Data Centres: Energy and Water Consumption

Lord Vallance of Balham Excerpts

Tuesday 8th July 2025 Lords Chamber

[The Lord Bishop of Oxford]

To ask His Majesty’s Government what plans they have (1) to measure, and (2) to regulate, the amount of (a) energy, and (b) water, consumed by data centres in the United Kingdom.

[The Minister of State, Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab)]

The Government are actively monitoring the data centre sector and published the first government estimate of data centre capacity on 1 May, including measures indicating energy use. As part of the Government’s commitment to reduce the use of the public water supply by 20% by 2037-38, Defra is examining how the efficiency of water use in data centres can be improved and the Environment Agency is working to improve the understanding of water and resilience needs.

[The Lord Bishop of Oxford]

I thank the Minister for his Answer. As he is aware, the Government have a dedicated energy council, but there is, as yet, no similar provision for water, no formal record of all the current data centres or the water they use and no public criteria for assessing new proposals such as the one in Culham in Oxfordshire. Does the Minister agree that water demand and supply in AI growth zones is a pressing problem? Do the Government have any plans to establish an AI and water task force and will it have representation from local communities?

[Lord Vallance of Balham (Lab)]

The right reverend Prelate is right that water is a very large issue for data centres, as they consume large amounts of it. There are now technologies that reduce that use, such as recirculation of water. The AI growth zone proposals are required to set out water use—the volume of water required, the availability of that volume, the timeline of delivery and any wider infrastructure requirements or constraints—and they must work with the water provider to do that. Applications must confirm the above from the relevant water supplier and include any other associated impacts. A working group on sustainability has also been set up under the AI Energy Council.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am an officer of the All-Party Parliamentary Water Group and follow these issues very closely. Does the Minister share my concern that data centres are being built and expanded very close to major new housing developments in areas of deep water stress? What is the Government’s policy to ensure that households, as well as the data centres concerned, will have sufficient drinking water and sufficient evacuation of wastewater sewage?

[Lord Vallance of Balham (Lab)]

The proposal process for AI growth zones, which is where the big data centres will be placed, started in early February and ended at the end of February. Over 50 proposals have come forward, each of which needs to deal specifically with water in relation to the local environment and local plans, and to plan that with the water company.

[Earl Russell (LD)]

My Lords, demand is increasing faster than our policies for AI energy usage. AI is desperately power hungry, just at the pinch point where we are desperately trying to reach clean power by 2035 and our electricity demand is set to more than double by 2050. I call on the Government urgently to create an AI energy efficiency strategy, with the target of ensuring that AI usage and savings are better than carbon neutral before 2030.

[Lord Vallance of Balham (Lab)]

The AI Energy Council is set up as a joint council between the Secretary of States for DESNZ and for DSIT. The noble Earl is right that, at the moment, around 2.5% of current total energy consumption is in data centres. The total amount of electricity use is due to go up from seven to 62 terawatt hours by 2050. In relation to the overall increase in requirement for electric vehicles and others, that is still about 10% of the total. However, it is a really important issue that the energy council is looking at and it leads to questions about the supply, and work on small module reactors may be part of the solution.

[Lord Wigley (PC)]

My Lords, would the Minister accept that, for both energy and water, there may be significant implications for the devolved Governments in Scotland and Wales, particularly with water needed in north-west England, the Midlands and the Thames area coming from water supplies from Wales? Can he undertake to keep in close touch with the Governments of Wales and Scotland on these matters?

[Lord Vallance of Balham (Lab)]

The AI growth zones can be distributed right the way around the country. There is a very specific plan for each of those proposals, and they must be looked at with local engagement with the relevant authorities. I am sure there will be contact with the devolved Governments as part of that.

[Viscount Stansgate (Lab)]

My Lords—

--- Later in debate ---

[Viscount Stansgate (Lab)]

My Lords, I for one am very grateful to the right reverend Prelate for raising this issue. I think the House is only beginning to realise just how staggering big tech’s energy usage is. I understand that Google has doubled its CO₂ emissions since 2020 and signed a contract with Commonwealth Fusion Systems for 200 megawatts of power, using a power plant that does not even exist yet. Can my noble friend say whether more can be done to enable big tech companies to reveal how much energy usage and water is going to be involved in the use of AI? We ought to have an honest discussion about the costs involved in both those areas.

[Lord Vallance of Balham (Lab)]

I have given answers on the data centres. The broader question of AI has been looked at by a number of publications, including recently in the journal Nature, which looked at the overall energy consumption by AI and the overall potential energy reduction by the application of AI across industries. It turned out to be slightly net positive for energy. The noble Viscount is right that energy consumption is a major area to think about. There are new chips that are reducing energy consumption by a thousandfold and new approaches to machine learning that can reduce it. It is high on the list of concerns, and that is why the AI Energy Council has formed a sustainability working group.

[Baroness Stuart of Edgbaston (CB)]

My Lords, in the light of the National Preparedness Commission report and the energy requirement of the AI data centres, is the Minister satisfied that this is not undermining our energy systems’ resilience?

[Lord Vallance of Balham (Lab)]

The latest data suggests that it is about 2.5% of total energy consumption. That will increase, and is being taken into account. It is clearly important that, as we move to more renewable sources of energy and come off reliance on gas, we have an increased supply. It is also why the Government announced that Rolls Royce will be the first partner for small modular reactors, which will be an important part of our energy system going forward.

[Viscount Camrose (Con)]

My Lords, building on the question from the noble Baroness, now that the Government have renamed the AI Safety Institute as the AI Security Institute, can the Minister confirm that its expanded role will indeed include energy security? If so, what view does it take of the resilience of UK- hosted AI systems of exposure to high energy costs and intermittent energy sources?

[Lord Vallance of Balham (Lab)]

The Government believe that the best way to deliver price reductions for clean power is the clean power 2030 mission, so that the marginal price of electricity is set by gas less and less often. The increase in renewables will allow that, plus the advent of small modular reactors. The AI Security Institute is not the place to consider energy security; that is the AI Energy Council. Its sustainability working group is considering whether renewable and low-carbon energy solutions should be adopted, and where; how innovation in AI hardware and chip design can improve energy efficiency; whether new metrics, alongside the PUE—power usage efficiency—metric should be introduced; and the impact of new energy solutions such as small modular reactors. That speaks to the issue of resilience.

[Lord Harris of Haringey (Lab)]

My Lords, I refer to my interest as chair of the National Preparedness Commission. I am grateful to the noble Baroness for referring to a report that we issued. My question is a slightly different one. Given that data centres are now an integral and necessary part of the infrastructure of this country in the private sector and the public sector, who is responsible for their security?

[Lord Vallance of Balham (Lab)]

The Government are aiming to designate data centres as a type of commercial project to be considered under the nationally significant infrastructure projects plan, allowing the Secretary of State to decide on applications for new centres and bringing this into clear view of the security agencies. The security agencies are, of course, engaged in the question of how to ensure the security of what we have in data centres. On the broader point about the data itself, that is covered by the AI Security Institute.