Entering the UK Data Centre Market: Opportunities and Strategic Considerations

The European data centre sector is experiencing unprecedented growth, driven by the escalating demand for digital services, cloud computing and artificial intelligence (AI) applications. Understanding the landscape, associated challenges and strategic opportunities is crucial for clients considering entering this dynamic market. This article provides expert analysis, practical solutions and tactical recommendations to guide clients through the complexities of developing their first data centres in the UK while highlighting how our cost and project management services can support successful project delivery.

Introduction

Data centres are the backbone of the digital economy, facilitating services from online banking to streaming media. In the UK, the data centre market is experiencing substantial expansion, with projections indicating ongoing significant growth in capacity and investment¹. However, this rapid growth raises critical considerations, particularly regarding power availability, energy consumption, carbon emissions, water usage, regulatory compliance, flexible design, and technological advancements. Balancing operational efficiency with environmental responsibility has become imperative for stakeholders aiming to establish a foothold in this sector.

Key Challenges and Actionable Strategies

Contractor and Market Capacity

The data centre sector is under mounting pressure from contractor capacity constraints and a shortage of skilled labour. As demand for new facilities intensifies, the market is struggling to respond at the necessary scale. This imbalance is impacting procurement strategies, driving up costs, and causing delays that threaten programme certainty.

A key challenge is the scarcity of experienced trades and specialist professionals—such as electricians, HVAC technicians, and network engineers—essential for data centre construction. This limited talent pool is constraining build quality, increasing labour costs, and narrowing the field of contractors capable of delivering complex projects to the required standard.

Compounding the issue are persistent supply chain disruptions affecting critical materials and specialist components. If not proactively managed, these challenges can lead to further delays and budget overruns.

The inherent complexity of data centre projects adds another layer of difficulty. High-performance infrastructure—redundant power systems, advanced cooling, and resilient connectivity—requires expert coordination and a high degree of technical skill. Delivering these systems becomes increasingly challenging as multiple large-scale projects compete for the same limited resources.

These capacity constraints are reshaping the way projects are procured and delivered. Lead times are stretching as contractor and material availability tightens, while escalating demand is inflating costs. Contractors with proven data centre experience are commanding premium pricing, prompting clients to reassess budgets and adopt more flexible financial strategies.

In response, clients and contractors are moving toward more collaborative, risk-sharing contractual arrangements. These frameworks help distribute the burden of potential cost increases and delays, encouraging a more balanced and proactive approach to project delivery.

There is also a noticeable shift towards subcontracting, with main contractors outsourcing specialist packages to manage internal limitations. While this helps meet demand, it introduces added complexity in coordination and accountability, particularly across large, layered supply chains.

Finally, traditional procurement models are being reconsidered. In today’s saturated market, many contractors are reluctant to participate in resource-intensive competitive tenders with low win probabilities. Instead, clients are increasingly favouring negotiated contracts, two-stage tenders, and long-term framework agreements with trusted delivery partners. This pivot reflects a broader move toward strategic, relationship-based procurement, where early engagement and mutual trust are essential for success.

Actionable Strategies:

• Engage Early with the Supply Chain - Involve key contractors, designers, and suppliers at the pre-design or concept stage and secure early input on programme, feasibility, and logistics to avoid bottlenecks.
• Adopt Flexible Procurement Models - Consider hybrid two-stage or negotiated procurement to reduce bid risk and increase contractor appetite. Explore construction management or design-and-build frameworks to enhance delivery flexibility.
• Embrace Off-site and Modular Construction - Use prefabricated or modular components (eg MEP systems, plant rooms) to reduce site labour requirements and compress build time. Engage specialist suppliers early to pre-book manufacturing slots.
• Invest in Workforce Development - Partner with training providers and industry associations to develop programmes focused on Data Centre-specific skills. Support initiatives that upskill local labour forces or retrain workers from adjacent sectors.
• Expand the Contractor Pool Through Partnerships - Explore joint ventures between experienced Data Centre contractors and reputable firms from adjacent sectors (e.g., commercial, industrial). Consider working with European or international contractors with a proven track record, particularly on larger or phased projects.
• Plan for Long-Lead Items Early - Proactively identify and procure long-lead equipment (eg switchgear, chillers) in parallel with design development. Use early procurement packages to mitigate delays in the supply chain.
• Demonstrate Pipeline and Repeat Work - Contractors are more willing to invest in relationships where there is visibility of future work. Bundle multiple projects or create long-term programmes to attract interest from strategic partners.

