Summary
- Five Covenant tests are encouraged for all operators.
- Strategic developments must meet relevant tests to qualify for support.
- Potential assistance includes grid capacity allocation and controlled temporary power options.
HM Treasury has published a Data Centre Covenant setting out expectations for electricity costs, environmental performance, community investment, employment and national security, with additional government assistance proposed for qualifying strategic projects.
The Covenant was published on 28 October and identifies five tests encouraged for all data centres. Projects seeking enhanced strategic support must meet the relevant tests. That distinction is essential: the broader expectations are not, by themselves, a new universal statutory licensing regime.
The government estimates that the UK will need 6GW of AI data centre capacity by 2030 to support its strategic objectives. The figure is a national policy estimate, not a statement that 6GW has already been permitted, connected or commissioned.
The document seeks to connect the development of computing facilities with the infrastructure and communities affected by them. A major site requires electricity capacity, cooling and telecommunications, while its construction can also create demands for land, access roads and a substantial specialist workforce.
Energy and environmental expectations
The first test concerns electricity bills. Data centres are expected to pay a fair share of the costs they impose on the energy system, make credible commitments for the capacity they request and support efficient, secure and flexible network operation.
Large electricity loads can require reinforcement to transmission and distribution networks. The cost and timing of that work affect both the developer and the wider system, making connection planning a central part of a proposed data centre’s commercial viability.
Environmental expectations include efficient energy and water use, protection of nature and recovery of waste heat where practical. The Covenant encourages new facilities to be designed for a Power Usage Effectiveness of 1.3 or better and to minimise demand on public water supplies, including through closed-loop cooling where appropriate.
PUE compares total facility energy with the energy used by computing equipment. It measures overhead consumption but does not independently establish carbon emissions or the volume of water required. Those outcomes also depend on electricity supply, operating conditions and the selected thermal system.
Waste heat recovery can provide useful energy to nearby buildings where suitable heat demand and delivery infrastructure exist. A data centre’s technical ability to capture heat is only one requirement; the system also needs a practical customer and an economic route for transporting the energy.
Strategic data centres should report annually on energy and water use, efficiency, emissions, heat reuse and participation in flexibility services. Existing operators are strongly encouraged to report comparable information.
Community, employment and security
Strategic developments are expected to prepare Local Benefit Plans, prepared with host communities and linked to project scale. These could support priorities such as transport, parks and town centres, extending beyond obligations already established through planning contributions.
Developers are also encouraged to create local employment, paid apprenticeships and training opportunities. The government wants the investment to support domestic supply chains and contribute to British AI hardware capability, particularly where projects qualify as strategically important.
Security requirements focus on resilient access to computing capacity for critical services. Operators are encouraged to cooperate with national technical authorities and strengthen arrangements for cyber threats, physical disruption and continuity of essential systems.
In return for qualifying commitments, the government intends to establish a Ministerial Control Centre chaired by the Minister for AI to consider support for the most strategically important data centre projects.
The proposed measures include reserving or reallocating network connection capacity, identifying locations where additional capacity could become available before 2030 and facilitating transfers of eligible pre-2030 connection agreements.
The government also intends to develop a tightly controlled arrangement for temporary on-site generation where an exceptionally strategic project cannot secure timely grid capacity through other measures. Any such facility would face conditions, including those concerning energy security.
These proposals do not automatically grant a faster connection or planning consent to every participating developer. Strategic status, supporting action and eligibility criteria require further definition and assessment. Existing environmental and planning obligations continue to apply.
Wider measures include regional alignment of data centre connections after 2030, greater choice in building connection infrastructure and policies intended to discourage speculative queue positions. Their implementation will depend on subsequent regulatory and operational decisions.
Taken together, the tests link government assistance with commitments that extend beyond the construction of computing facilities. Its effect on individual investments will depend on how strategic status is defined, assessed and translated into connection and planning decisions.
