19 Dec 2023

techUK Data Centres Programme Overview 2023

The Data Centres Programme represents over 200 members across operators, suppliers, customers and developers in the sector of which 80+ are SMEs.

At techUK, we help build strong relationships in a community of interest around the sector to expand networks and create business opportunities. We bring together industry and policymakers to work collaboratively and help improve external perceptions of the sector. Through our programme, we foster thought leadership as our members share technical knowledge and best practices towards achieving sector goals such as sustainability and net zero.

We intervene on policy, we mitigate regulatory impacts and we raise awareness. We have changed UK law and negotiated a tax concession worth over £200M for operators, we have reduced regulatory burdens, identified, and mitigated business risks, established a community of interest and shared technical knowledge. We have educated the sector about policy, and we have educated policymakers about the sector.

What We’ve Achieved

Despite late 2022 and most of 2023 having been a tumultuous year for the UK’s economy, society and planet, there were some positive developments for the data centres programme, with lots of new challenges for 2024.

techUK reached a landmark in November when we turned 10! We are proud to have been on this journey with so many of you over the past decade and look forward to working with you on the challenges and opportunities in the next year. Take a read of our CEO's reflections on some of the commitments we made back then, and our vision for the next decade. We also published our UK Tech Plan: How the next Government can use technology to build a better Britain, which includes recommendations such as cutting the cost of investing in new compute power and networks by ensuring the UK has access to adequate data centre and network infrastructure, both vital for the future of the UK tech sector.

The recent Autumn statement brought some positive news for the data centres industry, notably, supply-side reforms were a major feature with a determined effort to reduce the time it takes for businesses to get new projects connected to the national grid, something that will be welcomed by AI, data centres, telecoms and semiconductor companies. Ofgem announced the changes to the grid connection queue framework. We also saw the extension of the Growth Duty to Ofcom, Ofwat, and Ofgem, as well as the introduction of a Digital Adoption Taskforce to promote the uptake of digital and AI technologies among SMEs. Lastly, in the Autumn Statement, the government launched a consultation on new proposals for a 6-year CCA scheme.

While the announcement to boost economic growth is promising, it comes with uncertainties, especially regarding estimated contributions from reforms to the energy grid and pension/capital market changes. There's also a notable tightening of public spending, raising concerns about potential impacts on public services and digital transformation plans.

However, this may well be the Chancellor’s last statement before a General Election in 2024, and who knows what that may bring…

And just as we’re wrapping up the year, the Department for Science, Innovation and Technology opened a consultation seeking views on proposed regulation to improve the security and resilience of data infrastructure, including data centres (with a focus on third-party data centres, in particular, those being implemented to provide colocation and co-hosting data centre services), protecting against potential disruption such as cyber and extreme weather events. techUK will be responding on behalf of members in Q1 of 2024. Something nice and light to start the new year!

Local Authorities, Local Enterprise Partnerships and GLA Engagement

Throughout the year, techUK proactively initiated engagement with several Local Authorities (LAs), Enterprise Partnerships, and we continued engagement with the Greater London Authority (GLA) and OPDC on London power constraints and heat district networks.

We also plan through our Nations and Regions Programme to engage more LAs and Councils and to bring the DC Programme outside of London in 2024 (some members got involved in our Local Digital Index 2023), with one date already in the diary for Manchester in Q1!

Letters of support: techUK wrote two letters of support. The first letter was in support in principle for OPDC’s bid for the Green Heat Network Fund (GHNF), which has since been awarded. We continue to engage with ODPC on the development of the project which involves several techUK members.

The second letter of support was written for the Heathrow Strategic Planning Group to explore a £5m funding bid for Phase 2 of Innovate UK’s Net Zero Pathfinder Places fund aimed at increasing decarbonisation measures.

Engagement with GLA/OPDC on Power Connection: The delays to power provisioning for new DC projects, particularly relevant in West London, continued in 2023, and these were discussed alongside planning challenges, especially with the GLA. We are looking forward to progressing this engagement in a more structured setting in 2024.

Heat district networks: Heat offtake from commercial data centres remains a ‘hot’ issue within planning, with operators wishing to help, but the financial incentives and retrofit technology not existing to make it a reality at present. We engaged on this both with Manchester City Council and OPDC, as both LAs and data centres progress in their net zero journeys. It is worth noting that the new Energy Act will aim to deliver a cleaner, more affordable, and more secure energy system. The Act introduces a regulatory framework for heat networks and powers to enable heat network zoning in England as these are a crucial part of how the UK will reach its net-zero targets as they are one of the most cost-effective ways of decarbonising heating in built-up areas at a fair price to consumers while supporting local regeneration. DESNZ has just published a consultation seeking views on proposals for heat network zoning in England, to attract investment and give local communities access to cheaper, greener heat sooner. techUK will be responding to the Consultation on behalf of members in early 2024.

