The UK government’s latest initiative to prioritise artificial intelligence (AI) data centres for electricity connections is igniting concern among builders and housing advocates. With an alarming 460% surge in the queue for new electricity supplies in the first half of 2025, the Home Builders Federation (HBF) warns that this policy could effectively halt new housing projects, exacerbating the ongoing housing crisis.
Soaring Demand for Electricity Connections
Currently, all new infrastructure projects, including hospitals and industrial facilities, must navigate a virtual queue to secure access to the electricity grid. Data centres—particularly those focused on AI—are pushing the system to its limits. In a recent report, the energy regulator Ofgem highlighted that the queue for electricity connections has exceeded even the most ambitious demand forecasts. The bulk of this demand is driven by a growing number of data centres, currently estimated at 140 awaiting new connections.
As a result, legitimate projects that could provide essential housing and jobs are facing significant delays. The HBF’s executive director, Steve Turner, expressed deep concern about the implications of this shift, stating, “As we continue to face a housing crisis, it is frustrating that regulatory, planning, and policy arrangements effectively prioritise energy-intensive data centres over energy-efficient homes for families.”
Government’s Proposed Prioritisation
In response to the burgeoning electricity demand, the government is proposing to allow “strategically important” projects—such as AI infrastructure and electric vehicle charging hubs—to bypass the queue. This plan aims to stimulate economic growth and job creation. AI Minister Kanishka Narayan defended the initiative, asserting that timely reforms are essential for harnessing AI’s potential to foster a more prosperous and equitable Britain.
However, this initiative has raised alarms among housing advocates. Turner cautioned that without prioritising housing developments, the government is effectively imposing a moratorium on new homes in areas where electrical capacity is already strained. Some local authorities, including the London Assembly, have already reported delays in housing projects due to grid capacity issues.
The Growing Influence of AI Data Centres
The demand for data centres is set to escalate as AI technologies continue to develop. The UK is home to nearly 500 data centres, which currently consume about 2% of the nation’s electricity. Experts project this demand could increase dramatically, with electricity needs potentially rising six-fold by 2050 as the AI sector expands.
The implications of this growth are significant. If data centres continue to receive preferential treatment in planning and electricity access—having already been classified as critical national infrastructure—they may further overshadow housing developments that cater to communities’ needs.
The Housing Crisis Deepens
As the government seeks to balance the burgeoning energy demands of data centres with essential housing requirements, the HBF and other stakeholders urge a reevaluation of priorities. The ongoing housing crisis in the UK demands immediate attention, and critics contend that the current trajectory is unsustainable.
The prioritisation of energy-intensive data centres could lead to a bleak future where housing developments are sidelined. Local communities, already grappling with inadequate housing, may face further challenges as projects stall and demand for homes continues to climb.
Why it Matters
The government’s focus on AI data centres raises pressing questions about the balance between technological advancement and social responsibility. With the housing crisis reaching critical levels, the prioritisation of data centres over homes not only threatens to exacerbate existing inequalities but also undermines the government’s commitment to providing sustainable living solutions. As the nation navigates this complex landscape, the choices made today will shape the future of housing and energy in the UK for generations to come.