Energy Consumption and Power Supply

Data centres are inherently energy-intensive, requiring substantial, continuous, and reliable power to support their operations. Electricity is the backbone of any data centre facility, powering thousands of high-performance servers and running sophisticated cooling systems. Ensuring access to a stable, scalable, and cost-effective power supply is, therefore, one of the most critical factors when entering the market.

In the UK, particularly in the southeast, securing sufficient power has become increasingly challenging due to grid capacity constraints. The rapid expansion of data centres, alongside growing demand from other sectors such as electric vehicle charging infrastructure and new housing developments, has placed significant strain on the national grid. As a result, some areas face longer wait times for grid connections, which can delay project timelines and increase costs. Operators are starting to explore alternative energy strategies, such as onsite power generation, battery storage or private grid connections, and hybrid delivery strategies to mitigate these risks.²

Beyond securing access to power, energy efficiency and sustainability are also key considerations. With increasing regulatory pressure and sustainability commitments, data centre operators must consider how to reduce energy consumption, integrate renewable power sources, and optimise efficiency through smart technologies. Innovations such as AI-driven energy management, advanced cooling techniques and energy-efficient server architecture are becoming essential for minimising operational costs and meeting environmental targets.

For new entrants into the market, a comprehensive power strategy is crucial—not only in selecting the right location with reliable grid access but also in future-proofing operations against rising energy costs and evolving regulatory requirements. Partnering with energy providers, grid operators, and sustainability consultants from the outset can help ensure a resilient, cost-effective and scalable energy solution for long-term success.

Actionable Strategies:

• Plan Ahead – De-risk the power requirements by securing power before committing to a site.
• Engage Early with Utility Providers: Initiate discussions with electricity suppliers at the project's inception or earlier to assess grid capacity and determine necessary infrastructure upgrades. Early engagement can help identify potential challenges and develop effective mitigation plans.
• Explore Onsite Energy Generation: Consider integrating onsite power generation solutions, such as renewable energy installations, power storage, and microreactors, to reduce dependence on the national grid and enhance energy resilience.
• Assess Alternative Locations: Evaluate regions with more robust grid infrastructure or lower demand pressures, which may offer more favourable conditions for data centre development. For instance, in the north of England and Scotland, grid capacity may be more accommodating, in contrast to the significant supply constraints currently in Ireland. Understanding these regional differences will help inform strategic decisions on data centre development and site selection.

Related article: Exploring the Future of… | Gardiner & Theobald Market Intelligence

Sustainability and Environmental Impact

The environmental footprint of data centres, including carbon emissions, energy consumption, and water usage, has come under increasing scrutiny from both regulators and the public. With data centres accounting for a significant share of global electricity demand, estimated to be around 3% per year, their reliance on non-renewable energy sources contributes to carbon emissions, making sustainability a critical concern³. Additionally, traditional water-based cooling systems place strain on local water resources, particularly in regions facing drought or water scarcity. As a result, governments and industry bodies are tightening regulations on energy efficiency, carbon reporting, and water conservation, pushing operators to adopt more sustainable practices⁴.

Sustainability is no longer a competitive advantage—it is a business necessity. Compliance with new and emerging environmental regulations, such as mandatory reporting of energy and water usage, is essential to avoid fines and operational restrictions. Beyond regulatory obligations, adopting sustainable practices strengthens corporate responsibility, enhances brand reputation, and meets the growing expectations of investors, clients, and stakeholders who prioritise environmental, social, and governance (ESG) commitments. To stay ahead, data centre operators must invest in renewable energy integration, energy-efficient infrastructure, advanced cooling technologies, and AI-driven energy optimisation. As sustainability pressures intensify, data centres that proactively embrace greener operations will not only ensure compliance but also improve efficiency, reduce long-term costs, and enhance market competitiveness.

