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Proposals to prioritise artificial intelligence (AI) data centres for electricity connections could severely hamper the construction of new homes, according to warnings from industry experts. With the number of new electricity connections surging, particularly from power-hungry data centres, the Home Builders Federation (HBF) has voiced concerns that the focus on these facilities may effectively freeze new housing projects, exacerbating the ongoing housing crisis.
A Surge in Demand for Electricity
The UK currently has approximately 140 data centres awaiting new electricity connections, a number that has skyrocketed by 460% in the first half of 2025 alone. This staggering increase is primarily fuelled by the burgeoning demands of AI technologies. As a result, essential infrastructure projects—including hospitals and industrial sites—are facing extensive delays, with some projects potentially waiting years for a connection.
Under the government’s new proposals, projects deemed most likely to stimulate economic growth and job creation could be given priority access to the grid. However, the HBF cautions that if housing developments are not included in this priority list, it could lead to a de facto moratorium on new homes, particularly in areas with limited electricity capacity.
Concerns from the Home Builders Federation
Steve Turner, executive director of the HBF, expressed frustration that the current regulatory framework appears to favour energy-intensive data centres over the construction 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. The HBF argues that by neglecting housing in these priority discussions, the government risks stalling critical residential projects just as the nation grapples with a pressing housing shortage.
The situation is particularly acute in London, where Assembly members have already highlighted delays on new housing developments in west London due to the electricity grid reaching its capacity. This predicament underscores the urgent need for a balanced approach to energy allocation that considers both technological advancement and the necessity of new housing.
Energy Sector Warnings and Future Implications
Ofgem, the regulator for the energy sector, has also raised alarms over the unprecedented surge in demand for electricity. In November, it warned that the queue for electricity connections had exceeded even the most optimistic forecasts, driven predominantly by the appetite for AI data centres. Some of these projects, however, are considered speculative; they lack the necessary financing, planning permission, or land rights to transition from concept to reality.
The government’s strategy aims to mitigate this issue by allowing “strategically important” projects, such as AI infrastructure and electric vehicle charging hubs, to bypass the queue. This move could expedite the evolution of the UK’s energy landscape but at what cost to housing?
AI Minister Kanishka Narayan has defended the reforms, stating, “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 whether this potential outweighs the immediate need for housing.
The Broader Context of Electricity Demand
The UK is already home to nearly 500 data centres, which account for around 2% of the nation’s electricity consumption. The rise of AI technologies is set to dramatically increase the energy requirements of these facilities, with projections suggesting that their electricity demand could rise by as much as six-fold by 2050. This dramatic escalation raises concerns not only about the sustainability of energy consumption but also about the future availability of electricity for essential services, including housing.
Why it Matters
As the UK grapples with a critical housing shortage, the potential prioritisation of AI data centres for electricity connections poses a significant threat to new residential developments. In a time when affordable housing is more crucial than ever, policymakers must strike a balance between embracing technological advancements and ensuring that families have access to homes. The choices made today will shape the landscape of the nation for decades to come, making it imperative that all voices are heard in this vital discussion.
