Scotland’s first AI growth zone
Scotland’s First AI Growth Zone will result in the establishment of 500MW of AI-ready data centres, renewable energy parks, and innovation hubs — all of which are critical infrastructure for the next industrial revolution. In turn, thousands of jobs could be created as a result.
Community impact was central to the proposal with up to £543 million that could flow into local programmes over the next 15 years. Every megawatt that comes online will support skills, services, and opportunities for local people.
This announcement follows the recent unveiling of other AI Growth Zones spanning the length and breadth of the UK including the announcement of key strategic sites in the North East of England in September 2025 (a £30 billion initiative, focused on Cobalt Park (North Tyneside) and Blyth, to create a major European data centre hub) and in South Wales in November 2025 (an area stretching along the M4 corridor from Newport to Bridgend and supported by a potential £10 billion investment, driving innovation, and establishing specialised data centres over the next decade).
But what is an AI growth zone?
AI Growth Zones (AIGZ) are a new initiative aimed at accelerating the development of artificial intelligence infrastructure, particularly large-scale data centres. The programme is designed to remove planning, energy, and investment barriers while attracting private capital and boosting local economies. They were first trailed in the UK government’s AI Opportunities Action Plan in January 2025, with the Government’s formal proposals then published in November 2025.
Authorities in England, Scotland, Wales and Northern Ireland are eligible to apply, including city and regional mayors. The initiative follows strong interest from more than 200 local authorities.
To improve coordination and investor confidence, a dedicated AI Growth Zone Delivery Unit is being established within the Department for Science, Innovation and Technology. Acting as a single point of contact, the unit will include a pipeline team to identify and progress suitable sites and investors, and a delivery team responsible for ensuring zones are developed on time and to scope. Public sector finance will also be used to unlock private investment, with the National Wealth Fund and UK Export Finance exploring support for viable AI data centre projects within the zones.
The UK government is also offering direct financial support. Up to £5 million will be invested initially in each AIGZ to help local areas develop tailored schemes that deliver economic benefits, upskill workers, and meet site-specific needs. In England, local authorities will retain 100% of business rates generated by sites for 25 years, where no prior arrangements exist, strengthening local incentives. In Scotland, non-domestic rates relief for AIGZs, particularly focused on data centres, involves potential 100% relief via the Business Growth Accelerator Relief for new builds for 12 months after the building is completed. Similarly, rates will not be payable on new buildings until they are occupied and new tenants will then qualify for the relief for 12 months.
Additionally, data centres located in AIGZs in Scotland and the North of England will be exempt from paying certain electricity system costs associated with grid constraint charges. While the final approach to calculating and applying these savings will be determined following consultation, the UK government has stated that from April 2027, a 500MW data centre will be able to save up to:
- £24/MWh in Scotland
- £16/MWh in Cumbria
- £14/MWh in the North East
How can a site qualify as an AIGZ?
To qualify as an AIGZ, sites must meet strict high-capacity requirements, reflecting the scale and urgency of the government’s ambitions. Proposals must demonstrate access to at least 500MW of power by 2030, alongside sufficient water availability and discharge capacity to support AI infrastructure at the same scale.
Land availability is a key criterion, with a minimum of 100 acres required for construction by 2028. Sites will also be assessed on planning readiness, with preference given to locations that already have planning permission or a credible pathway to securing full consent by 2028.
Strong digital connectivity, including fibre and mobile networks, is essential. In addition, the UK government has signalled a clear preference for sites located near renewable or nuclear energy sources, in line with its low-carbon objectives.
Tackling the obstacles
The biggest obstacle to establishing AIGZs is access to the electricity grid. Government, Ofgem and the National Energy System Operator (NESO) are exploring ways to manage the large queue of “demand” customers who are seeking connection to the electricity transmission system, which includes data centre projects. Options remain under review as to how this will be managed. As part of its AIGZ strategy, the UK government had noted that it plans to introduce two new grid connection mechanisms: a reallocation system that prioritises freed-up capacity when projects leave the queue, and a reservation mechanism allowing capacity to be held for strategically important projects. Alongside this, developers may be enabled to build their own high-voltage grid infrastructure, with further support provided through a new Connections Accelerator Service offering enhanced engineering assistance. The government, Ofgem and NESO have committed to working at pace on finalising the proposals for accelerating the queue, and until then the industry will be eagerly awaiting more detailed plans on these proposals.
Conclusion
AIGZs are the hotspots where AI is advancing fastest and making the biggest impact, thanks to a powerful mix of data, talent, infrastructure, and supportive policy or investment—not just tech breakthroughs.
With competition for investment intensifying and suitable data centre sites in short supply, landowners and developers will have a stronger hand in negotiations if their site has AI Growth Zone status. In the coming months, it will be worth watching whether securing AI Growth Zone status becomes a standard requirement in land deals for large-scale data centre projects.
