IT Sustainability Think Tank: Building the backbone of the UK’s AI economy

Datacentre expansion, grid constraints and geographic imbalance 

The expansion of UK datacentre capacity is unfolding in an increasingly chaotic and uncoordinated manner. Planning authorities have been inundated with simultaneous applications, with more than 60 separate planning applications for the construction of new datacentres filed in England and Wales last year, creating significant local strain and signalling a lack of national oversight.

The geography of datacentre deployment is similarly imbalanced, with the largest clusters concentrated around London Docklands and Slough, two of Europe’s most mature and interconnected digital hubs. 

Overall, the pattern is one of hyper‑concentration rather than strategic distribution, raising the risk of a deepening digital divide that leaves rural and semi‑rural communities technologically marginalised.  

As AI servers become more power‑dense, datacentre connection requests – often sized to reflect anticipated final capacity – are placing increasing demands on electricity networks, prompting providers to explore alternative solutions that may carry environmental trade-offs.

The lack of standardised carbon accounting for digital workloads, as evidenced in our report last year, means these environmental impacts remain opaque and poorly quantified. 

AI could help address this challenge by optimising datacentre planning and operations, reducing carbon impact through smarter infrastructure design and deployment. 

This is why Digital Catapult’s place-based approach to innovation is helping to democratise access to compute and connectivity. And by providing technological and innovation consultancy to corporates in the datacentre and energy space, we recognise the need to strengthen carbon accounting using deep tech innovation. 

How the UK can build a fair and sustainable backbone  

Under existing regulations, Ofgem approves investment levels for electricity networks, while consumers ultimately fund a significant portion of this through household energy bills.

Demand‑connection applications surged from 41 GW in late 2024 to 125 GW by mid‑2025, prompting warnings that consumers may be subsidising hyperscaler‑driven grid expansions without receiving proportional benefits.

If the current model persists, households and small businesses could face higher bills to underwrite infrastructure primarily serving private datacentre developments. 

Overlaying all of this is the urgent need for credible carbon accounting, which we’ve investigated at Digital Catapult through our AI-led innovation programmes. 

We know that for each AI query, inference operation or training cycle carries a measurable carbon cost, yet the industry lacks consistent standards for reporting digital‑emissions intensity.

Without reliable metrics, sustainability claims will remain speculative, and organisations will struggle to evaluate the true environmental impact of their digital strategies.

This is where deep tech innovation is important, and where Digital Catapult’s interventions will strengthen infrastructure planning and mobilise economic growth and AI success.  

 How Digital Catapult is helping to drive sustainable AI  

Through targeted programmes Digital Catapult is helping industry move from aspiration to action by tackling the lack of consistent, credible standards for measuring digital-emissions intensity that can inform infrastructure planning and operations.

Our interventions convene capabilities between technology providers, infrastructure operators and end-users to develop practical frameworks that quantify the carbon impact of digital workloads, from AI training and inference to datacentre operations and network usage. 

By establishing shared metrics and common reporting approaches, our work helps enable organisations to make informed decisions about where, how and at what scale AI systems are deployed, unlocking productivity gains while ensuring infrastructure investment aligns with sustainability objectives. 

This standardisation effort strengthens the foundations of the UK’s digital and energy infrastructure, with transparent, comparable emissions data allowing policymakers, regulators and investors to identify where grid reinforcement, low-carbon generation and regional capacity will deliver the greatest economic return.

As such, Digital Catapult is accelerating the practical application of AI innovation across sectors, ensuring that as AI continues to be embedded in the fabric of the economy, and that the infrastructure that supports it is resilient, equitable and fit for long-term national success. 

Building on this foundation, a next step is to move beyond optimisation and rethink how digital infrastructure is designed. While carbon accounting is important, a true step change may come from shifting away from the hyper-cluster model of highly concentrated facilities towards a more distributed, cooperative network of datacentres that are geographically dispersed and intelligently orchestrated.

Enabled by AI-driven workload management, digital twins and advanced connectivity, this approach could route compute according to grid capacity, carbon intensity and resilience needs, reducing pressure on networks while integrating more effectively with local energy systems. Digital Catapult can support companies to explore and validate these models by convening capabilities, bringing together technology providers, infrastructure operators and end-users to test new technical architectures and business models that underpin a more resilient and sustainable AI economy. 

The UK has an opportunity to lead in both AI capability and sustainable digital‑infrastructure planning. Achieving this will require coherent national strategy, modernised funding and regulatory frameworks, accelerated grid reinforcement and a transparent, equitable cost‑sharing model. AI is becoming the operating layer of the modern economy and can be used to inform infrastructure investment, which will build the backbone of the country’s AI economy.  

Any readers interested in learning more about Digital Catapult’s work in this space can find out more here.