UK data centres approved by parliament as ‘nationally significant infrastructure projects’

The proposed Infrastructure Planning (Business or Commercial Projects) (Amendment) Regulations were approved by the House of Lords last week, having previously been approved by MPs in the House of Commons earlier in November.

The proposed regulations, which still need to be formally made by the Secretary of State before they can come into force, are designed to provide data centre developers with a right to request that their project be considered as a ‘nationally significant infrastructure project’ (NSIP) for the purposes of consenting.

The NSIPs consenting regime, introduced in 2008, was originally designed for the approval of those energy, transport, water, waste water and waste infrastructure projects considered to be nationally significant. In 2013, however, it was opened up to certain business and commercial projects and in December 2024 the UK government said that it would be expanding the list of business and commercial projects eligible to apply to use the NSIP consenting regime to include data centres as well as gigafactories and laboratories.

The UK government is seeking to encourage investment in data centre development as part of its broader plans to support the development and use of AI, which it sees as an enabler of economic growth. As well as moving to enable individual data centre projects to be processed as NSIPs within the planning system, the government has developed more general plans to streamline consenting for NSIPs.

In its recent policy paper on delivering so-called AI growth zones, the government, among other things, said it is exploring whether it can cut NSIP consenting times generally down to just 12 months from the current 18-month average. It said that it will “consider further planning reforms that may be needed to streamline the delivery of AI growth zones” too.

Prior to their approval by parliament, the draft regulations were the subject of review by the Secondary Legislation Scrutiny Committee in the House of Lords. Among other things, the Committee highlighted its concerns that the proposed national policy statement (NPS) for data centres, which would inform consenting decision-making for data centre NSIPs once the new regulations are in force, has not yet been published.

In a subsequent debate in the Lords, Baroness Taylor of Stevenage, the parliamentary under-secretary of state at the Ministry of Housing, Communities and Local Government, confirmed it is the government’s intention to publish a draft of the NPS for data centres soon after the regulations come into force – and said that the document, “currently under development and testing”, will set out “details of any thresholds and parameters, such as size or other relevant factors [to clarify what projects are in-scope of the policy], as well as relevant policy background – including the needs case for data centres”.

The NPS for data centres will also reflect environmental sustainability issues, she said, addressing related questions raised by Baroness Pinnock and Conservative peer Lord Jamieson regarding data centre demand for water and energy.

“The extent to which a proposed data centre NSIP would have environmental impacts, both positive and negative – including water and energy consumption, noise pollution, waste generation, land use, visual impacts and location – would be part of the consideration of the NSIP during its examination and its determination by the Secretary of State,” Baroness Taylor said, highlighting how data centre projects would be subject to environmental impact assessments and how statutory bodies like the Environment Agency and Natural England can have a say on project proposals.

She added: “The emerging national policy statement on data centres, like any national policy statement that is being developed, will need to be supported by an appraisal of sustainability which takes account of the environmental, social and economic effects of designating an NPS and reasonable alternatives, sets out mitigation and enhancement measures and helps inform the preparation of the national policy statement to promote sustainable development.”

During the debate, Baroness Taylor also did not rule out requiring data centre developers and operators to enable the excess heat generated from their operations to be used to heat nearby properties. She confirmed that current government policy is to simply “encourage” data centre developers and operators to capture excess heat so that it can be used for the purpose of heating homes or other infrastructure assets in the local area. However, she said “further interventions” are possible “in future”.

Baroness Taylor was responding to questions posed by Liberal Democrat peer Baroness Pinnock, who is in favour of the imposition of new data centre heat recycling duties.

Baroness Taylor said: “Data centres produce significant heat; the technology exists to capture that and use it in district heating networks or to meet significant demand. I hope that, increasingly, as this industry develops, there will be more creative and imaginative uses for that heat. There is potential for it to be captured and used for further benefit and there have been successful examples of using data centre heat for hospitals and homes.”

“A current UK example, if she is interested, is the use of a data centre to heat a local swimming pool in Devon. That is very good news. The Greater London Authority is developing a pilot to test heating up to 10,000 homes and at least one hospital – Middlesex – from London-based data centres. We are engaging with developers and operators to determine whether further interventions are necessary and appropriate to encourage that sort of take-up of recycling the heat,” she said.

Robbie Owen, a national infrastructure planning and development consent order (DCO) expert at Pinsent Masons, welcomed parliament’s approval of the proposed regulations.

“The debates in parliament have given us a welcome indication both of what’s likely to be in the draft NPS and of the issues data centre developers will face if they choose to go down the NSIP consenting route,” Owen said “How many decide to do so is uncertain – we doubt it will be many. This is because most data centres will not, on their own, need the extra powers a DCO will give them.”

According to Owen, the government appears to share this view. In its delivering AI growth zones paper, it stated that “planning for most AI data centres will be consented through the standard local planning process (Town and Country Planning Act)” and that it expects that only “a small number of very large projects may need to go through the Nationally Significant Infrastructure Projects (NSIPs) consenting route”. 

Owen also welcomed confirmation in the paper that government would be publishing the NPS for consultation by mid-February, and that it will consider whether the NPS should apply ‘critical national priority’ status to data centres in line with government’s approach to low carbon energy projects.