Homes or Hard Drives – Charlton Riverside and the Competition for London’s Land

As demand for AI and digital infrastructure grows, London is facing a difficult question: what should happen when data centres compete with housing and regeneration ambitions for the same land? A proposed 100,000 sq m (1 million sq ft) data centre on industrial land at Charlton Riverside in south-east London has become the latest flashpoint. Described as "concerning", the scheme has been opposed by Greenwich Council before a planning application has even been submitted.

The Council says the proposal is at odds with its plans for the area, which include around 8,000 homes, improved public transport and 1,000 new jobs. The 2014 local plan described Charlton Riverside as a "key regeneration area", while the draft local plan currently being prepared earmarks the land only for "mixed-use development comprising residential, commercial, and light industrial uses".

A spokesperson for the data centre project counters that regeneration in the area has seen "limited" progress, that data centres have been designated by government as Critical National Infrastructure, and that the scheme would "help unlock the delivery of new homes" through new roads and green spaces. The developer, Charlton Gateway, states that the facility is not intended for AI, would use a closed-loop water cooling system, and would rely on generators for backup only. Many local residents nonetheless remain opposed, citing noise, energy use and the pressing need for housing.

Demand for data centres in the capital is driven by London's dense concentration of businesses, financial services and internet connections, as well as operators' wish to locate close to their customers. The government has rejected claims that data centres are "draining the country's water", noting that they account for just 0.2% of non-household water usage in England, while stressing that this "does not mean a blank cheque for Big Tech".

The debate also reflects a wider concern about the scarcity of resources. In a written briefing to MPs, Water UK described the government's water forecasts as "fatally flawed", noting that they "explicitly exclude" data centres. More than three-quarters of data centres are located in the water-stressed south and east of England, and Water UK estimates that data centres in England use 6.6m litres of drinking water a day, which could rise to 19.8m litres if the government achieves its ambition to triple data centre capacity by 2030. Major reservoirs taking up to 15 years to plan and build, and the national policy statement for AI growth delayed. Water UK has also called on the government to publish a drought hierarchy setting out which sectors are prioritised in times of shortage. Further, energy use is a recurring source of objection, with Charlton residents questioning where the facility's power would come from.

The Charlton dispute is unlikely to be the last.  Data centres are the physical home of the computing power behind phones, computers and AI, and underpin everyday services from online banking to booking a GP appointment, so demand for them will continue to grow. Local community concerns must be properly considered and addressed, but they can present only one side of the picture. Charlton Gateway's responses, that its proposals are not for AI, and that its scheme has been designed with environmental impact in mind, from closed-loop cooling to backup-only generators, are important to remember, and contribute to a balanced debate in which both sides should be heard.

For a closer look at the issues shaping the sector, please visit our Data Centres Decoded website, and in particular our most recent article ‘Data Centres: The Next Frontier for Class Action Risk’?