Thought of the Week
Scotland’s renewable energy: Fuelling the future of data centres
January 23, 2025 6 Minute Read
Scotland has huge renewable energy potential, driven by its natural resources. Over the last decade, the country has more than doubled its renewable energy generation, and its wind capacity alone is over 11GW – 39% of the total UK capacity. Scotland produced more renewable electricity than it used in 2022, the equivalent of 113% of its overall electricity consumption.
Amongst the many industries competing for Scotland’s abundance of green energy is data centres. Data centres are large consumers of energy, and demand for data centre infrastructure is huge. In the UK, data centres currently consume approximately 2.5% of the country's total electricity. This is expected to rise to approximately 6% by 2030, largely driven by the growth of Artificial Intelligence (AI), cloud computing, and the digital transformation of businesses and services.
The increasing demand for energy from data centres has a significant environmental impact that cannot be ignored. Many hyperscalers in the data centre industry, such as Amazon Web Services (AWS), Google, and Microsoft, have joined the Climate Neutral Data Centre Pact, are committing to making their facilities climate neutral by 2030. This is likely to increase demand for data centres that can be powered by renewable energy. And because there are several benefits of using renewable energy close to where it is generated, Scotland could be a more attractive option for data centre providers.
Scotland’s potential goes beyond just renewable energy. Scotland’s cooler climate could help reduce the need for artificial cooling systems in data centres, which can be costly. Land is also cheaper in Scotland than in many existing hotspots; for example data centre land in Glasgow can cost up to 90% less than in Slough, the UK’s largest data centre hub. And talent is deemed to be cheaper, with the average IT salary lower in Scotland than in other data centre hubs like Dublin, Frankfurt, or Amsterdam. All of this, combined with growing capacity issues in other established markets in the UK and Europe, means there is potential for Scotland’s data centre market to grow.
The potential is already being recognised by the Scottish Government, who are keen to encourage inward investment. In 2021, the Green datacentres and digital connectivity vision and action plan was launched, with the aim to position Scotland as a leading location for data centres. This was updated again in 2023 and includes a shortlist of potential data sites, from edge to hyperscale facilities.
So, if everything is as promising as it seems, why hasn’t it happened yet? This may be due to location. Organisations looking to secure data centre capacity in the UK have typically turned to London, which is home to 80% of the UK’s co-location data centre supply. The sheer distance between Scotland and the existing concentration of customers for co-location data centres has been an inhibiting factor in the past, as there is no incentive to move, particularly if they already have equipment located in other hubs.
Scotland’s location may also create latency issues; data centres often need to be close to their end-users to ensure fast transfer speeds, and Scotland’s relative remoteness could result in higher latency for users in other parts of the UK and Europe. This is particularly an issue for industries like mobile gaming and high-frequency financial trading. Overcoming this would require investment in high-speed connectivity and strategic placement of data centres to balance energy efficiency with performance needs.
Still there may be growing demand for data centre power from within Scotland. The Scottish Government have implemented the ‘Techscaler’ programme, an initiative designed to support the creation, development, and scaling of tech startups in Scotland. The programmed is delivered by CodeBase, one of the largest technology incubators in the UK. Launched in 2022, it was supported by more than 5,000 companies in its first year. The programme now has nearly 2,500 members, backed by £42 million of government investment, which is likely to boost the number of tech-based businesses within Scotland. Many of which will require robust digital infrastructure including cloud computing, data storage, and high-speed connectivity that can be produced by data centres based within Scotland.
There could remain challenges from the planning process. Land re-zoning, consultations, and environmental and construction approvals can all delay development. Streamlining these processes could speed up development and go some way to encouraging more investment.
Nevertheless, it seems that Scotland has some of the necessary ingredients to succeed, specifically available land and power. Moreover, demand for green energy has grown and capacity constraints in other markets are more pressing than ever. Could Scotland emerge as the next European data centre hub?
