UK businesses need better energy infrastructure to power their deeptech ambitions

The UK is home to some of the most innovative and cutting-edge startups in the world, especially in fields like AI, semiconductors and quantum computing. These startups have the potential to transform various industries and sectors, from healthcare to finance to defence.

However, as highlighted in a previous insight, they also face a major challenge that could hinder their growth and competitiveness: the lack of adequate energy infrastructure to serve their businesses and the data centres required to support this growth.

As reported by Sifted, many UK startups that rely on lots of data centre capacity or high-power consumption have struggled with power constraints, delays and costs. For example, Paragraf, a Cambridge-based startup that produces graphene-based sensors and electronics, reported that it had to pay £1m and wait a year to connect to the main grid. Sifted notes that other startups have resorted to relocating to other parts of the country or abroad.

This situation is not only frustrating for the startups, but also detrimental to the UK’s economy and innovation ecosystem. If the UK wants to maintain its position as a global leader in deeptech, it needs to invest in its energy supply and the government needs to address not only the competing demands from the data centre industry and tech businesses but other big users of the power network, notably housing. In 2022, we heard the Greater London Authority (GLA) express concerns around the delivery of housing due to demands on power by the data centre industry. There needs to be better supply and co-ordination so that power can be delivered fairly to both new housing and the critical infrastructure supporting the tech industry.

Sifted reports that Ofgem are taking steps to improve the allocation of power which has been welcomed but there is a feeling from the industry that more is required. There is also a need to increase the understanding of local authorities about the needs of these startups and the role data centres play. Otherwise, it risks losing its talent, intellectual property and market share to other regions or countries that offer better conditions and incentives.

Fortunately, there are some initiatives and recommendations that could help address this issue. With calls from lobbying groups for urgent action from the government to improve the energy infrastructure, and suggestions of some measures such as creating a dedicated task force, incentivising green energy sources and improving the network to fully utilise those green energy sources.

The industry is also calling for the UK government to provide some standardised guidance to local authorities when processing data centre planning applications to build data centres, including on power consumption and noise.

The UK has a leading tech and data centre industry and a unique opportunity to harness the power of deeptech and create a more sustainable and prosperous future. But it also has a responsibility to provide the necessary support and infrastructure for its startups to thrive. The time to act is now, before it is too late.

The UK has always been a great place to start a business but, of course, if a startup relies heavily on data, on AI machine learning, it will require a lot of power. We do need to see a move from government


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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