UK Risks Losing 20K AI Processors as Grid Delays Jeopardize Microsoft Investment

Key Takeaways

• Microsoft has warned that its data center ambitions in the U.K. risk being delayed.
• The firm had planned to install 20,000 new AI processors by 2026.
• However, crucial grid connections may not be completed until 2035.

Microsoft recently warned that a backlog of upgrades to the U.K.’s energy infrastructure threatens to derail its data center projects in the country.

But the government has made streamlining infrastructure delivery a key priority, merging two key regulators and introducing new guidance for builders.

Grid Delays Threaten New Data Centers

In 2023, Microsoft committed £2.5 billion to building new AI infrastructure nationwide.

However, despite securing sites in Cardiff and North Yorkshire last year, the firm has warned that developments in Wales and the North of England face delays getting online.

The National Grid reportedly told Microsoft it couldn’t guarantee connections in time.

“In most of the U.K., the National Grid has advised it cannot commit to providing new electricity transmission connections before 2035,” a Microsoft spokesperson said. “We require data center sites that can be operational within the next five years,” they added.

20,000 GPUs

As part of Microsoft’s commitment to the U.K., the company had planned to install 20,000 of “the most advanced Graphics Processing Units (GPUs)” by 2026.

However, with the timing of new data centers now uncertain, it isn’t clear whether the company will be able to ramp up its AI computing capacity.

U.K. Data Centers Lag Behind

Despite being the world’s sixth-largest economy with a thriving technology sector, the U.K. ranks ninth in CloudZero’s global cloud index , behind European neighbors like France and the Netherlands, due to infrastructure limitations.

While the country is home to 514 data centers, these tend to be much smaller than those found in other regions, and building new ones can be challenging.

Google recently warned that the U.K. “risks being left behind” if it doesn’t ramp up its data center capacity. It called for the government to champion pro-innovation policies and invest in new public-private infrastructure-building approaches.

Infrastructure Development

Besides challenges connected to the National Grid, new data centers must also overcome the high cost and limited availability of land, and strict planning regulations.

Since coming to power last year, the Labour government has proactively pushed to accelerate data center construction.

In one of her first moves as Deputy Prime Minister, Angela Rayner resurrected two proposals to build data centers within protected areas of the countryside that local authorities had previously dismissed.

Meanwhile, Science and Technology Secretary Peter Kyle recently announced ambitions to start building Europe’s largest data center by the end of the year.

Overcoming Challenges

To help get new projects across the line, the government has introduced reforms to the National Planning Policy Framework that designate data centers as critical national infrastructure.

The new planning rules require local councils to identify prospective sites and make it harder for them to block construction.

Meanwhile, on Tuesday, April 1, the government moved to overhaul infrastructure delivery by issuing new guidance for stakeholders and launching the the National Infrastructure and Service Transformation Authority (NISTA).

Explaining the rationale behind the changes, the government acknowledged that “uncertainty about infrastructure plans and policy” has inhibited investment.

The new regulator replaces the National Infrastructure Commission and the Infrastructure and Projects Authority, combining their remit under a single organization.

The government stated that NISTA, which replaces the National Infrastructure Commission and the Infrastructure and Projects Authority, “will look to fix the foundations” of British infrastructure “by bringing strategy and delivery under one roof, addressing the systemic delivery challenges that have stunted growth for decades. “