Future Energy Networks (FEN) is a membership organisation representing the GB and NI’s gas transmission and distribution networks: National Gas, Cadent, SGN, Northern Gas Networks, Wales and West Utilities, Evolve Networks, Gas Networks Ireland, Kinecx Energy, Mutual Energy, Phoenix Energy.
Introduction
The UK’s data centre sector is growing at unprecedented speed. The UK Government has put becoming an AI superpower central to its growth ambitions. The Chancellor noted in her Mais lecture that the UK will see the fastest adoption of AI in the G7, with a record £2.5 billion boost to secure the UK as a world leader in AI.
With more than 500 data centres[1] already in operation across the country, delivering the government’s ambition for 6GW of AI-ready energy capacity was already challenging - as highlighted in the Tony Blair Institute’s report last year[2] and, as Jensen Huang, Chief Executive of Nvidia, has remarked, electricity prices in the UK ‘remain a challenge in the near term’ to the government’s AI ambitions.
In order to ‘bring more power to bear’, Mr Huang expressed his ‘hope that gas [is] going to also contribute… alongside sustainable power like nuclear, wind and solar’. International experience underlines this point: in the US, nearly a fifth of new gas generation capacity in development is intended to directly power data centres, while in Ireland, data centre demand has grown at twice the pace of renewable generation and they have just announced their first data centre connected into their gas network.
The government’s AI ambition is clear - but its current energy strategy is not aligned with the physical realities of delivering that ambition.
Developers are clear: electricity connections alone cannot meet required timelines or deliver that scale of demand. Bottlenecks and uncertainty mean some companies could be left waiting up to 15 years to connect to the grid, while the grid itself will require extensive reinforcement at considerable cost and taking significant time, which may deter investment.
Gas infrastructure is therefore not an alternative option – in many cases it is the only deployable solution at the scale and pace required in the near term, with connections typically taking just 6-12 months.
The gas networks have a legal duty to meet ‘all reasonable demands’ for gas without discrimination, with those principles embedded across the Gas Act. Through 2024 and Through 2024 and 2025, gas networks (at both distribution and transmission level) have seen strong – and growing – enquiries in relation to connection for data centres. Our members have received 113 enquiries from data centres, representing demand equivalent to well over 20% of total GB annual gas throughput.
Green gases - biomethane and hydrogen - provide a credible pathway to decarbonising gas-connected data centres. This enables immediate deployment, while aligning with our climate objectives through progressive substitution of natural gas.
The UK’s AI and data centre ambitions cannot be delivered through electrification alone. A whole energy system approach - integrating gas and electricity - is required.
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[1] United Kingdom Data Centers - 509 Facilities
[2] Sovereignty, Security, Scale: A UK Strategy for AI Infrastructure
Summary of our response
Our response is centred around three key messages
- Data centre deployment at scale cannot be delivered through electricity infrastructure alone. Gas is essential and must be proactively managed, not constrained, if the UK is to remain competitive.
- The constraints on connection times to the electricity grid is a systemic inhibitor. A whole-system approach – integrating gas and electricity – is required to deliver capacity at pace and manage system costs.
- Green gases provide a clear pathway to decarbonisation, enabling gas-connected data centres to align with net zero and avoiding the binary choice between growth and decarbonisation.
Failure to adopt this approach will delay deployment, increase system costs and – ultimately – displace both emissions and economic benefit internationally.
Opportunities for integrating gas-connected data centres into a decarbonising energy system
There are multiple different ways gas connections for data centres could be delivered. To demonstrate this, we have provided in the following pages a set of archetypal examples, building on one another to show how using the gas network to power data centres can benefit our domestic energy system, if done right.
These archetypes are:
- Archetype 1 – Immediate deployment via natural gas. This archetype assumes a baseline model where data centres are unable to connect to the electricity network so instead connect into the gas network and use natural gas to fuel on-site generation.
- Archetype 2 – Transition to green gases. This archetype assumes the same as Archetype 1, but with the gas needs for the site met by low carbon, green gases rather than fossil fuels, making the site fully compatible with Clean Power and Net Zero ambitions.
