Spending on new UK data centres is forecast to rise to £10 billion annually by 2029, according to analysis from construction data firm Barbour ABI, a more than five-fold increase from 2024.

Barbour ABI said AI-driven demand is fuelling investment as technology companies ramp up capacity and almost 100 new projects enter the pipeline. The firm estimates that tech giants will invest £25 billion in the UK over the next five years. Growth is being supported by government initiatives such as AI Growth Zones that aim to streamline planning and ensure energy availability.

While London and its surrounding areas have traditionally dominated the sector, development is spreading across the country, with the Northeast, East of England and Wales highlighted as increasingly attractive locations by Barbour ABI. The largest planned UK project is a proposed $13 billion hyperscale facility in North East England backed by U.S. private equity group Blackstone. Britain and the United States last month agreed a technology pact, with companies including Microsoft, Nvidia and Google pledging investments in the UK, Reuters reported.

Barbour ABI’s market commentary points to a twin track of hyperscale builds outside urban centres and increased demand for edge data centres in dense population areas, designed to bring computing closer to users and support real-time applications. The report cites sustainability pressures and evolving approaches to energy use, including commitments to renewable power and waste heat recovery. It notes a shift to modular systems and prefabricated components to accelerate construction and scale capacity.

“The UK data centre market is poised for exponential growth, projected to quadruple in value by 2029, driven primarily by the demands of Artificial Intelligence and cloud computing,” said David Bain, editor of the Barbour ABI report. “There is increasing pressure on data centre operators to create facilities which are as energy-efficient as possible, use renewable energy and partner with nearby homes or commercial operations to re-use waste heat.” Bain added that government policy and investment point to “significant inward investment … over the next five years, which will support the sector’s continued growth.”

Barbour ABI also warns of constraints, including rising energy costs, power availability, land, planning restrictions and a shortage of skilled labour. The government’s AI Energy Council has been established to help address the sector’s power needs, the report said.

---