2023 saw a flurry of regulatory activity in the EU, especially on ESG, but also the EU’s Energy Efficiency Directive, with Germany’s one-size-fits-all approach in their Energy Efficiency Act ("EnEfG"), which mandates that data centres provide their residual heat.

To avoid similar elephant traps in the UK, techUK drafted an industry white paper which explores some of the opportunities, barriers, and successes of reusing data centre residual heat, as well as outlines the benefits and risks of planning future networks around the assumption of heat offtake from data centres. Publication is expected in Q1 of 2024, so watch this space…

Our engagement with OPDC and collaboration on the West London Local Area Energy Plan (LAEP) with Arup has also been hampered by short timelines and competing interests, although we expect to continue working with them next year, we have however made significant steps in the understanding of these barriers in our public sector colleagues, and the issue of heat networks remains a priority to get right for 2024.

Planning issues: Planning challenges have been a constant for data centres, and in March 2023, techUK responded to the Department for Levelling Up, Housing and Communities (DLUHC) Consultation on “Levelling-up and Regeneration Bill: reforms to national planning policy”. In our response, we urged techUK urges DLUHC to work with the Department for Science, Innovation and Technology (DSIT) to ensure the National Planning Policy Framework (NPPF) addressed the need for ongoing investment in the deployment and delivery of digital infrastructure across the UK.

Furthermore, data centres are not a well-known industry, as a result, they often encounter delays at the planning stage or suffer inappropriate conditions because planning professionals are unfamiliar with this type of digital infrastructure development. This can be partly attributed to the absence of any mention of data centres in the NPPF or the accompanying Guidance. techUK plans to draft a planning white paper document to share with DLUHC and planning officials in 2024.

Sector Energy Resilience & Government Contingency Planning for Power Supply Shortages

Energy resilience: Energy became a key topic for the data centre sector in winter 2022/23 and continues throughout this winter. Conversations with DSIT, ENA, SSEN and the EA have been productive in improving the resilience of the sector in the face of these issues. Nevertheless, some challenges remained unaddressed, and despite the reassurances that this winter outlook will be more positive (see Wayne Mitchell’s guest blog on behalf of Kao Data), techUK will continue to engage with Government to ensure there is further clarity on some of their Reasonable Worst-Case Scenario (RWCS) plans.

techUK made progress in highlighting the issues facing the sector under existing government guidance on (RWCS) involving rolling blackouts (ESEC). Originally there was a lack of understanding of the potential impacts of an unprotected data centre sector in government contingency planning for said blackouts, and a grey area between protected site status and priority diesel resupply status that we had hoped to clarify.

techUK pushed for push for protected diesel resupply status, however, the outcome of these attempts still remains unclear at this point this winter. Nevertheless, the techUK team were able to advise operators on what ESEC would mean for their operational sites and chased some queries relating to sites not listed in the ESEC directory.

We also have gained assurances from the Environment Agency (EA) that operators won’t be penalised for generator use in these scenarios and the sector is being considered alongside others for more advanced warning on planned blackouts. The EA cleared up some misconceptions around the status of diesel permits under prolonged blackout scenarios, preparing the sector for the eventuality this winter. The issue of data centres in clusters, such as the Slough Trading Estate being on a single ESEC load block seems to be one that National Grid cannot easily remedy, and one that still remains unaddressed in this year’s Government Winter Resilience Plans.

Power Capacity and Connection Queues: This year, Ofgem, DESNZ and National Grid all shared their plans for future reform to the electricity connections process.

The Open Letter by Ofgem set out how Ofgem, alongside government and industry, will work to reform the connections process for all parties and ensure it is responsive to customers’ needs and ultimately fit for the net zero transition. techUK responded following a member’s roundtable, by emphasising the urgency of having a fit for the future connections’ regime with reliable, affordable, and scalable access to decarbonised electricity, faster grid connection times, and changes to the queue system. techUK is pleased to report that as a result, Ofgem has recently made an announcement about the changes to the grid connection queue framework. techUK will continue to have further and sustained engagement on the energy capacity and resilience, as well as the power connection on behalf of our members in 2024.

Media Engagement

Following a series of stories in national news outlets concerning the resiliency, energy demand, water demand and other aspects of the data centre sector, techUK spoke reactively on behalf of the sector. Our response to the Ofgem Open Letter received widespread coverage (including in the Financial Times, Bloomberg, and most recently, Sifted).

