Planning matters

The Government’s publication of the draft National Policy Statement (NPS) for Data Centres and the new Data Centre Covenant on 28 October 2026 marks a significant moment for the sector. Combined, these documents recognise the importance of digital infrastructure to economic growth, AI capability and national resilience, and seek to provide greater certainty for investors and accelerate delivery bringing both planning applications and Development Consent Orders (DCOs) forward.

There is plenty to welcome. But there is also quite a lot to unpick.

 

  

The dedicated NPS, that will be the primary basis for the examination of data centre DCOs and an important material consideration for planning applications, provides a clearer national case for additional data centre capacity, recognising its importance to the economy, AI capability, national resilience and security.

Significantly, it introduces a presumption of consent for applications determined under the Nationally Significant Infrastructure Projects (NSIP) regime. Where proposals meet the relevant NPS requirements, apply the mitigation hierarchy and satisfy legal and regulatory requirements, the starting point for the Secretary of State should be support for development.

This is a real policy shift and provides applicants with a stronger platform for making the case for nationally important infrastructure. However, it is not a green light. The presumption is subject to important exceptions, including impacts on protected habitats, risks to human health and public safety, flood risk and where development proposals are forthcoming within the Green Belt.

Confusingly, the draft also says little about Grey Belt sites. Given the potential availability of previously developed or less sensitive land within the Green Belt, the NPS should clarify how the presumption would apply to such development opportunities.

 

  

The NPS is closely linked to the Government’s decision to bring large data centre projects within the NSIP consenting regime through Section 35 of the Planning Act 2008.

Projects with a rated IT load of 100MW or more are likely to be considered nationally significant and may be suitable for a Section 35 direction. However, the DCO route remains optional; it is not compulsory for every project above that threshold.  A DCO may offer a more nationally focused consenting process, supported by the dedicated NPS and presumption of consent. But it also brings its own costs, programme and evidence requirements. The TCPA route will remain appropriate for many schemes.

The right consenting strategy will depend on the scale and complexity of the development, power arrangements, programme, environmental constraints, control over land and local planning context. It is a decision that needs to be considered early.

  

Power availability remains one of the sector’s biggest delivery challenges, and the draft NPS places considerable emphasis on securing a grid connection.

The NPS clarifies that a secured connection is not necessarily a prerequisite for submitting a DCO application. However, applicants will need to explain progress with the network operator, demonstrate credible commitments to the capacity sought and address the likelihood of connection within the required timeframe.

The treatment of behind-the-meter (BtM) generation is more challenging. The NPS requires any such energy solution to be both a ‘last resort’ and a temporary solution.  It advertises a “forthcoming framework” to establish the conditions by which projects can make use of BtM. Approval for BtM power will be refused if the data centre project is either not exceptionally strategic or is exceptionally strategic but does not demonstrate sufficient compliance with the framework.  Both the framework and additional guidance on what will comprises ‘exceptionally strategic’ have yet to be published, which seems an omission at this time, given the pivotal nature of these points.

With the limitations around grid availability a very real constraint to data centre developments particularly in the south, BtM offers a practical solution for immediate delivery of data centre capacity. It also offers opportunity to address existing resilience issues in power availability in local catchments, as part of the host community benefits the draft NPS seeks to secure.

The importance of BtM is evident from some of the recent Section 35 submissions, several of which rely on this source of power in the short term. Without a clear framework and associated guidance, these sorts of schemes risk being left in limbo.

We would expect any emerging guidance to recognise the realities of delivering large-scale infrastructure where a combination of power sources may be necessary. We would also like to see acknowledgement that such an energy solution offers up potential benefits to local communities, strengthen resilience of supply.  But for developers today, it is evident that a robust and deliverable power strategy will be fundamental to both site selection and the planning case going forward.

  

Alongside the NPS, a Data Centre Covenant was announced, which appears to be in play immediately.  All data centres are encouraged to meet five new tests, whilst strategic data centres are required to do so where they are seeking enhanced Government support.

The Covenant is intended to establish a reciprocal arrangement: in return for meeting these commitments, strategically important data centres can expect enhanced Government support, including efforts to unlock investment, prioritise access to power and accelerate grid connections and planning. The potential benefits are significant, but the detail of how this support will operate in practice remains to be clarified.

The tests cover:

• Energy costs: paying a fair share of the costs created and supporting grid resilience and flexibility.
  
  
• Local communities: agreeing a Local Benefit Plan, committing substantial investment linked to the scale of the development and local priorities.
   
• Environmental performance: protecting nature, minimising water use, reporting energy and water consumption and capturing waste heat wherever practical.
   
• Jobs and skills: creating local employment, apprenticeships and training opportunities, and supporting UK suppliers and technologies.
   
• National security: providing secure and reliable compute capacity for critical services and working with national technical authorities to strengthen resilience.

The principles are understandable, and there are clear opportunities for the sector to demonstrate wider benefits. However, the Local Benefit Plan is potentially one of the most significant changes for developers. What constitutes ‘substantial investment’? How will contributions be calculated, who determines what is proportionate, and how will these plans sit alongside existing Section 106 and Community Infrastructure Levy requirements?

Is it a risk that, without clear parameters, Local Benefit Plans become an additional and potentially open-ended layer of negotiation, extending beyond the mitigation of development impacts and the normal scope of planning obligations?

  

The Covenant also raises expectations around energy efficiency, water consumption and waste heat reuse. These are important considerations, but their practical delivery will depend on the location and design of each facility.

Heat reuse is a good example. While there are clear opportunities to supply nearby homes, businesses and public buildings, viability depends on the availability of a suitable heat user, proximity, infrastructure and commercial arrangements. Developers cannot deliver a viable district heating network in isolation where there is no realistic local demand.

Similarly, water efficiency needs to be considered alongside local water availability and the proposed cooling technology.

The NPS expects applicants to consider these opportunities and explain where they are not feasible. 

 

 

Overall, the new framework provides a stronger national case for data centre development, but it also raises the bar in terms of what makes a good site.

Power availability remains critical, but water supply, opportunities for heat reuse, environmental constraints, infrastructure and the potential to deliver local benefits will all need to feature much earlier in site assessment and due diligence. The publication of the BtM framework and exceptionally strategic criteria can’t come soon enough.

The consultation provides an opportunity for operators, developers, landowners and the wider industry to influence the final policy. In particular, the treatment of Grey Belt sites, BTM generation, Local Benefit Plans and the definition of strategic infrastructure all warrant further consideration.

The direction of travel is clear: the Government wants more data centres but expects them to deliver wider benefits in return. The opportunity is significant. The challenge is ensuring that the policy translates into projects that are genuinely deliverable.