Data centres in the UK could cut their power costs by a third by investing in onsite gas-fuelled power generation, according to a new report.
The report, from Cadent and consultancy Stonehaven, argues that data centres could also act as a spur for development of biomethane production and injection. For a typical 100MW data centre, annual power costs using on-site gas generation could be roughly one-third lower than relying solely on a connection to the electricity grid, the report suggested.
Cadent said it had struck nine connection agreements with data centre developers over the past year, with gas expected to begin flowing to some of these projects in the coming months.
The report notes that gas-fired electricity generation can be installed on-site to deliver relatively cost-effective electricity in the near term.
Typically, this involves an on-site gas turbine or engine. While engines produce electricity at a slightly higher cost, they are more readily deployable than turbines and offer more flexibility. The report argues engines can operate as a primary energy source now, retaining a role as backup power from the mid-2030s onwards, as private renewable micro-grids and small modular reactors are developed.
“Gas connections offer a commercially viable solution to data centre developers, providing the required very secure connection with almost unlimited, scalable power supply,” said the report.
Future Energy Networks (FEN) also said that data centre developers were turning to the gas network. According to FEN, gas networks received well over 100 connection enquiries from data centre developers in 2024 and 2025.
Over the two-year period, networks considered a total of 113 enquiries regarding data centre gas connections “as a result of the significant delays developers are encountering in securing access to the electricity grid”, said FEN.
“This surge in engagement confirms that developers are actively pursuing it [gas] as a primary power strategy to manage constraints in the electricity grid,” the Cadent / Stonehaven report said.
James Earl, FEN chief executive, said: “If we are to get ahead in the global AI race, bolster economic growth and secure future investment, we must harness the immense potential of both gas and electricity systems.
“Gas networks stand ready to support the AI revolution in ways which both bolster the UK’s burgeoning tech industry while remaining on track to decarbonise our energy system.”
Cadent said data centre demand could act as an anchor customer for biomethane production and injection, reducing the carbon intensity of the homes and businesses which remain connected to gas.
Biomethane – produced from organic waste and off-season crops – can reduce lifecycle emissions by up to 70% compared with fossil gas. The UK has enough domestic resources to produce 50TWh by 2030 – well beyond projected demand from data centres.
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