Data centre boom could push 10,000 London households into poverty and drain 77mn litres of water a day

London’s data centre boom could push 10,000 households into fuel poverty and place unprecedented strain on water resources, experts have warned.

The buildings — secure, warehouse-like facilities that house IT infrastructure such as computing, storage, and networking systems — are seen as critical for helping prop up the capital’s economy and public services.

They are disproportionately placed in and around London due to their proximity to the financial hub in the City of London, as well as the “snowball effect”, where new data centres are built near existing ones in clusters.

With 99 data centres already built, London accounts for more than 80 per cent of the UK’s data centre capacity, with another 26 new facilities currently planned or progressing through the system.

Oliver Hayes, head of campaigns at Global Action Plan, has warned that high-growth data centre projections could force 77,000 British households into fuel poverty in future — including 10,000 in the capital — due to increased energy bills.

Research from the climate campaign group reveals that added demand on the UK’s energy systems from new data centres could add an average of £88 to the average household energy bill.

“It will also further impoverish the households already in fuel poverty,” Hayes told the London Assembly Environment Committee on Thursday 12 November.

“This is an enormous issue that is not being adequately considered. Early analysis of that at a regional level suggests that in London that figure would be about 10,000 additional households.”

Zack Polanski, the leader of the Green Party and London Assembly Member who sits on the committee, told the Local Democracy Reporting Service (LDRS): “We need to slam the brakes on the rampant building of new data centres. So many Londoners are already struggling with the toxic combination of sky-high bills and low wages.

“Building more data centres risks pushing tens of thousands more households into fuel poverty, and that’s especially worrying here in London, where so many data centres are being proposed.

“Data centres don’t just threaten our climate targets by driving up emissions, but at a time when London is facing a housing emergency we cannot afford to prioritise data centres ahead of the homes our city desperately needs.”

The structures will also consume huge amounts of water, Assembly Members were told, which could lead to significant issues during “peak demand” in summer.

Jon Chappell, deputy director of Water UK, said: “We build our system to meet the highest point of demand in the year.

“If you have a big extra new demand in summer, that increases the peak. That means you have to increase the size of your service reservoirs and your treatment works.”

If every data centre to come was built like the least efficient one currently in existence, he claimed the country would need an extra 77mn litres of water a day — the equivalent to three London boroughs.

This could have a knock on effect on other parts of ministerial and City Hall’s ambition, Chappell suggested, adding: “We are in a position where in the east of England and in the southeast of England, there are places where houses cannot be built and businesses cannot expand already for no other reason than a lack of water.”

Researchers also warned the cross-party committee that headline figures around water only captures a fraction of the true cost. Rory Murphy, a research asssociate at the University of Exeter, noted that while US data centres used 66bn litres of water directly to cool servers in a given year, 800bn litres was used to keep the servers on in the first place.

“We need to consider the wider indirect effects, particularly when considering the stress that this could place on an already stressed infrastructure,” he urged.

The Mayor of London, when asked about this concern last year by Labour Assembly Member James Small-Edwards, said he had commissioned a study on the implications of new data centres on the capital’s water supply, adding: “Data centres use a variety of cooling technologies, with some requiring water while others use air cooling or non-water systems. The impact of data centres on water infrastructure and supply can therefore vary considerably.”

Earlier this year, he told Assembly Members: “We are looking at what we can do in terms of the water impact and what we can do in terms of the grid impact and of data centres.

“We are looking into the issue of the impacts on demand for water, the domestic demand for water, particularly in hot summer times if people are increasingly using AI. Again, my point about the offsetting in terms of what is not being done because of the energy and water required by data centres is really important. That is why we need a proper comprehensive plan for London.”

The draft London Plan, which guides councils on planning, says data centres in suitable locations should be supported in principle, but should only be given the go-ahead if water and electricity capacity is available.

London Assembly Environment Committee, Thursday 12 November 2026. Agenda. Webcast.

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