Global spending on data centre infrastructure is expected to top $1trn by 2030. As the construction of data centres ramps up in the United Kingdom, underwriters and risk experts are gaining knowledge about the unique challenges and opportunities involved in building these vast projects.
The drive to create data centres represents the biggest construction boom in the UK since the rebuild after the Second World War, commentators say.
Although the construction of data centres in Europe has so far lagged the United States and Asia Pacific, increasing demand for artificial intelligence capability is prompting a rush to build massive data centres, notably in the five major hubs of Amsterdam, Dublin, Frankfurt, London and Paris.
A government-backed plan to create so-called AI Growth Zones (AIGZ) across the UK is fuelling rapid growth in the construction of data centres in various sites around the country.
AXA XL has recently set up a Special Interest Group (SIG) to develop deeper understanding about this evolving area of risk and opportunity. The SIG is intended to enable us to share knowledge and hear insights from external partners and industry insiders.
Developing risk insights
Unlike other data centre hotspots such as the US, the UK faces a shortage of available space in which to build these vast sites. This means that instead of building expansive single-storey data centres, developers in the UK are looking to build upwards – creating multiple-floored structures, with a different risk profile.
There are other construction risk challenges too. Not only are there regulatory hurdles to overcome and environmental requirements to comply with, data centres require enormous amounts of power to operate. They also house valuable technology and equipment, like General Processing Units (GPU), that are highly susceptible to dust, fire and water damage, among other things.
With hundreds of proposed projects worldwide coming across their desks, risk engineers and construction underwriters are gathering valuable insights into the risks, challenges and opportunities posed by constructing data centres in the UK.
UK set for data centre growth
During 2025, more than 60 separate planning applications were made for the construction of new data centres in England and Wales alone. And the rapid uptick of interest in building data centres looks set to continue this year.
The creation of AIGZs is intended to support investment in data centres. This is expected to accelerate the processes required to connect to power grids and reallocate grid capacity, among other changes.
To qualify as an AIGZ, applicants must demonstrate that they have access to at least 100 acres of developable land – and, where that land requires remediation, must outline a credible remediation plan.
Proposed changes to the UK National Planning Policy Framework – the consultation closed on 10 March 2026 – are intended, in part, to streamline the processes required for data centres and the power generation operations needed to run them, to achieve the necessary permissions.
Vast, complex projects require new risk understanding
Data centre construction projects are huge. Current designs range in size anywhere from $1bn to $20bn. They are also complex and require specialist materials and skilled labour.
Space constraints, among other factors, mean that many UK-based projects are using modular or pre-fabricated units that are then transported to the construction site, according to Data Centre Insight.
Site selection, land availability and adherence to planning and environmental regulations are among the initial challenges for data centre construction.
Other potential risk areas include access to power supply – and the pressure for that power to be derived from renewable, efficient sources.
The logistical challenges posed by area-constrained sites in the UK seem to be driving longer build times than those being seen in the US, where multi-billion-dollar data centres can be delivered in two years or less.
As with many other major construction projects, data centre developers face potential supply chain risks. Geopolitical fluctuations can disrupt logistics, and product shortages and price inflation can also result in bottlenecks and delays. Particular challenges for data centre projects include potential equipment tariffs.
And the specialist nature of data centres, the materials used to build them and the technology housed within them, means that these projects require highly qualified engineers with expertise in design, installation and maintenance. The ambitious timelines for many data centre construction projects may result in workers who lack the specialist knowledge and experience required being drafted in.
Overcoming construction challenges
Alongside the rush to build more data centres across the UK, risk engineers and underwriters have been working closely with clients and experts to understand the construction challenges and how they might be addressed.
There are various risk management steps that can be implemented, including:
- Ensuring that planning is comprehensive, with a detailed project schedule including milestones and contingency plans;
- Diversifying suppliers, to reduce supply chain risks;
- Adopting sustainable building practices to mitigate environmental liabilities and regulatory issues;
- Implementing robust compliance and cyber security protocols.
- Local opposition to data centre sites due to concerns over sustainability and increased use of AI has been mounting in the US. This could also become more of an issue in the UK; planning for enhanced physical/site security during construction would, therefore, be prudent.
Risk engineers and underwriters will also consider factors like the number of contractors involved in a project, the experience of the main contractors, the layout of the site, the location of the power grid that is being used – or created – natural hazard exposure, the materials being used and the schedule of work.
Risk experts also examine factors like the cooling systems that are being used – this is an area where the technology is evolving quickly. They will ask for detailed information about fire-suppression systems, hot-works plans and how prefabricated or modular elements will be stored.
To protect sensitive equipment from dust, contractors can create sealed environments, limit footfall and sequence workflows to avoid doubling-back, among other things.
Constructing the future
As more data centres are built, and the technology involved continues to evolve, underwriters are continually learning about the challenges and opportunities created by these enormous projects.
Our recently created SIG will give us greater insights into the evolving risks and opportunities presented by the data centre construction boom.
And we will continue to work closely with clients as they grapple with these challenges and seek to take the opportunities presented by this new phase of construction growth in the UK.
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