Industry Challenges and Changes to Come

1. What are the challenges I might face when trying to develop a data centre in Scotland? 

• Power Supply and Grid Connection: Scotland produces surplus renewable electricity, exporting to the rest of the UK. Onshore wind is already widespread, with a strong pipeline of offshore wind projects in the North Sea. However, grid capacity constraints create challenges. Severe bottlenecks delay grid connections for large projects, with renewable generation concentrated in remote areas far from demand centres. The transmission system struggles to transport power over long distances. Intermittency of wind power adds complications, as generation often misaligns with demand, leading to curtailment. For data centres, this all creates challenges in securing consistent, resilient and sustainable power supplies until infrastructure improves. The UK government’s decision to rule out zonal pricing under the Review of Electricity Market Arrangements has reduced remote Scottish areas’ attractiveness.
• Planning and Consenting:  Data centre developers face planning challenges due to a lack of established policy frameworks and limited experience with large-scale projects, creating uncertainty in how they are treated by local authorities. Linked to this is the tension between National Planning Framework 4 (NPF4) drive for digital infrastructure and net-zero energy goals, as well as the weight from community concerns and their large energy use.  Four further key complications around approvals include the lack of a streamlined consenting regime for major infrastructure; environmental considerations, such as water demands; extensive assessment and consultation if environmental impact assessments are triggered; and the benefit and need for data centres not being universally understood by the public.  
• Site Suitability: Large, serviced brownfield or industrial sites (for security and containment) are perceived to be in the central belt and competition for strategic sites (near transport connection, fibre routes and substations) is intense. 
• Latency and Connectivity:  Scotland’s fibre network is expanding, but coverage outside the central belt is uneven. Hyperscale customers prioritise proximity to subsea cables and Points of Presence (PoPs) for low latency and cost efficiency. Sites far from these face higher costs and risks. Customers demand dual-entry fibre, separated ducts, and multiple carriers to ensure redundancy, with outages posing a major risk. Locations near PoPs or colocation hubs benefit from lower latency and better global access. Wayleave processes for new fibre installations add further challenges.

2. How is Scotland addressing some of these challenges? 

• Grid Upgrade and Connections Reform: Scotland is alive to many of these challenges and is actively upgrading its transmission network to meet growing renewable, data centre and electrification demands. SSEN Transmission – the body responsible for electricity transmission in the north of Scotland – is planning a £22bn “Pathway to 2030” for north Scotland, while SP Energy Networks proposes £10.6bn for central and southern areas. Great Britain’s National Energy System Operator reform programme is seeking to clear speculative “zombie” projects from the connection queue, prioritising clean energy and key infrastructure with net-zero goals. These have clear benefits for green data centres that align with net-zero and flexibility objectives. While zonal pricing is ruled out, reforms such as locational signals and network charging offer similar benefits. Co-locating with flexible generation, such as battery energy storage systems (BESS) or renewable hybrids, will help mitigate delays in transmission reinforcement.
• Planning and Consenting: The Scottish Government has identified data centres as strategically important to achieving its “green digital economy” ambitions. Through NPF4, there is policy support for developments that contribute to decarbonisation, digital resilience and regional economic development. NPF4 identifies energy and digital infrastructure as priorities, giving planners stronger grounds to support applications aligning with national net-zero objectives. Early engagement with planning authorities and statutory consultees is encouraged to de-risk applications. Planning authorities are also encouraging developers to consider sustainability measures such as district heating, low power usage efficiency (PUE), on-site renewables, BESS, water-efficient cooling, and biodiversity net gain to strengthen their planning case.
• Site Suitability: Scotland offers a diverse range of sites, including brownfield industrial land near grid substations or renewable generation, with generally lower and more competitive prices than in the South-East of England. Local authorities and private developers are packaging brownfield and regeneration sites such as Ravenscraig, which offers planned infrastructure and secured grid capacity, reducing risks in site assembly.  Research commissioned by several bodies and produced by specialist connectivity consultancy Farrpoint identified 34 potential green data centre locations, which may evolve further with infrastructure improvements, such as the superfast broadband R100 digital programme.
• Latency and Connectivity: On-land, digital infrastructure investment is being made to expand fibre networks across Scotland, with government-backed programmes aimed at bridging gaps in rural digital access. For latency-sensitive sectors this is a compelling factor.

3. What other changes could be made to help the data centre industry grow and stay competitive in Scotland?

While there is no shortage of potential, further changes to help the sector grow competitively and sustainably could include:

• Grid and Power Infrastructure: Introducing priority connections for digital infrastructure, similar to those offered to renewable generators, could reduce waiting lists and unlock earlier delivery of capacity.  NESO is trialling “flexible connections” where demand can ramp up or down to match grid constraints. Applying this approach systematically for data centres — coupled with on-site BESS — would allow facilities to operate sooner.  Regulatory reforms to make private wires between data centres and nearby renewable projects easier would give developers confidence in long-term, low-carbon supply.
• Planning and Consenting: Clear national policy will reduce local inconsistencies and expedite decisions. Explicit recognition in NPF4, with a new category of ‘digital infrastructure of national importance’ would help.  Identifying ‘data-centre ready’ sites as national developments would further support investment and explicit guidance on data-centre siting principles would also be beneficial. A development accelerator, combining local authorities, the Scottish Government and statutory consultees, could also coordinate reviews for large, national-priority sites. A streamlined consenting process is also critical. A “one-stop shop” for consent or fast-track consenting for net-zero-aligned projects meeting strict environmental thresholds (e.g., low PUE, on-site renewables, heat reuse) would assist but legislative changes would be required to implement such reforms.  Strong community engagement and benefit packages would educate the public and mitigate objection.
• Site Suitability: There is opportunity for the tech, renewable energy and real estate sector to collaborate and help to drive growth. Public co-investment in infrastructure and government incentives for net-zero design and heat reuse such as grants for waste-heat capture could make heat reuse economically viable and improve social licence at sites.
• Latency and Connectivity: Scotland’s strategic position between North America, the Nordics and mainland Europe is underused. Government-backed incentives to land new transatlantic and European cables would reduce latency and create a selling point for hyperscale clients. Establishing regional hubs in Aberdeen, Inverness and Dundee would enable distributed growth and open rural regions to investment.