Microgrids promise cheaper power and less queueing
“AI data centres are being built where there is cheaper power. That’s the reality.” Ben Pritchard, chief executive of power system supplier AVK, knows that when it comes to the development of indigenous AI capability in Britain, energy costs are the biggest barrier. “I don’t know if the UK – even with the AI Growth Zones – is going to get to the point where it is an AI superpower. Time will tell.”
Pritchard is backing microgrid generation to help data centre developers battling the relatively high cost of power and restrictions on access to the grid. Indeed, AVK has just announced a new partnership with Rolls-Royce to deliver generators to the UK and Ireland. The hope is that micro-generation will expand the range of sites available for data centre development and help overcome the connections queue. Looking longer-term, data centres could potentially perform a canny balancing act between using renewables, generating and storing power onsite, and selling energy back to the grid, helping to slash running costs, he says.
The AVK/Rolls-Royce announcement comes a year after AVK delivered its 500th mtu generator from the aero engine maker. The HVO-ready generators (HVO stands for hydrotreated vegetable oil, a biofuel which cuts emissions of greenhouse gases, particulate matter and NOx) were primarily sold into the data centre sector.
The European industry actually experienced a relatively slow year in 2025, Pritchard says, but he thinks that data centre operators will “definitely start to build microgrids” as it rebounds. “On the cost side, if you build a microgrid that eventually gets a grid connection you can start to trade the asset.”
Such a move could result in much more competitive energy pricing, with operators exploiting the interplay between producing, consuming and selling power over a typical 15-year lease. “For the first five years, it will just be building a microgrid and funding it,” suggests Pritchard. “The next 10 years will be interactivity between renewables, the grid and gas. And all of them will allow you to drive more competitive pricing.”
Data centre development: US versus Europe
Energy costs and the connections queue are undeniably holding back development of data centres in the UK and more widely in Europe, says Pritchard, but there are other factors at play, especially when the industry is compared to the US. “Europe has been slow to get legislation into a position that will allow the adoption of AI in various European countries.
“Compare that with somewhere like the US, where there is a vast amount of land and standard legislation. If you compare Germany, the UK, and the Netherlands, the permitting and planning is completely different.”
The landscape for construction is also worlds apart. Because of the availability of land, the US is also able to design two or three storey data centres, whereas a project might need to be seven storeys in Europe in order to be viable, adding to build costs and design complexity. “When you are comparing build costs in the US and Europe, the two don’t match up.”
Despite these concerns, 2026 will be a busy year for AVK in the UK and Ireland. Pritchard says that in the four weeks prior to Christmas, the company brought in half a gigawatt of power projects. “Microgrids are becoming more of a feature because those data centres [sites] that have grid connections are being taken. So it pushes people to start reviewing sites where they don’t have grid connections and need to start exploring other methods of powering their data centres.”
The partnership with Rolls-Royce is intended to ensure both companies and their supply chains can meet demand from the data centre sector. The new framework formalises a five‑year capacity partnership between Rolls‑Royce Power Solutions and AVK, with Rolls-Royce increasing supply and AVK committing to order volume. A parallel six-year master framework makes AVK the exclusive system integrator for mtu generator sets across the UK and Ireland until 2031.
This type of agreement is becoming more common, explains Vittorio Pierangeli, senior VP power generation at Rolls Royce. “If a company like Rolls-Royce starts investing today, it takes two years to bring new capacity online. This is due to the complexity of the supply chain involved in the construction of engines. This means we need to plan well in advance: we cannot react to demand growth without proper planning.
“This is why the industry is transitioning from first come, first served to partnerships. It allows the supply chain to make investments and bring new capacity online. The entire industry is transitioning between ad hoc transactional activities toward partnerships and joint planning.”
Pierangeli adds: “We have seen demand for gas systems in the Americas first and now in Europe skyrocketing because it takes three, five or even 10 years in certain areas to get access to grid power.”
