Key legal risks and considerations for UK data centre providers and their customers

Data centres have become the backbone of the digital economy, underpinning cloud computing, AI, and critical infrastructure services. Their rapid expansion in the UK has been driven by hyperscale demand and government initiatives such as AI Growth Zones. Although this presents significant opportunities, those opportunities can come with complex legal risks for both providers and customers. Some of the main risks, and suggested strategies for mitigation, are explained below.

1 Planning and land use

The historic challenges of uncertain policy treatment and green belt constraints that were once viewed as a hindrance to large scale development in the UK, appear to be easing. The Government has indicated a more supportive stance for data centre growth as part of its wider AI and digital infrastructure agenda, with data centres designated as Critical National Infrastructure (“CNI”), and draft regulations laid before Parliament on 15 October 2025 to bring these large facilities within the Nationally Significant Infrastructure Projects (“NSIPs”) regime. This would allow qualifying developers to apply directly to the Planning Inspectorate, making the consenting process faster and more streamlined. 

The introduction of “grey belt” within the green belt (focusing on underutilised or previously developed land) creates additional options for site selection, albeit with careful justification still required. 

However, disputes are still likely to arise over land use and environmental impact. Projects on green belt land have faced legal action, as seen in the recent challenge over a 90MW hyperscale facility in Buckinghamshire where campaigners argued that government approval breached planning law and sustainability obligations. 

Furthermore, the proposed NSIP regime brings new complexities and eligibility uncertainties. The forthcoming national policy statement for data centres is due to define what constitutes “national significance.” However, until that is published, developers face ambiguity over whether projects qualify, creating planning risk. In addition, while bypassing local authorities accelerates approvals, it may provoke community opposition and an increase in legal challenges, especially for green belt or “grey belt” sites. 

To mitigate these risks, it is vital to begin early eligibility analysis for NSIP, strategic site screening that balances grid proximity with planning prospects, and proactive stakeholder engagement. Given the interplay between land constraints, grid capacity and local sensitivities, early advice from planning lawyers can materially de risk programme and cost outcomes. 

2 Grid connection: reordering of the queue

OFGEM’s TM04+ reforms introduced in 2025 are a major overhaul of how electricity projects connect to the UK grid. They aim to fix long-standing problems like delays, speculative projects clogging the queue, and misalignment with national energy goals. However, projects with historic offers but without physical connection may need to re-apply under the new Gate 2 process, creating timing risk and potential for investors to pull out in early-stage schemes unable to demonstrate Gate 2 compliance. 

With the National Energy System Operator (“NESO”) expected to open the next Gate 2 application window later this year, developers should strengthen their evidentiary record on readiness and strategic alignment, engage early with NESO and OFGEM, and prepare for potential challenges where refusals occur. 

3 Cybersecurity

Cyber risk has escalated both in terms of frequency, sophistication and systemic consequences. The National Cyber Security Centre (“NCSC”) reported a 50% rise in “highly significant” incidents in the twelve months to August 2025. 

Organisations should align with NCSC best practice, including implementing Cyber Essentials (an NCSC certification scheme) where appropriate, layered security controls, incident response playbooks, threat-led testing and robust third-party risk management. 

Clauses that can be incorporated in contracts to enhance cyber security should address a range of requirements and best practice. For example, clauses regarding supply chain security, governance and incident management, data protection, and business continuity. Data and security responsibilities must be explicit. Clearly identify who is accountable for safeguarding the facility, systems, and shared services, and align liability limits for breaches with insurance coverage and realistic risk exposure.

4 Construction and supply chain

Data centre planning and delivery demands intricate coordination across specialised Mechanical, Electrical, and Plumbing (“MEP”) systems, cooling, grid works, fibre routes and security infrastructure, often under compressed timetables to meet capacity demand. The number of stakeholders (including authorities, utilities, community groups and investors) raises the probability of disputes arising. 

Mitigation starts with clear contractual arrangements: precise scope definition; interface matrices; realistic completion and key documented milestones. Early consideration of governing law, jurisdiction and forum (including the potential for arbitration as a forum of choice for cross-border supply chains) is essential. 

5 ESG scrutiny and compliance

ESG expectations have intensified, with investors, customers and the general public, driving greater transparency. Shareholder activism is a growing source of exposure, amplified by the rise of litigation funding and the increase in collective actions. 

Companies should embed verifiable ESG targets into governance, procurement and operations. Contractual commitments should be framed with measurable KPIs (so parties can clearly demonstrate compliance or lack thereof), data-sharing protocols, and audit rights to avoid allegations of greenwashing. 

Conclusion

The UK market offers compelling opportunity for growth for data centre platforms and their customers, encouraged by governmental policy support. Yet opportunity sits alongside a sharper risk profile. In order to benefit from the opportunities for growth and development in this sector, organisations should invest early in credible planning strategies, Gate 2 readiness, NCSC-aligned cyber security, and adopt a considered approach to contractual arrangements and verifiable ESG delivery.