Actionable Strategies:

• Power Usage Efficiency (PUE): Setting a clear target PUE is essential to deliver a data centre that meets or exceeds expectations.
• Water Usage Efficiency (WUE): As with power, water usage is now a required measurable metric that must meet or exceed current expectations.
• Implement Energy-Efficient Technologies: To minimise energy consumption, adopt advanced cooling solutions, such as free air and evaporative cooling. Utilise energy-efficient servers and storage solutions and implement virtualisation techniques to maximise resource utilisation and reduce unnecessary energy consumption.
• Utilise Renewable Energy Sources: Engage in Power Purchase Agreements (PPAs) with renewable energy providers to supply data centres with green energy. This approach reduces carbon footprints and aligns with global sustainability goals.
• Adopt Water-Free Cooling Systems: To mitigate water usage, implement cooling technologies that do not require water, such as air-cooled chillers or liquid immersion cooling.
• Alternative Fuel: Design for utilising renewable fuel sources such as hydro treated vegetable oil (HVO) for generator fuel.

Case Study: London South – a state-of-the-art data centre, on track for a BREEAM Excellent rating, reflecting its sustainability and high performance. London South | Gardiner & Theobald

Regulatory Compliance and Planning Approvals

Navigating the UK’s planning system for data centre development can be a complex and time-consuming process, with regulations and local policies varying across different regions. One of the key challenges is the interpretation of use classifications, as data centres do not always fit neatly into existing categories. Some local authorities may classify them as industrial facilities, while others treat them as commercial or infrastructure developments, leading to inconsistent planning requirements. Additionally, data centre high energy demands and environmental impact mean that proposals are often subject to detailed scrutiny regarding power supply, water usage and sustainability measures. Operators must be prepared to demonstrate the benefits of their projects while addressing regulatory concerns to secure approval.

Another major hurdle is local community resistance, particularly in areas where data centres are perceived to contribute to noise, increased traffic or high energy consumption without offering direct local employment benefits. Engaging with local stakeholders early in the planning process, addressing environmental concerns and incorporating sustainability commitments can help ease opposition and streamline approvals. However, even with careful planning, delays in obtaining planning permission can significantly impact project schedules and budgets, leading to increased costs and uncertainty. To mitigate these risks, new entrants to the market should work with specialist planning consultant and, legal advisors to ensure a smooth approval process and avoid regulatory roadblocks.

Actionable Strategies:

• Engage with Planning Authorities Early: Initiate early consultations with local planning authorities to understand specific requirements and address potential concerns proactively.
• Conduct Comprehensive Environmental Assessments: Prepare thorough environmental impact assessments to demonstrate commitment to sustainability and address community concerns.
• Stay Informed on Regulatory Changes: Keep abreast of evolving regulations and participate in industry forums to influence and anticipate policy developments.

Case Study: Deloitte Data Centre Strategy – a feasibility study, property search, design, specification and implementation of its data centre strategy. Deloitte Data Centre Strategy | Gardiner & Theobald

Technological Advancements and Innovation

With the pace of technological advancements accelerating, data centres must be designed with built-in flexibility to integrate emerging sustainable and energy-efficient technologies. The shift towards AI-driven workloads, high-performance computing, and increased data demand means that infrastructure must be adaptable to evolving power, cooling, weight and storage requirements. Traditional data centres with rigid architecture may struggle to accommodate innovations such as next-generation processors with lower energy consumption, modular power distribution systems, or advanced cooling solutions like liquid immersion cooling⁵. A lack of adaptability can lead to higher operational costs, inefficiencies, and the need for costly retrofits to stay competitive.

Sustainability is another key driving force behind flexible data centre design, as operators must integrate renewable energy sources, waste heat recovery and AI-driven energy optimisation systems to meet increasingly strict environmental regulations⁶. Modular and scalable designs allow data centres to phase in new technologies without significant disruptions to operations. Futureproofing through intelligent automation, software-defined infrastructure, and hybrid cloud strategies ensures that data centres remain as efficient as possible, resilient, and compliant with current and future regulatory frameworks. In an industry where efficiency and sustainability are key differentiators, designing for flexibility is no longer an option—it is necessary for long-term success.

Actionable Strategies:

• Invest in Modular Design: Utilise modular construction approaches that allow for scalable expansion and easy integration of new technologies, reducing the need for extensive overhauls.
• Design for flexibility: Implement flexible design solutions at an early stage which can be easily adapted to meet the changing customer requirements
• Implement AI for Energy Management: Deploy artificial intelligence systems to monitor and optimise energy usage dynamically, enhancing efficiency.
• Stay Abreast of Emerging Technologies: Continuously research and adopt innovative solutions, such as direct current (DC) power distribution, which can improve energy efficiency.

