21.09.2026

From data centres and AI infrastructure to advanced logistics and industrial operations, demand for power is rising rapidly. As businesses compete to develop the technologies and facilities that will underpin the next phase of economic growth, access to critical connections – from power to water to digital – is increasingly shaping investment decisions. That presents a significant opportunity for London, but it also raises a critical strategic question: how can the capital accommodate growing needs in a way that remains affordable, reliable and sustainable? 

London hosts around 80% of the UK data centre capacity – consisting of 99 operational data centres equating to 1GW active capacity. 

Yet the grid connection queue behind that runs to more than 8GW, with connection wait times averaging seven to thirteen years (against three to seven in competing European cities). 

The GLA’s commissioned study suggests London’s data centre demand could grow by a further 8 to 11GW by 2050. Government has recognised the strategic weight: data centres were formally designated Critical National Infrastructure in September 2024, on a par with energy and water.

And none of this happens in isolation: NESO expects up to 37.4 million electric vehicles on UK roads by 2050, adding nearly 120TWh of demand a year, while UKERC modelling suggests that domestic air conditioning uptake could add a further 7GW to Great Britain’s summer evening peak on high ranges of modelling. 

This challenge was at the heart of BusinessLDN’s latest Infrastructure Group roundtable, hosted in partnership with Lexington. Bringing together representatives from across government, energy, infrastructure and property, we explored how London’s electricity system can support the expansion of energy-intensive industries whilst balancing this against the need for targeted investment and efficiency. 

One of the clearest messages was that simply building more transmission capacity will not be enough to meet projected electricity demand. Investment in the grid will remain essential, but a combination of flexibility and smarter planning will also be needed if London is to remain competitive. 

A range of measures could help unlock capacity while reducing both costs and pressure on the wider network, including greater flexibility solutions, demand-side management, increased energy storage, local generation and private energy networks, particularly those utilising waste heat as an energy source. Traditionally, network planning has centred on reinforcing infrastructure to accommodate higher levels of electricity use. While reinforcement will remain essential, these approaches could help defer or reduce the need for costly upgrades and the associated impact on costs for consumers. 

Energy efficiency is another key part of the mix, where improvements, paired with better management of standby power requirements and peak loads, could help create headroom across the system. Reducing demand can often be as important as boosting supply, particularly as electricity requirements from AI and data centre infrastructure continue to grow. 

Businesses are already putting significant capital into the infrastructure necessary to support future growth. Developers are funding network upgrades to bring major projects forward, particularly in sectors with substantial power requirements. The scale of that investment highlights both the commercial opportunity and the need for a planning and regulatory framework that provides greater certainty and speed. 

For developers, however, the issue is not simply securing a connection but having confidence in when it will be delivered. Repeated delays can undermine project viability, stall development decisions and increase exposure to security-of-supply risks. 

The wider energy landscape is also changing rapidly. The network has evolved around historic patterns of consumption and established business models, yet both are now being reshaped by new technologies and changing patterns of electricity use.  

Securing investment is only part of the challenge. Infrastructure must still be delivered on the ground and with an eye to the shape of future demand and growth. Labour shortages, supply-chain constraints and shortages of specialist equipment all influence how quickly projects can move forward – so-called ​“buildability”. Even where funding and approvals are secured, buildability remains a major constraint. 

Better coordination at local and national levels will also be essential in the planning of London’s future energy system. As electricity use continues to rise, decisions about where infrastructure is prioritised and how resources are allocated will become more significant, particularly where trade-offs between locations, technologies and users are required. Initiatives such as the Strategic Spatial Energy Plan can help align energy infrastructure with economic development, while national bodies, including the National Economic Council and the National Infrastructure and Service Transformation Authority (NISTA), also have a central role to play in helping to coordinate strategic priorities across the energy system and integration of wider critical infrastructure. 

These convening and coordinating bodies need a breadth and diversity of evidence and data to best understand and adapt policy to successfully accommodate the rapidly evolving energy demand; and the capital’s critical infrastructure providers, developers and local authorities are well placed to contribute.  

There is no single solution to London’s electricity challenge. Supporting London’s growth will require a mix of solutions: smarter use of existing capacity, greater energy efficiency, private investment, planning reform and faster delivery. 

Getting this right will help unlock much-needed new development, strengthen London’s competitiveness and ensure the capital remains an attractive place for business, innovation and talent, and the engine of the UK economy. 

For more information on BusinessLDN’s infrastructure and energy programme, please contact John Kavanagh, Programme Director for Infrastructure.  

For conversations on public and political sentiment on data centres and key infrastructure, please get in touch with Alison Woodhouse, Director, Energy at Lexington Communications.  


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