The UK government’s recent proposals to prioritise artificial intelligence (AI) data centres for electricity connections could inadvertently hinder the construction of new homes, builders warn. The alarming surge in demand for electricity from these power-hungry facilities has led to a significant backlog in the queue for connections, raising concerns about the future of housing amidst an ongoing crisis.
The Growing Demand for Electricity
As of now, around 140 data centres are vying for a new electricity connection in the UK, with the first half of 2025 witnessing an astonishing 460% increase in the queue. This demand is largely driven by the burgeoning AI sector, which is rapidly escalating its need for electricity to support its operations. The current system requires all new infrastructure projects, from hospitals to industrial sites, to join a virtual queue, resulting in some projects facing lengthy delays of several years before they can commence.
The government’s proposals, introduced on Wednesday, aim to streamline this process by allowing projects promising substantial economic growth and job creation to bypass the queue. However, the Home Builders Federation (HBF) has raised alarm bells, warning that neglecting to prioritise housing developments could effectively create a moratorium on new home construction.
The Impact on Housing Developments
In a stark warning, Steve Turner, executive director of the HBF, expressed concern over the government’s focus on energy-intensive data centres at the expense of energy-efficient homes. “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,” he stated. This sentiment reflects a growing frustration within the building sector, which is grappling with the dual challenge of meeting housing needs while navigating a constrained energy landscape.
Regulator Ofgem has also sounded the alarm, stating that the queue for electricity supply has surpassed even the most ambitious forecasts for future demand. The surge is primarily attributed to the appetite for power from AI data centres, some of which are described as “speculative” projects lacking adequate financing, planning permissions, or land rights. This creates a precarious situation where genuine housing initiatives, which could stimulate local economies and create jobs, are hindered by a system that favours data centres.
A Shift in Prioritisation
In response to these concerns, the government is proposing to prioritise projects deemed “strategically important,” which could include AI infrastructure, electric vehicle (EV) charging hubs, and industrial sites transitioning from fossil fuels to electricity. AI Minister Kanishka Narayan stated, “Delivering data centres… relies on access to the grid. These timely reforms will help us move at pace, to seize AI’s potential to help build a wealthier and fairer Britain.”
However, the question remains: at what cost? The HBF’s concerns highlight a troubling reality where housing, an essential need for families, is sidelined in favour of energy-intensive technological advancements. Data centres already benefit from critical national infrastructure status, which allows them to bypass local objections—a privilege not extended to housing developments.
The Current Landscape
The implications of this policy shift are particularly evident in London, where members of the Assembly’s Planning and Regeneration committee have noted that some housing projects have been delayed due to the electricity grid reaching capacity. With nearly 500 data centres currently operational across the UK, contributing to 2% of the nation’s electricity demand, the expected surge in AI-related centres could see their energy consumption increase by as much as six-fold by 2050.
As the UK grapples with a pressing housing crisis exacerbated by soaring energy demands, policymakers must balance the need for technological advancement with the necessity of providing adequate housing for its citizens.
Why it Matters
The potential prioritisation of AI data centres over essential housing developments presents a critical dilemma for the UK. As the nation faces a severe housing shortage, the risk of further delays in new home construction could have long-lasting implications for families and communities. The government’s challenge lies in fostering innovation while ensuring that the basic needs of its population are met. Striking this balance is crucial for a sustainable future, where economic growth does not come at the expense of essential community infrastructure.