Key Client Takeaways

Jonathan Wilson, Partner at Gardiner & Theobald, emphasises the unique opportunities and challenges for clients entering the data centre sector: "​The data centre industry offers substantial growth prospects, but newcomers must navigate complexities such as securing reliable power sources, adhering to stringent regulatory standards and implementing sustainable practices. Our role is guiding clients through these challenges, ensuring their projects are resilient and future ready."​

1. Strategic Site Selection: Choosing locations with robust infrastructure and favourable environmental conditions can significantly impact project success and operational efficiency.
2. Proactive Planning: Early engagement with utility providers and planning authorities is crucial for identifying and mitigating potential challenges in power supply and regulatory compliance.
3. Sustainability Integration: Incorporating energy-efficient technologies and renewable energy sources from the outset not only ensures compliance with regulations but also enhances corporate social responsibility.
4. Embrace Technological Innovation: Investing in flexible designs and staying informed about emerging technologies will future-proof data centres and enhance competitiveness.

Conclusion

Entering Europe’s burgeoning data centre market presents both significant opportunities and complex challenges. Clients can successfully navigate this dynamic landscape by adopting a proactive and integrated approach that encompasses strategic planning, sustainability, regulatory compliance, and technological innovation.

Selecting the right partners at all stages of the process is essential to the success of the Data Centre project. G&T’s ability to leverage its market presence and brand brings a wealth of key market contacts that lead to the success of the projects for clients.

How G&T Can Support Clients

G&T offers comprehensive support to clients entering the data centre sector, leveraging extensive experience delivering complex/ mission critical projects. Services include Project Management, Cost Management, Life Cycle Costing and Construction & Property Tax Consultancy amongst others, ensuring projects are delivered efficiently and sustainably.​

Cost Management: G&T provides detailed cost planning and control throughout the project lifecycle, helping clients optimize budgets and achieve value for money. For instance, in the Data Centre 30MW project, G&T managed costs effectively during the construction of a 30MW data centre and upgraded existing facilities to improve power usage effectiveness (PUE) and increase power capacity. ​Data Centre 30MW | Gardiner & Theobald

Project Management: G&T oversees the planning, coordination, and execution of data centre projects, ensuring they meet clients' objectives and adhere to timelines. In a recent confidential Data Centre Fit-Out project, G&T managed the refurbishment of a data centre facility to accommodate high-density customers, tying these new areas back to enhanced power infrastructure with centralised cooling and standby power. This resulted in a significantly improved PUE compared to the existing facility. ​Data Centre Fit-Out | Gardiner & Theobald

Life Cycle Costing: G&T assesses the total cost of ownership over a facility's lifespan, enabling clients to make informed decisions about investments in infrastructure and technology. This approach ensures that data centres are cost-effective to build and economical to operate and maintain.​

Construction & Property Tax Advice: G&T offers specialised Construction & Property Tax Advice services tailored for clients entering the data centre sector who can benefit from various tax efficiencies and incentives designed to encourage investment in infrastructure and technology. Their expertise encompasses navigating complex tax regulations, optimising capital allowances and Land Remediation Relief, and enhancing the financial efficiency of data centre projects.

By integrating these services, G&T assists clients in navigating the complexities of data centre development, from initial feasibility studies and property searches to design, specification and implementation. This holistic approach ensures that data centres are delivered on time, within budget and aligned with client's strategic goals.​ These services ensure that data centre developments are operationally efficient and financially optimised, delivering maximum value throughout the project's lifecycle.

Talk to our experts:

• Adam Thurley - Project Management
• Kevin Newton – Cost Management
• Jonathan Wilson – Engineering Services, Cost Management
• Gavin Ogg - Life Cycle Costing
• Neil Swarbrigg - Tax Advice

^Sources

1. ^{United Kingdom Data Centre Report 2025: Active Facilities}
2. ^{Powering the Future, Winter 2024}
3. ^{UK Government urged to promote, prioritise and invest in sustainable AI to become global leader in AI frugality and efficiency}
4. ^{Carbon reporting legislation pushes UK data centers to go green - DCD}
5. ^{Liquid cooling enters the mainstream in data centers}
6. ^{AI and Advanced Tech Transform Data Centre Energy Efficiency}