The UK is bracing itself for a datacentre boom that's poised to change the way we live and work. With artificial intelligence (AI) driving demand, over 10,000 active datacentres worldwide are expected to swell to 35,000 by 2025 - a growth that could have far-reaching implications for our environment, economy, and energy supplies.
Datacentres are notorious energy guzzlers, consuming vast amounts of electricity and water. In the UK, where we're striving for net-zero emissions, an unchecked increase in datacentre activity risks slowing down this transition - and potentially pushing up household and business energy bills. The reliance on fossil fuels for much of our current energy generation means that increased datacentre demand could also lead to higher greenhouse gas emissions.
The issue of waste heat generated by datacentres is another growing concern. While some countries have found ways to harness this heat for district heating, it could exacerbate existing temperature rises in regions with warmer climates - potentially including the UK during peak summer months. The economic benefits of datacentre construction are also under scrutiny: while they can boost business investment, much of the specialist equipment is imported, limiting the direct positive impact on local economies and job creation.
Experts argue that governments should adopt a more proactive approach to regulating datacentres, rather than taking a laissez-faire stance. They suggest subjecting them to rigorous cost-benefit analyses, as with other major public projects, to ensure their societal and economic advantages genuinely outweigh their environmental and financial costs.
The Bank of England will undoubtedly be monitoring the inflationary pressures that increased energy demand could create. While tech-related companies have performed strongly in recent years, the wider economic implications of datacentre growth on energy prices and climate targets could present headwinds for the broader economy.
Source: Nicki Hutley