculation.

DESNZ and HMT must implement levy reform to mitigate the impact of rising policy costs on energy bills.

DNOs and TOs must increase transparency over the grid connection queue, as indicated in Ofgem’s Connections End-to-End Review.

Ofgem should allow private sector participation in the building, financing, updating, and operating of transmission assets to reduce delays and unlock capacity.

DESNZ and DBT should unblock barriers to support better uptake of corporate PPAs between renewable generators and data centres, including government-backed credit insurance, standardised contracts, and guidance on pricing.

The digital economy is of paramount importance to the UK's growth objectives and ambition to kickstart reindustrialisation. Despite the Government recognising the enormous potential of AI to transform the UK economy, greater cohesion between policymakers is required to implement the system-wide reforms that the scale of transformation demands. If implemented correctly, the reforms required to support digital infrastructure will have positive ripple effects throughout the country, from lower energy prices for businesses and households to a more efficiently-managed grid. The quicker the energy sector reflects and caters to the needs of digital transformation, the sooner these benefits will be realised.

Smart Infrastructure and Systems Programme activities

techUK champion the role of technology in driving positive outcomes in our built infrastructure; from hitting net zero goals to improving safety. In doing so, we also optimise the commercial and regulatory landscape to ensure innovation in infrastructure can flourish. Visit the programme page here