By Chloe Nelson and Cameron Davis at Pegasus Group
Demand for data centres in the UK is huge, and the projected growth is striking.
In 2024, the UK had approximately 1.6 gigawatts (GW) of data centre capacity across the country, which could rise to between 3.3 GW and 6.3 GW by 2030. Even this may not be enough to meet demand.
More data centres are needed, but the justification developers use must be more nuanced than ‘addressing the AI boom.’ They will need to navigate a complex planning system at a time when data centres are meeting more resistance from the general public.
Understanding and thoroughly modelling the economic benefits on a local area can support the outcome of a planning application.
Don’t assume the benefit of data centres is self-evident to local planning authorities
There’s a reason data centres were re-designated as Critical National Infrastructure – indeed, large-scale developments could be directed into Nationally Significant Infrastructure Projects (NSIPs) to fast-track planning.
The government has clearly recognised that data centres will underpin ‘almost all economic activity and innovation, including the development of AI and other technology, public service delivery, and how we interact with one another’. That is why data centres are also specifically mentioned in the National Planning Policy Framework (NPPF), which was updated in December 2024 and February 2025.
Nonetheless, data centres are a relatively new asset class. Even though London is Europe’s largest data centre market – and new hubs are emerging in places like Wales and Manchester – local authorities must still consider the need for data centres when deciding policies and planning applications.
The employment opportunities of data centres
The most obvious incentive to build data centres comes from the government’s ambition to supercharge the UK into a leader in AI development. And given that AI relies on large-scale data processing and storage capacity, demand for data centres will likely only grow further. Both the construction and operation of data centres bring opportunities for jobs and economic growth in the areas in which they are built.
Research from techUK suggests that the UK could create 40,200 new jobs before 2035 (likely high-paying) if it increases data centre capacity growth from 10% per annum (the recent trend growth rate) to 15%. Another 18,200 jobs would be created over the same period during construction.
The construction and fit-out phases, for example, often generate sustained demand for electrical engineering firms, HVAC and cooling specialists, civil works contractors, and local materials suppliers. Many of these demands can be procured from local business – an easy win for authorities. Combined with local apprenticeship programmes, data centres can even play a role in upskilling the next generation of talent.
Pegasus has been modelling the economic benefits of data centre development across local areas to support developers with planning applications. Our recent analysis found that just a single data centre in the East Midlands would create 77 construction jobs on-site during the build phase. The knock-on effects of building (the multiplier effect) – e.g. through spending on supply chain materials and local businesses — would support 174 more local jobs in the local area. The construction of the data centre would contribute £19.7 million in Gross Value Added (GVA) per annum.
How data centres enable further inward investment
Authorities are increasingly, however, looking for local economic stimulation that extends beyond employment numbers. That is why developers must communicate the longer-term economic benefits once data centres become operational.
Because data centres require substantial investments in infrastructure, this has knock-on benefits for the community long after construction has finished. Some of these include grid connections, roads and access points, and utilities upgrades.
When we modelled the data centre in the East Midlands, we determined it would create 54 jobs available to local residents, which are likely to be highly skilled and highly paid given the specialist skills required for data centre operation. This includes technical operation, support staff, and security. Through the multiplier effect, these jobs would support a further 108 jobs in the local area. Consequently, the contribution once operational would be £10.6 million in GVA per annum.
The key is to also think beyond any single locality. In generating jobs and spend, data centre development can support regional growth plans of mayors and combined authorities. There’s even the opportunity to attract entirely new industries from other localities. When most industries in the future are reliant on faster processing that lives closer to the source – from fintech and manufacturing to public services – companies will flock to where their demand is met. Many of the jobs attracted are likely to be high-quality and technical jobs that pay well.
Data centre development is as much a local success story as it is a national infrastructure need. While many towns struggle to future-proof industries, data centres can diversify local economies and reduce dependency on sectors vulnerable to cyclical downturns. But developers who articulate these benefits clearly, backed by sound modelling and evidence, stand a much stronger chance of gaining approval on data centres schemes.
If you’re working to bring forward data centre development –– get in touch with Pegasus Group to learn how we can support you.