Burges Salmon
Summary
Data centres are a booming asset class. Global demand for AI and cloud services is driving unprecedented growth. But continued growth in this area is predicated on a sustainable energy supply and as such, there is also pressure to decarbonise and consider longer term ESG implications. In September 2024, the UK Government designated data centres as part of the country’s critical national infrastructure.
As the UK’s infrastructure evolves to meet net zero targets, the convergence of data centres and heat networks presents a unique opportunity for investors. With over £14 billion in UK infrastructure investment backing data centres and heat networks, the opportunity to monetise waste heat is no longer theoretical - it’s investable.
At present, district heating systems are the main technology used to utilise waste heat from data centres. These systems are well established across Europe, and in the Nordics in particular. For example, Stockholm Data Parks will use data centre waste heat to supply 35,000 apartments in Stockholm.
In London’s Old Oak and Park Royal regeneration area, Hemiko has been selected to develop the UK’s first data centre waste heat network, expected to heat over 9,000 homes. The project has received £36 million from the Green Heat Network Fund, alongside support from the Mayor of London’s Local Energy Accelerator and Green Finance programmes.
Paddington Village District Energy Network in Liverpool is working with data centre provider Deep Green to decabornise its heating network. Deep Green operate Modular Centres. These are prefabricated, scalable facilities that are in compact self contained units. The advantage of modular data centres is that they can be rapidly deployed, expanded or relocated as needed
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