London grid crunch delays new housing amid datacenter boom

Summary

London’s electricity network is already strained in parts of the capital and that shortage is delaying housebuilding. A London Assembly report warns that the rapid growth in datacentres — driven by soaring AI demand — is intensifying pressure on local grid capacity and that planning and energy policy need to be better coordinated to avoid further hold-ups for new homes.

The report notes West London hit full grid capacity in 2022, which contributed to development delays, and says short-term fixes secured by the Greater London Authority together with National Grid and Ofgem enabled about 12,000 homes to connect by early 2025. But longer-term demand could rise by 200–600 per cent in future, so the Assembly recommends structural policy changes including a separate use class for datacentres and stronger local energy planning.

Key Points

Grid constraints in parts of London have already delayed housing developments; West London reached capacity in 2022.
GLA, National Grid and Ofgem arranged short-term measures that allowed roughly 12,000 homes to connect by early 2025.
Projected electricity demand in London could increase between 200% and 600% as AI-focused datacentres expand.
The Assembly recommends a separate use class for datacentres (rather than grouping them under B8 warehousing) to enable clearer energy planning.
Other recommendations: give GLA and boroughs formal roles on regional energy planning boards, require Local Area Energy Plans, and include datacentre policy and energy-demand assessments in the London Plan.
Major datacentre projects around the M25 (Equinix, Google and others) exemplify the concentration of demand near the capital.

Content summary

The London Assembly’s report, Gridlocked: how planning can ease London’s electricity constraints, frames the problem as one of planning and coordination. Short-term fixes have bought time, but the report warns that without strategic, long-term measures the combination of datacentre growth and housing needs will continue to clash.

Recommendations focus on regulatory and planning changes so energy networks are treated as a central element of local development strategy — not an afterthought. The report stresses proactive assessment of large energy users and improved Local Area Energy Plans across boroughs.

Context and relevance

This story sits at the intersection of housing, energy and tech policy. As AI drives demand for large, power-hungry datacentres, local grid bottlenecks are becoming a planning problem that affects ordinary voters — delaying homes and requiring public bodies to coordinate on energy infrastructure. It also highlights tensions between central government pushes for AI infrastructure and local capacity constraints.

For industry, planning and local government audiences this is immediate: the recommendations would change how datacentres are assessed and sited. For residents, it explains why new housing can stall even when land and permission exist.

Why should I read this?

Short version: if you care about new homes, datacentre booms or London’s energy future, this is the briefing you didn’t know you needed. It explains why warehouses crammed with servers are now a planning headache for councils, how quick fixes only buy time, and what policy moves could stop houses getting stuck in the queue behind humongous AI power demands.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2025/12/02/london_datacenter_new_homes/