- Archetype 3 – Hybrid flexibility. This archetype assumes the data centre is able to get an electricity connection, but it isn’t sufficient to meet the entire energy needs of the site – hence also securing a gas connection. The developers can switch between the different vectors to support the energy system and as a revenue driver.
- Archetype 4 - Green gas data centres as “energy hubs”. This archetype assumes the same as Archetype 3, but with the capacity of the electricity connection improving over time until it can meet the entire energy needs of the site. This then leaves the gas-fired generation on site as an incredible useful asset for the wider energy system.
These archetypes collectively demonstrate why gas connections for data centres should be embraced, as a means of unlocking the economic benefits of AI in the short term while facilitating a whole system approach to decarbonisation in the longer term.
Archetype 1 – Immediate deployment via natural gas
Gas connections should be supported as a baseline option for data centres where electricity connections are constrained, using the same natural gas that other users of the system benefit from today. Gas networks have a legal duty to meet ‘all reasonable demands’ without discrimination and data centres can use on-site gas turbines or engines to generate the electricity needed.
Connecting data centres to the gas grid allows the UK to compete in the global market for data centre demand and will secure growth and jobs for the UK economy. Once investment is secured and delivered, there are then several options to enhance the carbon and energy system value of the connections. Government and regulators must ensure gas connections are not restricted or deprioritised in planning or regulatory frameworks.
This is a necessary enabling step - not a long-term end state.
Archetype 2 – Transition to green gases
Gas-connected data centres which cannot secure an electricity connection in parallel can still progressively decarbonise through adoption of green gases like biomethane. On-site electricity generators can switch over time from being supplied by natural gas to green gases. This wouldn’t require a physical connection to an anaerobic digestion facility, with the green gas instead injected into the network at the point of production and claimed by the data centre through mass balancing and certification.
This avoids lock-in, provided policy frameworks support increasing shares of certified green gas over time. The gas connection can also act as the primary energy provider for a site - if an electricity connection is not available, gas can act as a bridge to future electrification or a complementary power source where the electricity connection only meets part of the site’s demand.
Green gases enable data centres to decarbonise in line with Clean Power 2030 and Net Zero 2050. Evidence from the Green Gas Taskforce shows there is significant potential to the grow biomethane production, by up to 4 times by 2030 and tenfold by 2050. Data centres could provide the ‘demand pull’ needed to accelerate growth in this key sector.
Archetype 3 – Hybrid flexibility
Data centre developers are looking at gas connections primarily due to the challenges and timeframes with getting an electricity connection. In some cases, data centres may be able secure an electricity connection, but it may not be of sufficient capacity to meet the entire energy demands of the site – hence the need for a gas connection in parallel.
This dual gas and electricity connection provides a significant opportunity to support a more flexible energy system as well as a commercial opportunity for developers. It would enable data centres to reduce peak electricity demand, respond to price and carbon signals and provide flexibility without reducing output. The flexibility would be achieved simply by the data centre shifting between grid electricity and on-site gas generation, without providing power back to the grid (more on that in archetype 4).
This archetype assumes an on-site gas engine rather than a gas turbine. While gas engines typically operate at a slightly lower efficiency than turbines, they benefit from being able to be used much more flexibly – they are far more comfortable with being ramped up or down quickly. Using gas engines would also overcome the queue for gas turbines which is being seen globally.
Archetype 4 – Green gas data centres as “energy hubs”
The final archetype builds on archetype 3, but in this example the data centre is able to extend the capacity of their electricity connection over time until they are able to meet 100% of their energy needs from the electricity grid.
At this point, the gas-fired generation (in the form of gas engines) can be an incredibly useful strategic asset for the wider electricity grid. Data centres can evolve into ‘energy hubs’, providing dispatchable power generation, flexibility services and system balancing. Waste heat can also be used to supply local heat networks for nearby buildings and industry, or feed back into the data centre via an “absorption chiller” to help with its own cooling, improving on-site efficiency.
Data centres can therefore become net contributors to system decarbonisation - supporting renewable integration, reducing curtailment, and enabling efficient use of waste heat.
