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3 weeks ago
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Energy is essential for delivering the UK governments' AI ambitions, but Britain faces a critical question: how can it supply enough power for rapidly expanding datacenters without causing blackouts or inflating consumer bills?
At Energy UK's annual London conference this week, Energy Secretary Ed Miliband made his position clear: renewables are the future, and fossil fuels drive both climate damage and the nation's inflated energy costs. What's less clear is how to reach this renewable utopia given decades of infrastructure underinvestment.
"Building clean energy is the right choice for the country because, despite the challenges, it is the only route to a system that can reliably bring down bills for good, and give us clean energy abundance," Miliband claims.
The UK reportedly has the world's most expensive electricity, largely because wholesale electricity prices track gas prices, which surged after Russia's invasion of Ukraine. Gas-fired generators serve as the backup when solar and wind fall short — a frequent occurrence on Britain's gray, windless days.
The obvious solution — more solar farms and wind turbines — faces significant obstacles. Offshore wind farms can take years to construct, while onshore projects, though faster to build, face lengthy land acquisition and planning permission processes. Local opposition to solar farms is fierce, with many viewing them as blights on the landscape, particularly when built on farmland.
The government's answer is to streamline the planning process by amending the National Planning Policy Framework or designating projects as critical national infrastructure, as it did with datacenters. But even with expedited approvals, new power projects must keep pace with datacenter construction.
Several major datacenters have broken ground near London's M25 in the past year alone, including Europe's largest planned cloud and AI datacenter near South Mimms, a Google facility at Waltham Cross, and projects at Abbots Langley, East Havering, and one at Woodlands Park, near Iver in Buckinghamshire - previously been rejected but now listed as approved on the developers' website..
The government's "AI Growth Zones," targeted at sites with existing grid connections like decommissioned power stations, hint at recognition of the scale challenge.
In July, energy regulator Ofgem approved a £23.9 billion ($32 billion) investment program — £15 billion for gas networks and £8.9 billion for what's being called the biggest electricity grid expansion since the 1960s. However, The Guardian noted that householders will fund this through higher charges, with bills rising by £104 ($140) by 2031 — on top of already inflated costs.
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Replacing gas-fired generators as the reliable baseload source remains problematic. Unlike the US, Britain can't return to coal — its last coal-fired power station closed last year.
Battery energy storage systems (BESSs) offer one solution for storing excess renewable energy. But the gap is enormous: according to RenewableUK, Britain had 5,013 MW of operational battery storage at year-end, while peak demand on a cold day reaches 61.1 GW.
Nuclear power is the elephant in the room. And as Miliband states, much of the UK's nuclear fleet dates to the 1980s, and no new station has come online since Sizewell B 30 years ago.
Construction of a new reactor, Hinkley Point C, began in December 2018, with expected completion by 2027, but EDF, the company building it, now says it is unlikely to be operational before 2030. The overall cost has ballooned from £26 billion ($35 billion) to between £31 and £34 billion ($42 to $47 billion).
Small modular reactors (SMRs) are gaining attention from government and datacenter operators, but the technology remains largely untested, and unlikely to be ready for another decade.
"Omdia has talked with many power generation project developers and the consensus is that broad market acceptance and availability is likely around 2035, so about 10 years out," Omdia principal analyst Alan Howard, told us earlier this year.
A recent study also found that renewable energy sources can provide power for datacenters more cheaply than SMRs, when paired with battery storage.
However, the datacenters are being built now, and the government also expects Brits to switch to electric vehicles and give up gas-fired central heating for alternatives such as electric-powered heat pumps.
"In the years ahead, we expect a massive increase in electricity demand - around 50 percent by 2035 and a more than doubling by 2050," Miliband said in his speech, calling it "a massive opportunity for us."
"We want as a country to seize the opportunities of electric vehicles that are cheaper to run, new industries such as AI, and the benefits of electrification across the economy," he added.
Whatever Miliband plans to ensure there is sufficient energy for all this, he needs to act fast, or his government's ambitions to pepper the country with AI datacenters are going to be thwarted by lack of power, soaringe energy costs – or both. ®
