London is preparing to make parts of its grey belt available for datacentres, widening the land that can be considered for digital infrastructure while leaving the capital’s electricity bottleneck largely untouched.

The Greater London Authority has included datacentres in the draft of a new London Plan, which is open for consultation. Boroughs would be expected to identify appropriate sites, including lower quality or previously developed land within the green belt where proposals can satisfy the plan’s grey-belt tests.

The policy would not provide automatic permission to build on protected land. Developers would still need to address power, water, cooling, heat recovery, renewable generation, environmental impact, and the availability of land for housing and other essential uses.

Even so, the proposal changes how the capital treats digital infrastructure. Datacentres have tended to cluster in industrial areas of west London and around established fibre routes, providing strong connectivity while concentrating electricity demand in already constrained parts of the network.

Land is only one part of the development queue

London’s datacentre market benefits from proximity to financial services, cloud customers, internet exchanges, professional services, and international fibre. Those advantages have made the capital one of Europe’s main computing hubs, although they have also driven construction into areas where grid capacity is under exceptional pressure.

Opening grey-belt locations could give developers access to larger sites and allow facilities to sit closer to available substations or future network upgrades. It may also reduce competition for urban industrial land needed by logistics, manufacturing, maintenance, and other employment uses.

A planning allocation cannot create an electricity connection, however. Large facilities can require power comparable with substantial industrial plants, and connection queues in and around London extend far beyond current operating capacity. Projects may secure land and permission but remain commercially unusable until reinforcement is completed.

The draft recognises that boroughs must consider electricity capacity and competing land requirements when identifying sites. Its success will depend on whether planning work is coordinated with network operators rather than producing nominal locations that cannot be energised.

Compute joins London’s land-use dispute

Grey-belt policy emerged primarily through arguments over housing, while datacentres introduce a different kind of economic value. They support cloud services, financial markets, public systems, and digital businesses, but permanent employment is relatively limited after construction and electricity consumption can be substantial.

Project quality will therefore count for more than headline capacity. Facilities serving regulated industries, public services, low latency applications, or regional businesses may offer a clearer economic case than speculative developments intended mainly to secure a grid position.

Heat recovery could improve the relationship between datacentres and surrounding communities by supplying homes, public buildings, or commercial sites. Yet reuse schemes require nearby demand, suitable temperatures, pipe infrastructure, and long-term contracts. A theoretical connection in a planning application does not guarantee that useful energy will reach another building.

Water use and cooling technology will attract similar scrutiny. Air cooling can reduce water consumption but may require more electricity under certain conditions, while dense AI hardware is encouraging greater use of liquid systems. Planning rules need enough flexibility to accommodate technical change without allowing environmental commitments to become vague.

The London Plan consultation gives boroughs, infrastructure operators, businesses, and communities an opportunity to influence those conditions. A final policy will need to set out how digital infrastructure is weighed against housing, biodiversity, employment land, and electricity constraints.

London has a credible reason to retain computing capacity as demand for AI, cloud, and data intensive services grows. Expanding the search area may help, although the value of grey-belt land will still be determined by cables, substations, generation, and local willingness to host industrial infrastructure at the edge of the city.