Five tests, and a category that does not exist yet
HM Treasury published the Data Centre Covenant on 28 October, alongside the Budget. The document sets out standards that data centres are encouraged to meet and that strategically important projects will be required to meet in order to qualify for additional government action on grid connections, planning and infrastructure delivery.
The structure is a trade. Operators accept obligations; government accelerates the two things that hold data centres up in Britain, which are power and planning permission. The gap in the document is the category it turns on: it does not define a strategic data centre, saying only that qualifying sites must demonstrate sufficient strategic value, and that further details on the definition and the additional criteria will be set out in due course.
What the five tests ask for
The first test is on electricity bills: operators should pay their fair share of energy system costs, including the costs they create, and make credible commitments for the grid capacity they request rather than reserving more than they will use. The second asks strategic sites to agree a Local Benefit Plan with the surrounding community, with investment scaled to the size of the development and a meaningful local say in how it is spent.
The third sets environmental standards: protect nature, minimise water use, publish annual energy and water consumption reports, capture waste heat for nearby users where practical, and reach a power usage effectiveness of 1.3 or better on new facilities, using methods such as closed-loop water systems. The fourth covers jobs — local hiring, paid apprenticeships, prioritising UK suppliers and technologies, contributing to British AI hardware, and partnering with UK researchers.
The fifth is security. Operators are asked to provide secure, reliable compute for the NHS and other public services, work with national technical authorities including the National Cyber Security Centre, share relevant information with government, plan with critical suppliers and take part in government exercises.
What government offers back
The covenant creates a Ministerial Control Centre, chaired by the Minister for AI, to consider support for strategic data centres and use state powers to shorten time to power and planning. On the grid, government says it will reserve future capacity and reallocate capacity released by other projects using Planning and Infrastructure Act powers, work with NESO and the network companies to find capacity that may be free before 2030, and transfer pre-2030 connection contracts to strategic sites where needed.
For exceptional projects only, it will develop a tightly controlled framework allowing on-site generation until a grid connection is secured. Beyond 2030, connections are to be aligned with regional targets informed by a spatial planning tool the document calls ALIGN. Government also says it will support developers’ right to self-build connection infrastructure, back Ofgem’s data-centre commitment fee and queue management to deter speculative demand, publish a draft Data Centre National Policy Statement for consultation, and continue delivering five AI Growth Zones across England, Scotland and Wales.
The number behind it
The government’s own estimate is that the UK needs 6GW of AI data centre capacity by 2030. The covenant is the instrument meant to get there without the planning fights and grid queues that have slowed other infrastructure, and without the local opposition that follows a large building and a large electricity draw arriving in a place that was not asked.
Compliance is voluntary for most operators. The grid and planning measures are reserved for strategic sites, which is where the undefined category starts to matter: the covenant’s teeth are entirely inside a term the document does not yet define.
What to watch
Two things decide whether this works. The first is the definition of a strategic data centre, which the Treasury says will follow. The second is the draft Data Centre National Policy Statement, which sets how the largest projects will be decided under the Nationally Significant Infrastructure Project regime and is out for consultation. Until both land, the covenant sets out obligations with the reward still pending.
