London’s growing number of data centres could push an additional 10,000 households into fuel poverty and place significant pressure on water supplies, experts have warned.
Research presented to the London Assembly Environment Committee suggests that rising electricity demand from new data centres could add an average of £88 to household energy bills across the UK.
The warnings come as London continues to attract major data centre developments, with 99 facilities already built and another 26 planned or progressing through the development process.
The capital accounts for more than 80% of the UK’s data centre capacity, according to figures presented in the report.
Data centres are secure facilities housing computer servers, storage systems and networking infrastructure that support digital services, businesses and public sector operations.
Many are concentrated around London because of their proximity to the City of London’s financial district and the tendency for new facilities to be developed close to existing sites.
Energy bills could rise by £88
Oliver Hayes, head of campaigns at climate organisation Global Action Plan, warned that high-growth projections for data centres could push an additional 77,000 households across Britain into fuel poverty, including approximately 10,000 in London.
The estimates are based on projected increases in energy demand rather than an assessment of households already pushed into poverty.
“It will also further impoverish the households already in fuel poverty,” Mr Hayes told the committee.
“This is an enormous issue that is not being adequately considered. Early analysis of that at a regional level suggests that in London that figure would be about 10,000 additional households.”
Green Party leader and London Assembly Member Zack Polanski called for a slowdown in new data centre construction.
Speaking to the Local Democracy Reporting Service (LDRS), he said: “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.”
Water demand raises concerns
Experts also warned that data centres could place additional pressure on water supplies, particularly during periods of high demand in summer.
Jon Chappell, deputy director of Water UK, explained that water infrastructure must be designed to cope with the highest levels of demand.
He 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.”
Mr Chappell warned that, under a scenario in which all future data centres were built to match the least water-efficient existing facility, the country could require an additional 77 million litres of water every day.
That is equivalent to the water demand of three London boroughs, according to the evidence presented.
He suggested that additional demand could affect housing and business development in areas already experiencing water shortages.
“We are 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 already for no other reason than a lack of water.”
Researchers warn of hidden water consumption
Rory Murphy, a research associate at the University of Exeter, told the committee that direct water consumption for cooling data centre equipment represents only part of the overall impact.
He highlighted research showing that data centres in the United States used 66 billion litres of water directly to cool servers in a year, while approximately 800 billion litres were used indirectly in generating the electricity needed to operate them.
“We need to consider the wider indirect effects, particularly when considering the stress that this could place on an already stressed infrastructure,” he urged.
The figures underline the importance of considering both direct cooling requirements and the water used throughout the electricity supply chain.
Mayor calls for comprehensive plan
London Mayor Sadiq Khan has previously acknowledged concerns about the impact of data centres on the capital’s water and electricity infrastructure.
In response to a question from Labour London Assembly Member James Small-Edwards last year, the mayor said he had commissioned a study into the implications of new data centres for London’s water supply.
He explained: “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, the mayor told Assembly Members that City Hall was examining the effects of data centres on both water supplies and the electricity grid.
He said: “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 and 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 if 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 planning decisions across the capital, supports data centre development in suitable locations in principle.
However, it states that proposals should only be approved where sufficient electricity and water capacity is available.
The committee’s evidence highlights the challenge of balancing London’s growing demand for digital infrastructure with concerns about household energy bills, water availability and future housing development.
