The government has finally published its draft National Policy Statement (NPS) on data centres and has announced an accompanying Data Centre Covenant. The NPS clearly strengthens the case for data centre development by proposing a presumption in favour of consent for qualifying Nationally Significant Infrastructure Projects (NSIPs), subject to exceptions including development on Green Belt land.
At the same time, it sets out expectations for developers to carefully manage environmental impacts via reporting, have a credible plan for power and deliver local benefits.
For developers with projects already progressing through the planning system, the key question is what these announcements mean in practice.
Relevance to Town and Country Planning Act (TCPA) projects
While the NPS primarily concerns nationally significant projects going down the Development Consent Order (DCO) route, it explicitly allows relevance to TCPA decisions, assessed case by case.
In effect, it may strengthen the needs case for TCPA projects, with weight assessed on an individual basis. However, the presumption in favour of consent doesn’t carry across to TCPA planning applications. Additionally, even if a TCPA project meets the proposed indicative threshold of 100MW IT load for NSIP consideration, it wouldn’t automatically enter the NSIP regime.
The same goes for environmental and reporting commitments. The draft NPS doesn’t itself impose these energy efficiency reporting or community benefit requirements on every TCPA project. This isn’t to say that there won’t be more of an expectation from councils, residents and other stakeholders.
What the Covenant means for local benefits
The message is clear. Developers should consider producing a Local Benefit Plan for their projects. Strategic projects seeking enhanced government support will be required to agree a Plan, though we don’t yet know what criteria projects have to meet to be called strategic. Other projects are encouraged to produce the plans, but aren’t required to do so.
The detailed requirements for these plans are still to come on what the government expects from the plans at this stage, but in our experience, we can assume the expectations will be similar to social value plans. The developer may need to conduct in-depth research, using demographics data, to find out what communities need. Then they should meet with local communities, including councils, parish councils, businesses and residents to find out what they would prioritise. These findings should then be written up in a strategy that sets out what the developer will commit to with measurable targets and milestones.
We can’t be sure when these plans would be expected in the development timeline, so we’d recommend early preparation.
Making realistic commitments in the Local Benefit Plan
Producing the strategy is just the start. It needs to clearly articulate what local benefits the developer will deliver. For example, reusing waste heat from data centres could be used to heat local homes, businesses, swimming pools or hospitals, helping to reduce reliance on other heating sources and making better use of the energy consumed by the facility. However, not all developments will be able to offer this. Data centres need to tie into a heat network which will require multiple partners to deliver, is expensive and disruptive to build. A viable heat reuse plan could deliver significant local value, but it must be realistic and deliverable.
Jobs is another one. Being clear on the difference between operational and construction jobs is imperative. The NPS even recognises that operational employment is normally quite low. It’s incumbent on the developer to conduct an economic assessment to accurately predict employment numbers, transparently share figures during early political and community engagement and stick to them.
How early community engagement improves projects
While the statutory NSIP pre-application consultation requirement has been removed to speed up planning, the government retains an expectation of engagement. As we’ve shown, it’s important to engage with communities to understand what local priorities they have to craft an effective Local Benefit Plan and to show how pre-application consultation gathers feedback that can then be tangibly responded to in the final planning submission.
For example, for one of the data centre projects we’ve been advising on, we held a pre-application public consultation event where hundreds attended and left feedback. We analysed the feedback and shared requested design changes with the project team. The team has since proposed ways to improve connectivity between green spaces on-site, provided more details on plans for a heat network and introduced a community benefit fund.
Alpaca’s three recommendations for existing projects
Review the draft NPS implications with the planning team to determine whether more environmental or economic assessments are needed. If you have a 100MW+ data centre, consider whether pursuing the NSIP route could be advantageous for the project.
Review existing public commitments to ensure they are evidence based and deliverable. It’ll be important to be upfront on environmental impacts and proposed mitigations. Be as accurate as possible on predicting economic benefits and clear on what local benefits will be delivered.
Conduct early research and community engagement to find out what a community wants to prioritise before developing your Local Benefit Plan and promising benefits. Otherwise, you may end up spending money that doesn’t move the dial on community acceptance.
Should you have any questions on how the NPS and Data Centre Covenant affect you, do get in touch with our Data Centre Lead, Will Mendoza, on William.mendoza@alpacacommunications.com or 07852537986.