This is particularly important in the context of the nation’s Clean Power 2030 ambitions. As the share of our power generation from renewables increases over the coming years, the gas-fired generation we currently have connected to the grid will be used for fewer and fewer total hours per year, but increasingly be asked to ramp up and down quickly (and significantly) to manage shifts between high and low renewables output. This flexibility is not something that our existing gas generation assets, which are mostly large turbines connected at transmission level, are designed to do. Many of these turbines are also reaching the end of their life. A decision will need to be made in the coming years about we replace these assets while ensuring we have the gas-fired generation we need to keep the lights on.
Investment in flexible gas engines at data centre sites could be a really elegant solution to this challenge. Once data centre sites secure sufficient electricity connection capacity, these gas engines could become assets of significant strategic national importance to both our clean power and energy security aims.
Policy recommendations
To enable sustainable and scalable data centre growth, Government should:
- Formally recognise gas as a strategic enabler of data centre deployment alongside electricity;
- Mandate a whole-system planning approach across DESNZ, Ofgem and NESO;
- Remove regulatory and planning barriers to gas connections for data centres;
- Support scale-up of biomethane and hydrogen through long-term policy certainty;
- Ensure carbon accounting frameworks (including ETS) properly recognise low carbon gases;
- Encourage co-location of data centres with energy and heat infrastructure; and
- Update CCC and NESO modelling to reflect gas demand from data centres.
Conclusion
The UK cannot deliver sustainable data centre growth without gas. Electricity infrastructure alone cannot meet the scale, speed or flexibility required. FEN therefore advocates for a whole-systems approach as the most effective, sustainable solution to balance the risks and opportunities of the growing demand from data centres.
Gas provides the only viable route to near-term deployment, while low carbon gases ensure long-term alignment with net zero. A failure to do so will not reduce emissions - it will simply displace them to other jurisdictions with less efficient and more carbon-intensive energy systems – and see the jobs and tax revenues the UK could otherwise benefit from also be lost to our international competitors. With such an approach, data centres can evolve into flexible, low carbon “energy hubs” that strengthen the entire energy system, deliver growth and achieve our climate objectives.
Detailed responses to the specific questions posed can be found in the Appendix to this letter. FEN would welcome the opportunity to discuss any aspect of our response with the Committee through an oral evidence session and any further background briefing with members or clerks. Should you wish to discuss the letter or request our attendance at the committee please contact myself or the team: james.earl@futureenergynetworks.org.uk / enquiries@futureenergynetworks.org.uk
Yours sincerely
James Earl
Chief Executive Officer
Future Energy Networks
Appendix – Response to Call for Evidence questions
Question 1 What current and future factors and trends are driving demand for data centres and what opportunities and challenges do they pose for the UK?
Data centre demand should not be viewed solely as a challenge - it is a system asset if properly integrated across gas and electricity.
Demand for data centres is being driven by rapid growth in AI, increased digitalisation and expanding global digital services. This brings significant opportunity, as already seen in other countries across the world. In the US, almost all of the GDP growth achieved in the first half of 2025 could be attributed to data centres and associated information processing technology[3].
However, the significant energy usage of data centres clearly represents a potential pressure on the UK’s decarbonisation goals if not properly considered. The key challenge is not demand itself, but how it is met. Electricity infrastructure alone cannot deliver the required capacity within the necessary timeframe.
There is also a risk that data centres compete for space and resources needed by other sectors, e.g. water is a core component of green hydrogen production and carbon capture technologies.
The demand from data centres, while significant, is likely to be predictable baseload demand. If this demand can be flexed – regardless of energy vector - it can be a huge asset to the wider energy system, supporting an energy system which is increasingly reliant on intermittent generation.
This is as true for gas as it is for electricity. As data centres connect into gas for on-site electricity generation (either while they wait for an electricity connection or to complement their electricity demand from the grid), there is a significant opportunity to use these new gas assets for whole-system balancing, as set out in our “archetype 4” in the letter above.
Question 3 What impact are data centres having on climate change and the Government’s Net Zero targets and how will this change in the short, medium and long term in the UK?
Unmanaged data centre growth risks increasing emissions and placing pressure on Net Zero targets.