We also spoke to the media on a number of challenges, such as the exclusion in early 2023 of the data centres from the government energy discount scheme in Computer Weekly, and about the Government’s RWCS to Capacity. We also showcased in Data Centre Review on how the data centre industry can implement the best apprenticeship schemes and provided background information about the sector to several publications. Ahead of the summer and in the fear of a heatwave in the UK, we prepared an industry narrative for press enquiries.

Sustainability

With the digital world continuing to evolve and dominate how we live and work, the demand and necessity of data centres is ever increasing. When we discuss the sustainability of data centres it’s important to remember that they do not act in a vacuum and that they are, in fact, an interdependent necessity within our society and crucial to decarbonisation efforts. Whilst there’s still more to be done, progress has been made in the reporting and transparency of sustainability measurement, with signatories of the Climate Neutral Data Centre Pact recently launching an Audit Framework to assess and verify the compliance of data centre operators with the Pact’s Self-Regulatory Initiative (SRI). techUK as a key pact signatory NTA and help in the certification process for our UK SMEs.

Furthermore, established certifications such as BREEAM, CUE and PUE, also continue to play an important role in measuring sustainable built environments, and energy and carbon usage effectiveness respectively (read CyrusOne’s guest blog here).

Regulation: This year saw a flurry of regulatory activity in the EU, especially on ESG. However, in the UK there have also been some significant developments of interest to the data centres sector. Some key ones:

Climate Change Agreements: techUK is the UK trade body for the digital technology industry and we administer the Climate Change Agreement (CCA) for the UK’s data centre sector, and this year was quite the year for CCA holders! We responded to an initial consultation; and negotiated the target for TP6 on behalf of the sector (DESNZ has set the sector CCA TP6 target of 19.021% reduction by 31 December 2024 and that the target will be distributed across target units in the sector using the same methodology as was applied for target periods 1-5).

To finish the year strong, in the Autumn statement the government launched a consultation on new proposals for a 6-year CCA scheme. In Q1 of 2024, techUK will be responding on behalf of members to the proposals for the 6-year new scheme. Please get in touch should this be of interest (find my contact details below)
UK battery strategy: The Department for Business and Trade (DBT) has published its battery strategy in the advanced manufacturing plan. techUK will be drafting a response to the Consultation and Call for Evidence in the strategy once they launch in 2024.
Scope 3: The Department for Energy Security and Net Zero (DESNZ) has published a call for evidence on the costs, benefits, and practicalities of Scope 3 greenhouse gas emissions reporting in the UK. techUK responded on behalf of members advocating, amongst other things, for a staged phasing-in approach, safe harbour provision to build confidence in Scope 3 disclosures, gradually transitioning to increased liability, and expressed concerns on the perceived expense and limited utility of SECR reports.
Proposals for heat network zoning 2023: The Department for Energy Security and Net Zero (DESNZ) has published a consultation seeking views on proposals for heat network zoning in England, to attract investment and give local communities access to cheaper, greener heat sooner. The deadline is 26 February. techUK will be responding on behalf of members.
Defra Publishes its Third National Adaptation Programme (NAP3) with New Risk Profiles for Digital Infrastructure: Despite the relatively low recognition of digital infrastructure and telecoms in previous adaptation documents, NAP3 provides them their own chapters, with techUK’s Data Centre Council explicitly mentioned as a touchpoint for policymakers. We believe this is reflective of continued engagement with the teams at Defra, Adaptation Reporting Power, and the digital infrastructure resilience team in DSIT (formerly DCMS).

Events: techUK had two successful sustainability-focused events this year: Our cross-programme Sustainable Cloud: A Lifecycle approach event in February 2023, which examined the cloud ecosystem as a whole and explored a sustainability topic and focused on the perspectives of colocation data centre, large-scale cloud service and software providers working on cloud sustainability; and our flagship Tech and Net Zero Conference, where discussion ranged from the tech sector's own net zero journey, upcoming priorities for COP28, and making the UK a climate tech leader in the face of the US IRA and EU Green Deal.

techUK also attended COP28. Read our key takeaways here and find some of our members' Insights here. techUK will be taking forward a new workstream on emerging tech for resilience/adaptation and will also look to work with the UK government on translating the different documents and agreements into actionable work for the tech sector.

Insight Paper: The Cloud Programme at techUK published our Cloud Computing and the Path to a More Sustainable Future report.

The report focused on the path to sustainability and consumer demands, whereby many cloud providers are investing in renewable energy, hardware recycling and more efficient energy and water use in data centres.

DSIT Engagement, Workshops, and Consultation

In the summer 2022, DCMS launched several exercises to look at the resilience, security, and incident management of the ICT infrastructure sector. The key piece of work in this area was the Call for Views into Security and Resilience of Digital Infrastructure. techUK's response to this was completed alongside the cloud, cyber and telecoms programme with the DC programme holding the pen.

