London draft plan gives data centres a place in city planning

The Mayor of London’s draft London Plan 2026 gives data centres a dedicated policy for the first time, tying future development to electricity and water capacity, clustering opportunities, waste heat recovery, and local community benefits.

In his foreword, Sadiq Khan said the plan was designed to make “the best possible use of City Hall’s planning powers” and prepare London for “the industries of the future, such as data centres for AI.”

Data Centres Become Part of London’s Growth Strategy

The draft plan’s GLE3 Data centres policy asks local planning authorities to identify suitable locations using current and projected electricity and water capacity, opportunities for clustering, land availability, waste heat recovery and the air-quality impact of backup generators. It also said development in appropriate locations should be supported in principle, with Community Infrastructure Levy (CIL) levels used to help mitigate impacts and deliver local benefits.

The policy also stated clustering should support “resilience and co-location benefits,” while data centres should “play a positive role in local areas” and be “clean, efficient and aligned with the Mayor’s climate goals.”

Infrastructure Capacity Comes First

A central theme in the draft plan is that data centre location now depends as much on infrastructure as on land. Electricity and water capacity sit at the front of the site-selection process, reflecting a wider point running through the plan: London’s planning system is being asked to coordinate growth with the infrastructure needed to support it.

The same logic appears in the plan’s wider utilities policies, which treat digital infrastructure as part of the city’s strategic systems alongside energy, water, wastewater, and transport. For data centres, that means the planning discussion is no longer limited to site boundaries. It now reaches into grid capacity, water resilience, and wider utility planning.

Brownfield First, With Wider Options if Needed

The draft plan keeps a brownfield-first approach, but it also sets out where more strategic growth may be appropriate if the infrastructure is there to support it. Local planning authorities are expected to identify suitable locations first within their boundaries, then work with neighbouring authorities where needed, before considering grey belt or Green Belt edge locations that meet the policy tests.

For data centres, that points to a more structured planning environment rather than a simple search for available land. Now there must be an investigation as to whether a site can support the infrastructure, environmental, and operational requirements of the development.

Community Benefit Becomes Part of the Equation

The draft plan has also broadened the conversation beyond technical capacity. It has stated that it expects local authorities to identify opportunities for local benefits and to use CIL to help mitigate adverse impacts and support affected communities. That places data centres in the same planning discussion as other major infrastructure projects that are expected to contribute to local services, place-making, and wider urban needs.

For operators, the message is straightforward. London is not closing the door on data centres; but it is setting clearer conditions for where they fit, what infrastructure they require, and how they should contribute to the city around them.