The UK government should introduce a separate use class for data centers to address the growing pressure the sector is putting on London’s power grid, as it becomes a “contributing” factor to house-building delays, a report from the London Assembly Planning and Regeneration Committee said.

The committee, which exists to scrutinize London Mayor Sadiq Khan’s plans for London’s housing, facilities, and green space, warned that long-term electricity needs in London, including those from “energy-intensive” sectors such as data centers, will require “long-term strategic planning to avoid further grid constraints and delays.”

Electricity demands caused by data centers are contributing to house building delays in London, the report said, recommending that the Greater London Assembly (GLA) include a “dedicated data center policy in the next London Plan to address their significant energy impacts and ensure more coordinated energy planning across the city.”

“London’s ability to grow, build the homes we need, and be at the forefront of economic progress depends on something most of us take for granted: electricity,” said James Small-Edwards, assembly member and chair of the committee. “The provision of electricity underpins our daily lives, powering essentials like our computers, mobile phones, and home appliances. As we continue to decarbonize, electricity will also underpin London’s vehicles and heating systems.”

“In short, the provision of electricity is critical and will only become more so in the years ahead. As a result of this reliance, when the grid can’t keep pace with demand, the consequences are immediate,” he added.

Data centers, especially those purpose-built for AI training and inferencing, have significant power demands. This is sometimes the equivalent of the power required for tens of thousands of homes.

According to the report, which cited data from the UK’s National Energy System Operator (NESO), data center electricity demand in the UK is expected to rise between 200 and 600 percent between 2025 and 2050.

The committee’s report makes ten recommendations in total, including the previously mentioned separate use class and dedicated data center policy plan.

Among the other recommendations were suggestions that the GLA Infrastructure Coordination Service publish the results of its data center forecasting project without waiting for the London Plan’s evidence pack, and that the Mayor should prioritize retrofit funds for social housing and key infrastructure to reduce energy cost burdens on low-income households.

“London is at a critical moment, with energy capacity becoming a real constraint on both housing delivery and wider economic growth,” Small-Edwards said.

“Through this investigation, we heard from councils, developers, and residents about the delays, uncertainty, and long-term risks posed by ongoing grid constraints. As demand for power rises, particularly from large energy users like data centers, we need a clear, strategic, and long-term approach.”

“The recommendations we’ve set out are an essential step towards managing these pressures fairly and ensuring London has the infrastructure it needs to support new homes and a growing economy,” he added.

The UK government is going all in on AI, bringing forward new policy and legislation to encourage the development of data centers and AI hubs.

Legislation that would afford data center developers the right to request their data centers be considered a “nationally significant infrastructure project,” is currently moving through parliament.

The government also approved a new “AI growth zone” in Wales, as UK Prime Minister Keir Starmer said his government was “putting our money where our mouth is.”

But there are concerns that the rush to be a leader in AI may have consequences if the country is unable to balance its current housing and infrastructure crisis against AI demand.

“The Government wants the UK to lead the way globally in artificial intelligence and digital innovation. Bold goals that, if successful, will drive huge demand for data centers, which are often staggeringly energy-intensive. But if we don’t plan ahead, we run the risk of not meeting those ambitions, or realising those ambitions at the expense of urgently needed housing and infrastructure,” said Small-Edwards.

“If there is to be just one takeaway from this investigation, it must be this: grid capacity cannot be an afterthought.”