The government has recognised this, through its development of new “AI Growth Zones”[4].
According to the International Energy Agency, data centres accounted for around 1.5% of the world’s electricity consumption in 2024, or 415 terawatt-hours (TWh), with data centre electricity consumption set to more than double to around 945 TWh by 2030[5]. In the UK NESO’s 2025 Future Energy Scenarios predict data centre energy demand will increase from 7.6TWh in 2024 to 33TWh by 2035, increasing to 71TWh by 2050[6].
A coordinated approach, one that incorporates gas and green gases can enable rapid deployment while maintaining a credible decarbonisation pathway.
If the focus remains solely on electricity connections, this will put further pressure on the transition. It is unlikely the reinforcement of the electricity grid could keep pace with data centre demand, especially with the push for the electrification of heat and electric vehicles. Cumulatively, this represents a significant security of supply risk.
Connecting data centres to gas networks can offer support and relief to the electricity network in the short term allowing it the time to invest in the necessary reinforcements and in the long term can turn data centres into “energy hubs” as they could act as a flexible demand asset and even small scale electricity producer through localised gas engines. This can all be compatible with decarbonisation goals as the data centres can be supplied by green gases (biomethane or low carbon hydrogen) either through direct supply, if co-located, or through certification of origin schemes like the Green Gas Certification Scheme.
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[3] https://fortune.com/2025/10/07/data-centers-gdp-growth-zero-first-half-2025-jason-furman-harvard-economist/
[4] AI Growth Zones: open for applications - GOV.UK
[5] https://iea.blob.core.windows.net/assets/de9dea13-b07d-42c5-a398-d1b3ae17d866/EnergyandAI.pdf
[6] https://www.neso.energy/document/364541/download
Question 4 To what extent will Artificial Intelligence (AI) accelerate the need for data centres and is this being adequately taken account of by the Government and relevant bodies, such as the Climate Change Committee and the Office for Environmental Protection, in terms of nature, the environment and climate change?
Forecasts suggest that demand from data centres is going to grow significantly. Data centre demand in the UK has been exponential in recent years, with over 500 data centres now based in the UK. Announced data centres will add 26.2TWh energy demand by 2030[7] The Climate Change Committee (CCC) has said that their 7th Carbon Budget[8] analysis factors in potential emissions from data centres through broader electricity demand growth projections.
It is our view that current modelling does not adequately reflect the pace of demand growth or emerging gas connection requirements, and should be updated to reflect real-world deployment timelines. Our data that shows 113 connection requests for data centres to the gas network over the past two years has not been factored into the CCC’s projections.
Questions 5b How important is the location of data centres and what factors should be considered for optimum siting of them?
The siting of data centres is very important to their public acceptance, environmental impact and energy supply.
When deciding where data centres should be located, access to electricity and gas connections as well as other services such as water and heat networks must be optimised. If sited too far from suitably sized electricity and gas connections, the cost and reliability of delivering energy is significantly impacted.
Data centres which act as “energy hubs” can become strategic assets and flex consumption, supporting system balancing.
As the UK decarbonises, the energy system will continue to be reliant on gas-fired generation for times of peak demand when renewable electricity output is low and for system balancing and resilience. However, the gas CCGTs we have currently were not built for this purpose – they are built for more frequent and sustained use than the system will need.
This is where the real opportunity with gas-connected data centres lies. If these developers invest in gas engines, which operate at slightly lower efficiency than CCGTs, those engines can become assets of strategic importance to the power system. There may even come a time where those assets are no longer needed by the data centres (if they can secure a sufficient electricity grid connection) but instead be repurposed solely for balancing our clean power system.
There are also opportunities beyond just gas and electricity. Waste heat from the data centres can contribute to local heat networks, bringing wider benefits to the communities they are located in, as well as being used for cooling of the data centres, reducing the demand for energy from the grid.
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[7] The UK’s data centre boom: Oxford Economics
[8] The Seventh Carbon Budget
Question 7 What existing and emerging technologies can be used to minimise the environmental and climate change impact of data centres?