This was a good stocktake of the state of digital infrastructure, provided members with an opportunity to give evidence of their proactive work on resilience and cybersecurity, and helped our partners at DCMS gain a better understanding of the data centre sector. 2023 saw the continuation of this work, with positive and constructive engagement from new the new Department - Department for Science, Innovation and Technology or DSIT. This included several roundtables focusing on areas such as risk management frameworks and with DSIT officials regularly attending the techUK Data Centres Council.

On 14th December, DSIT opened a consultation seeking views on proposed regulations to improve the security and resilience of data infrastructure, including data centres.

The consultation seeks to introduce “minimum requirements mandatory to ensure data centre operators are taking appropriate steps to boost their security and resilience”. Furthermore, the consultation notes that “a new regulatory function is also being considered, to make sure operators of data centre services report incidents and work with the sector to assure and test risk mitigation against threats and hazards. The move is intended to encourage better transparency of information and cooperation across industry and the government so risks to the UK can be appropriately identified and addressed.”

The proposals focus on third-party data centre services, which face:

Security threats such as cyber-attacks, physical attacks and insider threats
Resilience risks resulting from hazards such as human error and extreme weather
Limited information-sharing and cooperation across industry, and with HMG, which hamper their ability to appropriately identify and address risks

The government invites feedback from any interested party, but in particular centre operators; data centre land and facility owners; cloud platform providers; managed service providers; customers and suppliers of the providers above; and independent or academic experts on data storage and processing.

The consultation is open until 22 February 2024. techUK will be responding on behalf of our members in January 2024. Members are invited to start sharing input as of now. Please get in touch should this be of interest (find my contact details below).

New additions to the Data Centres Programme:

Working Groups: Following the Data Centres Council’s list of priority areas, we launched two formal working groups, one on Skills and D&I, and one on ESG+. The Skills and D&I WG went on a fact-finding mission, with a key output being a bespoke techUK conference day on Digital Infrastructure Skills in Q1 of 2024 (date and programme TBC). If you’re interested in participating, speaking or sponsoring, please get in touch should this be of interest (find my contact details below).

The ESG+ WG this year focused on upcoming regulations, worked on the industry white paper on heat district networks, and drove the conversations picked up as themes for the Data Centres Deep Dives webinar series. Next year will be focusing on raising awareness, encouraging best practices (by encouraging industry alignment with the Climate Neutral Data Centres Pact) and staying ahead of upcoming ESG regulations.

Data Centres Deep Dives: This year we launched the Data Centres Deep Dives webinar series, where we invited members with expertise in upcoming regulations to come present and share their insights with the rest of the industry. Unsurprisingly, all had an ESG-related focus, whether it was on the upcoming Biodiversity Net Gain legislation, on Heat Networks - The evolution and future for energy networks and district heating, or on the Minimum Energy Efficiency Standard (MEES, EPCs and Cowboy Hats). We will continue to share the latest industry information and invite any members to take part and share your expertise on a piece of regulation for our webinar series. Please get in touch should this be of interest (find my contact details below).

Governance and Contacts

techUK’s data centre programme is overseen by the techUK Data Centres Council which meets six times a year and sets strategic direction for the programme, agrees priorities and reviews activity.

Council Terms of Reference, member bios, application criteria, meeting notes and papers are all available on request and our formal Council Communications can be found under the relevant topic headings in our publications index.

In 2024, the Nominations for the Data Centres Council will be open. Please get in touch should this be of interest (find my contact details below).

Further Information

The best place to look for information is our publications index where the first section includes past overviews.

Contacts

Luisa C. Cardani

Head of Data Centres Programme, techUK

Matthew Evans

Chief Operating Officer & Director of Markets, techUK

Weronika Dorociak

Programme Manager, Sustainability , techUK

Lucas Banach

Programme Assistant, Data Centres, Climate, Environment and Sustainability, Market Access, techUK

About techUK

techUK is the trade association which brings together people, companies and organisations to realise the positive outcomes of what digital technology can achieve. With around 1,000 members (the majority of which are SMEs) across the UK, techUK creates a network for innovation and collaboration across business, government and stakeholders to provide a better future for people, society, the economy and the planet. By providing expertise and insight, we support our members, partners and stakeholders as they prepare the UK for what comes next in a constantly changing world.

techUK’s award-winning Data Centres programme provides a collective voice for UK operators. We work with government to improve the business environment for our members.

To date we’ve saved UK operators over £150M, alerted them to business risks, mitigated regulatory impacts and raised awareness, most recently negotiating key worker status for the sector. techUK is a signatory of the Carbon Neutral Data Centre Pact.

www.techuk.org

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