London's new AI data centres will increase fuel poverty and water stress

London’s data centre boom could push 10,000 households into fuel poverty and place unprecedented strain on water resources, the London Assembly environment committee was told.

The AI boom has driven demand for new data centres - huge warehouses that house servers running IT infrastructure - which the government considers critical to the capital’s economy and public services.

Data centres are disproportionately placed in and around London due to the proximity to the financial hub in the City of London, as well as the "snowball effect", where new data centres are built near existing ones in "clusters".

With 99 data centres already built, London accounts for more than 80% of the UK’s data centre capacity, with another 26 new facilities currently planned or progressing through the system.

Risk of higher energy bills

Oliver Hayes, head of campaigns at Global Action Plan, has warned that high-growth data centre projections could force 77,000 British households into fuel poverty in future – including 10,000 in the capital – due to increased energy bills.

Research from the climate campaign group found that added demand on the UK’s energy systems from new data centres could add an average of £88 to the average household energy bill.

“It will also further impoverish the households already in fuel poverty,” Hayes told the London Assembly environment committee this week.

“This is an enormous issue that is not being adequately considered. Early analysis at a regional level suggests that in London that figure would be about 10,000 additional households.”

'We need to slam the brakes on'

Zack Polanski, the leader of the Green Party and London Assembly Member who sits on the committee, told the Local Democracy Reporting Service (LDRS): “We need to slam the brakes on the rampant building of new data centres. So many Londoners are already struggling with the toxic combination of sky-high bills and low wages.

“Building more data centres risks pushing tens of thousands more households into fuel poverty, and that’s especially worrying here in London, where so many data centres are being proposed.

“Data centres don’t just threaten our climate targets by driving up emissions, but at a time when London is facing a housing emergency we cannot afford to prioritise data centres ahead of the homes our city desperately needs.”

Increased water demand across England could be 77m litres per day

The structures will also consume huge amounts of water, assembly members were told, which could lead to significant issues during “peak demand” in summer.

Jon Chappell, Deputy Director of Water UK, said: “We build our system to meet the highest point of demand in the year.

“If you have a big extra new demand in summer, that increases the peak. That means you have to increase the size of your service reservoirs and your treatment works.”

If every new data centre was built like the least efficient one currently in existence, the country would need an extra 77m litres of water a day, Chappell said, equivalent to the water use of three London boroughs.

This could have a knock on effect on other parts of ministerial and City Hall’s ambition, he added: “We are already in a position where in the east of England and in the southeast of England, there are places where houses cannot be built and businesses cannot expand for no other reason than a lack of water.”

Researchers also warned the cross-party committee that headline figures around water only capture a fraction of the true cost.

Rory Murphy, a research associate at the University of Exeter, noted that while US data centres used 66bn litres of water directly to cool servers in a given year, 800bn litres were used to keep the servers on in the first place.

“We need to consider the wider indirect effects, particularly when considering the stress that this could place on an already stressed infrastructure,” he urged.

Data centre policy in draft London Plan

The Mayor of London, when asked about this concern last year by Labour assembly nember James Small-Edwards, said he had commissioned a study on the implications of new data centres on the capital’s water supply, adding: “Data centres use a variety of cooling technologies, with some requiring water while others use air cooling or non-water systems. The impact of data centres on water infrastructure and supply can therefore vary considerably.”

Earlier this year, he told assembly members: “We are looking at what we can do in terms of the water impact and what we can do in terms of the grid impact of data centres.

“We are looking into the issue of the impacts on demand for water, the domestic demand for water, particularly in hot summer times as people are increasingly using AI.

"Again, my point about the offsetting in terms of what is not being done because of the energy and water required by data centres, is really important. That is why we need a proper comprehensive plan for London.”

The draft London Plan, which guides councils on planning, says data centres in suitable locations should be supported in principle, but should only be given the go-ahead if water and electricity capacity is available.

Sign-up for our free weekly newsletter - Salamander News in your inbox