Gas networks provide an immediately deployable and scalable solution to power data centres, with a clear pathway to decarbonisation through biomethane and hydrogen. This enables data centres to deploy quickly while decarbonising progressively, rather than delaying deployment until electricity infrastructure is available.
We are already generating enough biomethane to heat 1million homes and research suggests that, by 2050, GB and NI could be generating up to 120TWh of sustainable biomethane without impacting food production[9]. This means not only can biomethane be used today to support any connected data centres to decarbonise, but it can help to limit the climate impacts of data centre growth in the future. For the full benefits to be realised, the sector needs long term policy certainty to allow investors to have confidence in the country’s commitment to this energy source.
Fig 1. Potential future availability of different feedstocks in the UK by 2030 and 2050
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[9] Alder BioInsights - Biomethane Potential
Question 7a How mature are these technologies and are they ready to be rolled out at the scale and pace required to match the potential expansion of data centres?
Notwithstanding the business-as-usual connection processes on the gas network, the technologies required are mature, well established and widely deployed.
The relative maturity of the gases and related technologies are:
- Gas Engines: Fully Mature. Gas engines are used all over the country in many different applications being fuelled by different types of gas from fossil fuels, biogas, biomethane etc.
- Biomethane: Mature with significant growth potential. Biomethane is mature and ready to be rolled out further should policy and regulation be put in place to support it. We eagerly await the Biomethane Future Framework from DESNZ and need additional buy in from Defra into the holistic potential of anaerobic digestion to agriculture and the rural economy. Biomethane connected capacity is already at 11TWh in GB, with the potential for biomethane production to grow to 120TWh by 2050[10].
- Hydrogen: Nascent at scale. Hydrogen’s production technology is well understood and the UK has a long history of producing grey hydrogen. However, the production of low carbon (blue and green) hydrogen, and as such the wider hydrogen economy are nascent – an emerging energy vector at scale. The barriers to hydrogen growth are policy and offtaker support, which we expect to be partially addressed in the government’s upcoming Hydrogen Strategy. Therefore, hydrogen has a medium to long term potential to contribute to the data centre vision.
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[10] Alder BioInsights - Biomethane Potential
Question 7b What specific role can renewable energy play in reducing the carbon footprint of data centres?
Renewable and low carbon gases can play a significant role in reducing the carbon footprint of data centres.
Biomethane production coupled with carbon capture and storage can be carbon negative, and green hydrogen can be made with renewable electricity and result in zero emissions at the point of use.
Low carbon gases enable localised power generation for data centres, reducing pressure on electricity networks while maintaining alignment with net zero. They also support system flexibility by enabling generation during periods of low renewable output.
To support growth in biomethane the true carbon intensity of the gas must be recognised and accounted for fairly in the UK Emissions Trading Scheme (ETS), this will drive demand for the gas and support further increases in production.
Question 8 What opportunities do data centres offer in helping to power and heat local communities and amenities and what will be required to deliver benefits?
Data centres can become “energy hubs” - as shown in Archetype 4 in the letter above, data centres can support local energy systems through dispatchable power generation at times of high demand or low renewables output. The waste heat from data centres can also be supplied to local heat networks and would be a constant source of this heat given the 24 hour nature of these assets.
Delivering these benefits requires the co-location of gas, electricity and heat infrastructure, alongside policy support for low carbon gases, e.g. through green gas certification schemes.
Question 10 To what extent will the resource demands of data centres impact on other sectors with regard to competition for resources and decarbonisation?
Electricity is the primary constraint. Gas reduces pressure on this system, enabling parallel infrastructure development and improving overall system efficiency.
If left unmanaged it is likely that data centres will compete for resources including:
- Space / location – we have already seen BP drop out of a hydrogen production facility as the location was also being competed for by a data centre[11].
- Water – water is a feedstock for green hydrogen and a key requirement for carbon capture, water is also a vital part of the cooling process of data centres.
- - Electricity – electricity demand from data centres is significant and predicted to grow significantly. There are already demand connection queues which are unmanageable for electricity networks and with data centres set to compete for more and more electricity this adds risk to delivery and security of supply.
- Green gases – this could be a good thing, as it would stimulate the offtaker market and encourage domestic production.
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[11] BP Teeside