With this in mind, the sustainability of gas-powered microgrids is inevitably under the microscope. HVO reduces greenhouse gas emissions by up to about 90%. AVK is also exploring the use of carbon capture and storage technology and deploying technology to reduce emissions of NOx, Pritchard explains.
Pritchard is backing microgrid generation to help data centre developers battling the relatively high cost of power and restrictions on access to the grid. Indeed, AVK has just announced a new partnership with Rolls-Royce to deliver generators to the UK and Ireland. The hope is that micro-generation will expand the range of sites available for data centre development and help overcome the connections queue. Looking longer-term, data centres could potentially perform a canny balancing act between using renewables, generating and storing power onsite, and selling energy back to the grid, helping to slash running costs, he says.
The AVK/Rolls-Royce announcement comes a year after AVK delivered its 500th mtu generator from the aero engine maker. The HVO-ready generators (HVO stands for hydrotreated vegetable oil, a biofuel which cuts emissions of greenhouse gases, particulate matter and NOx) were primarily sold into the data centre sector.
The European industry actually experienced a relatively slow year in 2025, Pritchard says, but he thinks that data centre operators will “definitely start to build microgrids” as it rebounds. “On the cost side, if you build a microgrid that eventually gets a grid connection you can start to trade the asset.”
Such a move could result in much more competitive energy pricing, with operators exploiting the interplay between producing, consuming and selling power over a typical 15-year lease. “For the first five years, it will just be building a microgrid and funding it,” suggests Pritchard. “The next 10 years will be interactivity between renewables, the grid and gas. And all of them will allow you to drive more competitive pricing.”
Data centre development: US versus Europe
Energy costs and the connections queue are undeniably holding back development of data centres in the UK and more widely in Europe, says Pritchard, but there are other factors at play, especially when the industry is compared to the US. “Europe has been slow to get legislation into a position that will allow the adoption of AI in various European countries.
“Compare that with somewhere like the US, where there is a vast amount of land and standard legislation. If you compare Germany, the UK, and the Netherlands, the permitting and planning is completely different.”
The landscape for construction is also worlds apart. Because of the availability of land, the US is also able to design two or three storey data centres, whereas a project might need to be seven storeys in Europe in order to be viable, adding to build costs and design complexity. “When you are comparing build costs in the US and Europe, the two don’t match up.”
Despite these concerns, 2026 will be a busy year for AVK in the UK and Ireland. Pritchard says that in the four weeks prior to Christmas, the company brought in half a gigawatt of power projects. “Microgrids are becoming more of a feature because those data centres [sites] that have grid connections are being taken. So it pushes people to start reviewing sites where they don’t have grid connections and need to start exploring other methods of powering their data centres.”
The partnership with Rolls-Royce is intended to ensure both companies and their supply chains can meet demand from the data centre sector. The new framework formalises a five‑year capacity partnership between Rolls‑Royce Power Solutions and AVK, with Rolls-Royce increasing supply and AVK committing to order volume. A parallel six-year master framework makes AVK the exclusive system integrator for mtu generator sets across the UK and Ireland until 2031.
This type of agreement is becoming more common, explains Vittorio Pierangeli, senior VP power generation at Rolls Royce. “If a company like Rolls-Royce starts investing today, it takes two years to bring new capacity online. This is due to the complexity of the supply chain involved in the construction of engines. This means we need to plan well in advance: we cannot react to demand growth without proper planning.
“This is why the industry is transitioning from first come, first served to partnerships. It allows the supply chain to make investments and bring new capacity online. The entire industry is transitioning between ad hoc transactional activities toward partnerships and joint planning.”
Pierangeli adds: “We have seen demand for gas systems in the Americas first and now in Europe skyrocketing because it takes three, five or even 10 years in certain areas to get access to grid power.”
With this in mind, the sustainability of gas-powered microgrids is inevitably under the microscope. HVO reduces greenhouse gas emissions by up to about 90%. AVK is also exploring the use of carbon capture and storage technology and deploying technology to reduce emissions of NOx, Pritchard explains.
