Investment bank Jefferies has warned that opposition to new data centre developments is mounting across the United Kingdom, as the country grapples with surging electricity demand from artificial intelligence and cloud computing. In a note to clients, analysts highlighted that local planning objections and grid capacity concerns are increasingly delaying projects, potentially stymying the government's ambitions to position Britain as a European digital hub.
The UK's data centre sector has expanded rapidly in recent years, with major players such as Amazon Web Services, Microsoft, and Google investing billions of pounds in new facilities. However, Jefferies notes that communities are pushing back against the construction of these energy-intensive sites, citing noise, visual impact, and strain on local power networks. The bank's research suggests that the number of planning applications facing formal objections has risen sharply since 2023.
Energy demand from data centres is projected to grow by over 500 per cent by 2030, according to National Grid, driven largely by the computational needs of AI models. This has prompted concerns about the UK's ability to meet its net-zero targets while also accommodating the sector's appetite for electricity. Jefferies points out that without a streamlined planning process and greater investment in grid infrastructure, the UK risks falling behind the US and parts of Europe in the race to attract hyperscale data centre projects.
For UK investors and pension holders, the implications are twofold. Companies with exposure to the data centre supply chain — including real estate investment trusts, construction firms, and power utilities — could face headwinds if projects are delayed or cancelled. Conversely, firms specialising in energy-efficient cooling systems or renewable power generation may benefit from the growing focus on sustainable data centre design. Jefferies did not name specific stocks but advised clients to monitor regulatory and planning developments closely.
Tom Glover, a utilities analyst at a rival firm, commented: 'The tension between digital growth and local opposition is not going away. Developers will need to engage more with communities and invest in grid upgrades to secure planning consent. This is a structural issue that could define the sector for the next decade.' The Bank of England has also flagged the energy intensity of AI as a potential risk to the UK's climate commitments, though no policy changes have been announced.
Source: Jefferies research note