Description
London was already the largest of the key FLAP markets in Europe even before land and power constraints pushed the market beyond its original boundaries. It has long been a critical global hub for interconnection and financial services, and was an early cloud destination with the first regions opening in 2016. This is playing out in AI as well: CoreWeave opened its first European data centres in London in 2024, with Global Switch in Docklands and Digital Realty near Gatwick in a southerly extension to the London market.
The new London market also extends north and west but not east where activity is still limited. It includes Didcot near Oxford, where AWS opened one of three self-builds in 2022 for a specific government contract. It has acquired land in Iver which won’t be operational until 2029 at the earliest, but Google and Microsoft are both well underway with construction of self-builds in London. Both should go live in 2026 at the latest, Microsoft in the Park Royal AZ and Google in the North cluster. Both have more land banked, Microsoft in the Slough area and Google in two areas of Essex, one relatively close to its existing Broxbourne site but the other further east out of the London market boundaries.
The new Labour government has committed to the UK being a data centre and AI friendly destination. Soon after taking office in summer 2024 it classified data centres as critical national infrastructure and got involved in appeals against certain planning decisions. It has introduced measures to simplify and speed up the permitting process, improve access to power, encourage the generation of more clean energy – including nuclear – and reduce power costs which are among the highest in Europe. These will take time to be baked into legislation and filter down to the market, but they are a positive step forward.
The prominence the government has given to data centres has raised public awareness of the sector but is also causing a frenzy of speculation, not helped by the government asking for expressions of interest for AI Growth Zones in early 2025. But there are also a lot of credible projects in the works, by existing operators and newcomers alike. Some are in the ‘traditional’ London market where power is available or had already been reserved. Others are within the extended market, especially to the west.
In the meantime, power is all but non-existent in certain areas of London, especially around the Slough area where the National Grid hasn’t even begun a new substation that was originally intended to deliver power from 2026. The most optimistic expectation is for power delivery in 2030 but it could push beyond that timeframe. Several developments, possibly including Microsoft’s self-build, are dependent on this substation. Measures introduced in late 2023 to remove zombie power requests haven’t yet borne fruit but should do so in future, and also free up some of the 1GW of power from the new substation that has already been allocated.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in London or find a service provider. Structure Research now has DCI reports for the European FLAP markets plus Milan and Madrid in southern Europe, as well as a new DCI Market Spotlight report on Rome.
