With the exponential rise in digital infrastructure and the insatiable demand for data storage and processing, the prospect of developing a data centre has never been more enticing for landowners. But is your land truly a goldmine waiting to be tapped?
Here are the top five things every landowner should consider before embarking on the journey to data centre development.
1. Planning and land use: is your site suitable?
Across the UK and Irish planning jurisdictions, development is plan-led, meaning the strongest candidates are sites already allocated for industrial, employment, or strategic infrastructure use, or brownfield land on the urban edge. If your site falls within these preferred categories and can overcome typical constraints, it is far more likely to be viable for data centre development.
Key planning constraints to watch out for include greenbelt status, landscape impact, flood risk, noise, and access to transport links.
2. Power and grid connection: can you plug in?
Power supply is the lifeblood of any data centre. Securing a viable grid connection is both essential and increasingly challenging, particularly in the UK and Ireland where grid capacity is under severe pressure and connection queues stretch into the 2030s.
Landowners must obtain clear evidence of grid capacity, their position in the connection queue, and any reinforcement obligations before making significant investment. Land located next to an existing substation is not an indicator of capacity as many substations are already full or committed under existing connection agreements – hence NESO’s recent Connections Reform.
Having secured a grid connection offer for the land for another technology (eg. Battery storage) does not mean that it is a foregone conclusion that a data centre (demand) grid connection offer can be secure for the same land. Changes in project type can risk losing a place in the queue. Without a realistic path to a robust grid connection, even the best-located site may be unviable.
3. Water and cooling: is there enough to keep cool?
Whilst cooling might not be as much of an issue in the UK climate as some other parts of the world, modern data centres still generate significant heat and require sophisticated cooling solutions. Water-cooled systems, in particular, demand both abstraction permits and discharge licences.
In water-stressed areas, regulators are increasingly pushing for air or hybrid cooling solutions. Geological feasibility (for boreholes or cooling infrastructure) should be confirmed before land is secured. Landowners should investigate both the availability of water and the regulatory environment, as this can be a make-or-break issue for development.
4. Consenting strategy and environmental scrutiny: can you get permission?
Data centre projects face rising environmental scrutiny, with large facilities almost always requiring an Environmental Impact Assessment (EIA). Early engagement with planners, environmental regulators, and other key stakeholders is essential. Projects that demonstrate alignment with net zero and decarbonisation policies, offer low-carbon power procurement, on-site renewables, heat export, and water minimisation are more likely to achieve smoother consenting.
Landowners should be prepared for a lengthy lead-in (at least 18 months before planning submission) and should front-load baseline assessments (traffic, ecology, noise, water) to avoid surprises.
A robust consenting strategy, integrated into land agreements with clear milestones and step-in rights, is vital.
5. Commercial and contractual considerations: can you de-risk the journey?
Data centre development is a complex, high-stakes process involving multiple parties and significant capital.
Landowners should run a consent readiness assessment at the land acquisition stage and develop a planning and permitting risk matrix for contract drafting. Key milestones (land, grid, consent, enabling works) should be hardwired into land agreements with realistic longstop dates agreed.
Early negotiation of risk allocation, particularly around grid, water, and heat network obligations, is essential to avoid disputes and delays.
Data centre development is a specialist area often seeking land or serviced plot rather than a developer who will provide the end product. Standard construction contracts are rarely suitable; bespoke drafting is needed to address the unique integration of IT and building works, legislative requirements, and change in law provisions.
For non-data centre developer landowners, consider whether a promotion agreement, option or agreement for sale / lease is the most solution to extracting value from your land for data centre use.
Conclusion
The data centre sector represents a potentially lucrative opportunity for landowners, but only for those who do their homework.
By carefully considering planning suitability, power and cooling infrastructure, environmental and consenting risks, and robust commercial arrangements, landowners can position themselves to unlock the true value of their land. With demand showing no signs of slowing, those who prepare thoroughly may indeed find themselves sitting on a pot of gold.
