The Balance of Power
The recent news of Amazon’s commitment to invest $8 billion in the UK over the next five years to build new data centres and the Government's decision to designate data centres as critical national infrastructure places into sharp focus the importance of industrial buildings and their role in driving the country’s future digital economy
Increasing data centre demand, along with the growing energy requirements from transport, heating, cooling and automation means that while overall demand for electricity is expected to at least double by 2050, companies occupying industrial and logistics properties is likely to increase by far more than this.
Electrifying logistics transport fleets is a huge challenge. For context, a common sized battery used in an electric HGV would require 400 KWh of electricity to charge. This would be the same amount used by 50 average UK households in a day. There are estimated to be 400,000 HGVs on the UK roads, and this is in addition to the need to electrify Britain’s estimated 5 million vans.
Developers face mounting challenges in meeting these growing energy needs, as occupiers expect at least a proportion of this additional power to be readily available on-site.
These energy and power requirements are important factors in our customers’ location decisions, alongside access to labour and proximity to transport corridors. At the same time, electricity grids are becoming increasingly constrained due to the shift from centralised fossil fuels to distributed renewable systems, leading to multiple year waits for grid connections. The pace of connectivity, adherence to deadlines given for infrastructure upgrades and prioritising access for schemes that will enable economic growth are critical.
Onsite renewable electricity generation is a key lever in delivering net-zero transition. However, renewables and batteries can only provide intermittent power and cannot be substituted for Grid connection. There are currently no small-scale technologies available that can provide non-grid de-carbonised reliable power, as hydrogen and small-scale nuclear are years away from commercialisation and the role that biofuels could play is not yet clear.
It is welcome that in the last few weeks we have seen reforms to the planning system, a commitment to Britain’s digital future and a reinvigoration of industrial strategy, but all of these opportunities can only be realised if they are accompanied with the right energy strategy.
As such we are calling on the Government to prioritise support for the industrial and logistics sector to ensure that sufficient power is available where and when needed. This means continuing to drive forward the energy generation schemes in the pipeline and the associated transmission and distribution infrastructure upgrades. This includes supporting the net-zero transition and providing a stable base load for when the sun isn’t shining and the wind isn’t blowing. It means considering a priority access plan that enables key logistics hubs and data centres to connect to energy sources sooner, as well as making it more feasible for developers to invest in on-site renewables through better connections to export excess energy to the grid and more viable feed in tariffs.
Without these measures, customer dissatisfaction, increased vacancies, development delays, and investor challenges could arise. The country won’t be able to create the dynamic, tech-enabled economy that it is striving for and our transition to net-zero will be hampered.