In a move that could exacerbate the UK’s housing crisis, the government is considering new measures that would allow artificial intelligence (AI) data centres to leapfrog existing projects in the electricity connection queue. This proposal comes amid a significant surge in demand for energy, driven largely by the growing number of data centres, which are struggling to secure necessary power supplies.
Surge in Electricity Demand
The current situation for new infrastructure is dire. With an astonishing 140 data centres awaiting electricity connections, the queue has ballooned by 460% in the first half of 2025 alone. The bottleneck is primarily a result of the insatiable energy appetite of these facilities, which has left other essential projects, including housing developments, languishing for years at the back of the line.
In November, Ofgem, the energy regulator, issued a stark warning that the demand for electricity connections had far surpassed previous forecasts, primarily due to the burgeoning AI sector. Many of the projects in the queue are deemed “speculative,” lacking the necessary financing, planning permissions, or land rights to materialise. This situation jeopardises genuine projects that could stimulate local economies and create jobs.
Prioritising AI Over Housing
Under the latest government proposals, projects that promise significant economic growth, particularly those related to AI infrastructure, electric vehicle (EV) charging stations, and industrial shifts from fossil fuels to electricity, would be afforded priority status. However, this raises critical concerns from the Home Builders Federation (HBF).
Steve Turner, the executive director of HBF, expressed his frustration, stating, “As we continue to face a housing crisis, it is disheartening that the current regulatory and planning landscape prioritises energy-intensive data centres over energy-efficient homes for families.” He warned that sidelining housing could effectively create a “moratorium” on construction in areas where energy capacity is limited.
Existing Challenges in the Capital
The issue is already palpable in London, where some housing projects have encountered delays due to grid capacity constraints. Members of the London Assembly’s Planning and Regeneration committee have noted that specific developments in west London have been temporarily stalled as the electricity network reaches its limits.
With nearly 500 data centres operating across the UK, they currently consume about 2% of the nation’s electricity. However, the demand is projected to soar, potentially increasing six-fold by 2050 as the reliance on AI grows. This expansion poses a serious challenge to the balance between technological advancement and the pressing need for new housing.
The Broader Implications
The current trajectory raises fundamental questions about prioritising infrastructure that supports economic growth against the urgent need for housing. The government’s commitment to prioritising “strategically important” projects risks overshadowing the critical housing requirements of the population.
AI Minister Kanishka Narayan defended the proposals, asserting that timely reforms are essential for harnessing AI’s potential to foster a wealthier and more equitable Britain. Yet, without a balanced approach that includes residential development, the country may face a future where the housing crisis deepens, and families are left without suitable homes.
Why it Matters
This unfolding situation is emblematic of a broader conflict between technological progress and societal needs. By prioritising AI data centres at the expense of housing developments, the government risks entrenching a crisis that affects the most vulnerable in society. As the demand for energy continues to grow, it is crucial that policymakers strike a balance that supports both innovation and the essential need for housing. The decisions made now will shape the UK’s landscape for generations to come, highlighting the necessity for a comprehensive strategy that addresses the needs of all citizens.
