Over recent weeks, we’ve seen increasing reports of UK data centre investment being thwarted by delays in connecting to the national grid and securing electricity supply. As a result, there’s growing concern that the country could fall behind in the global AI race.
One solution that’s gaining attention is behind-the-meter energy generation projects, where businesses can generate their own renewable power onsite or nearby, significantly reducing energy requirements or potentially bypassing the need to connect to the grid entirely. This approach not only removes the burden of long grid connection waits but can also reduce energy costs – helping UK tech businesses stay competitive, whilst helping them achieve their net zero goals.
The challenges facing data centres
The rapid adoption of AI technologies in the UK and around the world has boosted the demand for data centres – a trend that is only set to accelerate AI continues to reshape our professional and personal lives. To keep pace with this, the power needs of UK data centres are expected to grow six-fold over the next decade and as a result, access to power has become a critical determinant of AI’s future success.
Concerningly, data centres are currently facing multiple challenges when it comes to energy requirements – including escalating energy costs, decarbonisation demands and fundamentally, issues with connecting to the national grid.
Currently, there is severely limited capacity on the electricity network, which has resulted in a significant bottleneck queue and long delays to get connected to it – despite the UK government’s efforts in investing billions of pounds and legislation to expand it, create additional capacity and reduce waiting times. Companies and developers are facing an average waiting time of over five years to connect and it is understood that any proposed big infrastructure project looking to connect could need to wait until at least 2037. Unfortunately, slow grid connections are also coinciding with regions where data centres are concentrated (the South East), and such delays are leading data centre developers to hold off on submitting new planning proposals and instead, look at options outside of the country.
For a market that is experiencing rapid growth – and therefore has an increasing demand for reliable, low-cost energy – it’s imperative that we look to alternative and innovative solutions here.
The solution: Behind-the-Meter generation
Decentralised energy solutions like behind-the-meter (BTM) generation offer a valuable opportunity to alleviate the pressures currently facing data centres when it comes to connecting to an under pressure national grid, and securing cheap, clean and reliable energy.
This involves generating renewable energy directly at or near the point of consumption, bypassing the need for complex and expensive grid connections. For businesses, this typically means setting up on-site or near to site renewable projects—such as rooftop solar, solar farms, or wind turbines—that feed power directly to the business via private wires.
This decentralised approach empowers businesses to take control of their energy usage, ensuring a higher standard of accountability, and providing clarity to their respective decarbonisation efforts.
The benefits of BTM for data centres
Cost is a top priority for companies, and a key concern for data centre developers as the country faces rising energy prices. At present, the Social Market Foundation has estimated that powering a hypothetical 100MW data centre would cost four times higher in the UK than in the US due to industrial energy prices. Behind-the-meter generation addresses this challenge head-on, helping to significantly lower energy costs, and in turn, make businesses more competitive.
Furthermore, as grid connections become scarcer, more delayed and more expensive, a private wire connection accelerates projects by bypassing the need for a connection to the national grid network. Instead of waiting for grid infrastructure to be built or upgraded, tech companies can directly connect to the renewable energy project, reducing project timelines and constraints on an already strained grid.
In addition, by investing in on-site or near-site renewable energy, businesses can strengthen their energy security. By reducing reliance on the grid, data centres can experience increased reliability and fewer disruptions, leading to greater energy independence and control over their supply. Resilience to the changing energy landscape is something that will be increasingly important for tech companies, as the UK moves towards a more varied and decarbonised grid system, and more precarious energy landscape globally.
What’s more, behind-the-meter generation supports businesses in achieving their net zero goals, which is fundamentally important in light of increasing environmental and governmental pressures. BTM directly contributes to decarbonising the consumer’s energy profile, rather than simply purchasing renewable energy through a Power Purchase Agreement (PPA) that may not always meet the same standards. Many PPAs allow businesses to buy renewable energy from grid-connected sources that are often distant from the point of consumption, which doesn’t guarantee that the power used by the business is fully decarbonised. In contrast, behind-the-meter solutions offer a genuine reduction in emissions by directly providing energy that is 100% renewable.
There is a plethora of examples of successful BTM development globally. California, Australia, and Germany have all seen a relatively rapid uptake in industry self-generation over the last 10-15 years. Tech companies can therefore look to these successful case studies as a sign of success and the opportunities that are available to them.
Looking ahead: realising the full potential of AI
Behind-the-meter generation offers a fast, cost-effective alternative to the data centre industry that not only reduces reliance on the grid – improving their energy reliability and security – but also enables them to decarbonise quickly and affordably, helping them achieve their net zero goals.
Despite this, uptake in this vital practice has been largely slow in the UK, with many businesses being either unaware of the benefits it brings, and some perhaps being daunted at the prospect of an on-site renewable development.
However, if we are to remain competitive and not fall behind in the global AI race, it’s imperative that tech companies are educated on these benefits and make the empowering decision to take control of their energy usage – in turn, reaping the economic, environmental and reputational rewards that come with it.
