UK data centres lobby government for energy bill relief
Data centre operators in the UK are urging the government to extend an energy bill subsidy scheme to cover the sector.
Along with TechUK, they are lobbying ministers to expand the British Industrial Competitiveness Scheme (BICS) – that reduces energy bills for energy-intensive businesses – to include data centres.
Spencer Lamb, managing director and chief commercial officer at Kao Data, said: “We should be included. It’s crazy we are not. We are working with Tech UK to lobby the government.”
He added that without the subsidy, data centres would not be able to attract investments from cloud service companies such as Microsoft, Coreweave, and Google, which are typically their primary source of revenue.
“Without this investment,” Lamb said, “we will not have the funds to train our AI models, thus risking the UK’s position as the third largest in the world’s data centre list. We might be beaten up by middle eastern companies.”
Data centre operators are aware of the narrative that they have ‘deep pockets’ and therefore should be able to pay their energy bills without any government subsidy.
Ben Pritchard, chief executive at AVK, which provides on-site power generation to data centres, contested this view. He said: “The narrative that data centres are simply ‘too profitable’ to warrant support fundamentally misunderstands both the economics and the strategic importance of this sector.
“Electricity costs typically account for 25-40% of a data centre’s total operational expenditure – far higher than most industries.”
Pritchard added that with the rising non-commodity cost of electricity, the real issue has now become competitiveness. Cloud service providers are comparing UK costs against Ireland, the Nordics, and increasingly mainland Europe, where electricity is cheaper.
He said: “The argument that data centres can simply absorb these costs ignores the cumulative effect on investment decisions. Margins may be healthy now, but rising non-commodity costs – network charges, levies, policy costs – are eroding competitiveness year on year.”
He is also calling for data centres to be included in the BICS: “Extending similar relief to data centres, even partially, would signal that the UK is serious about competing for AI investment.”
Under the BICS, eligible businesses are exempt from paying the costs of the Renewables Obligation, feed-in-tariffs and the Capacity Market scheme, resulting in a saving of around £35-40/MWh. Eligibility is determined by the business’s SIC code.
These codes categorise companies based on the type of business but have not been updated since 2007. Many tech companies struggle to find an SIC code that accurately describes what they do.
Along with TechUK, they are lobbying ministers to expand the British Industrial Competitiveness Scheme (BICS) – that reduces energy bills for energy-intensive businesses – to include data centres.
Spencer Lamb, managing director and chief commercial officer at Kao Data, said: “We should be included. It’s crazy we are not. We are working with Tech UK to lobby the government.”
He added that without the subsidy, data centres would not be able to attract investments from cloud service companies such as Microsoft, Coreweave, and Google, which are typically their primary source of revenue.
“Without this investment,” Lamb said, “we will not have the funds to train our AI models, thus risking the UK’s position as the third largest in the world’s data centre list. We might be beaten up by middle eastern companies.”
Data centre operators are aware of the narrative that they have ‘deep pockets’ and therefore should be able to pay their energy bills without any government subsidy.
Ben Pritchard, chief executive at AVK, which provides on-site power generation to data centres, contested this view. He said: “The narrative that data centres are simply ‘too profitable’ to warrant support fundamentally misunderstands both the economics and the strategic importance of this sector.
“Electricity costs typically account for 25-40% of a data centre’s total operational expenditure – far higher than most industries.”
Pritchard added that with the rising non-commodity cost of electricity, the real issue has now become competitiveness. Cloud service providers are comparing UK costs against Ireland, the Nordics, and increasingly mainland Europe, where electricity is cheaper.
He said: “The argument that data centres can simply absorb these costs ignores the cumulative effect on investment decisions. Margins may be healthy now, but rising non-commodity costs – network charges, levies, policy costs – are eroding competitiveness year on year.”
He is also calling for data centres to be included in the BICS: “Extending similar relief to data centres, even partially, would signal that the UK is serious about competing for AI investment.”
Under the BICS, eligible businesses are exempt from paying the costs of the Renewables Obligation, feed-in-tariffs and the Capacity Market scheme, resulting in a saving of around £35-40/MWh. Eligibility is determined by the business’s SIC code.
These codes categorise companies based on the type of business but have not been updated since 2007. Many tech companies struggle to find an SIC code that accurately describes what they do.
