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A huge data centre proposed for Charlton Riverside in south-east London faces strong opposition from Greenwich Council, which wants 8,000 homes, better transport and 1,000 jobs on the site instead. The developer, Charlton Gateway, says the facility will use closed-loop water cooling and fund roads and green space that unlock housing. The row mirrors a national debate as data centres gain Critical National Infrastructure status while councils prioritise homes.
A proposal to build one of London's largest data centres has turned into the capital's latest land-use battleground. On a stretch of riverside in Charlton, south-east London, a planned 100,000 sq m facility — roughly a million square feet of computing power — has run into fierce opposition from the local council, which would rather see the site become 8,000 new homes alongside better public transport and around 1,000 jobs.
The dispute goes far beyond one corner of south-east London. It is a test case for a question facing cities across Britain: in the age of artificial intelligence, where the cloud physically lives matters — and so does where people live. On one side stands the urgent demand for digital infrastructure; on the other, a housing crisis that shows little sign of easing.
The scheme at Charlton Riverside would be a huge data centre on what is currently a scruffy industrial estate near the Thames. Developer Charlton Gateway says the project is explicitly not aimed at the energy-hungry AI workloads that have given data centres a controversial reputation. Instead, it says the facility would use closed-loop water cooling — a system that recirculates water rather than consuming it continuously — and that the development would "help unlock the delivery of new homes" by paying for the road and green-space infrastructure the area needs.
"Together, this would make nearby development more viable and transform a disorganised industrial estate into an area that is hospitable to both current and future residents," the developer argues. In other words, the data centre is being pitched not as an alternative to housing, but as the financial engine that could make housing happen.
Greenwich Council sees it very differently. The local authority has set out its priorities for the site as 8,000 homes, improved public transport and 1,000 jobs — and believes a data centre would crowd out that vision rather than enable it. Tom Creswell, the council's cabinet member for planning and development, said the authority's priorities would "always be focused on serving local people and bringing meaningful opportunities to the beautiful borough we call home".
The council's stance reflects a broader scepticism among local politicians about the trade-off. Data centres are notorious for creating relatively few permanent jobs per square metre compared with the housing or mixed-use schemes they can displace, and Greenwich appears unconvinced that the developer's infrastructure promises outweigh the loss of a once-in-a-generation regeneration site.
The data centre industry, for its part, insists London cannot afford to turn capacity away. Mark Pestridge, managing director of Telehouse — the company behind the pioneering Telehouse data centre in Tower Hamlets, built in 1989 when the internet was barely a commercial reality — argues the capital must stay ahead. "I think London needs to be at the forefront of this moving forward... There's a huge opportunity for London," he said.
London's claim to be Europe's data centre capital is well founded: the UK hosts the highest number of data centres in Western Europe, and the sector generates an estimated £4.6bn a year in revenue. Recent months have seen a wave of mega-projects announced, including a proposed £3.75bn facility in Hertfordshire billed as Europe's largest, and an £8bn Amazon Web Services investment in UK data centre capacity.
But Pestridge also concedes the industry has a communication problem. "We haven't done a very good job of educating people about how much electricity and water we use," he admitted — a frank acknowledgement that public suspicion is partly the sector's own making.
!Rows of server racks inside a modern data centre Credit: Carl Lender, CC BY 2.0, via Wikimedia Commons
That suspicion was on full display among Charlton residents. One local, reflecting a widely held view, said simply: "I think we've got enough technology going around, I really don't think we need any more." Behind such sentiments lie concrete fears: the hum of cooling systems and backup generators, the strain on the local electricity grid, and above all water.
Water has become the most politically charged issue in the data centre debate. Government figures put UK data centres' share of non-household water use in England at just 0.2% — a tiny fraction. To put consumption in perspective, data centres' annual use of drinking-quality water is estimated at around 1.88 billion litres, while water companies lose more than 3 billion litres every single day to leaking pipes. The government has approved ten new reservoirs to shore up supplies.
The industry points to those numbers as proof the water panic is overblown, and water companies have publicly backed the sector's efficiency efforts. Critics counter that national averages mask local pressure: a very large facility drawing from a stressed catchment is a different proposition from the sector as a whole. Closed-loop cooling, as proposed at Charlton, is designed precisely to answer that objection by recycling water on site.
!Close-up of cabling at the rear of a data centre server rack Credit: Derrick Coetzee, CC0, via Wikimedia Commons
The Charlton row is unfolding against a decisive shift in national policy. The government has designated data centres as Critical National Infrastructure — the first new addition to that protected category since the space and defence sectors in 2015 — placing them on the same footing as energy, water and emergency services. The designation brings a dedicated team of senior officials to monitor threats, prioritised access to the National Cyber Security Centre, and coordinated emergency support.
Planning decisions are beginning to reflect that elevated status. A data centre proposed for Brick Lane in east London was approved in July, suggesting that — political rhetoric aside — the planning system is still saying yes to digital infrastructure in the capital. The question is whether Charlton Riverside, with its competing vision of thousands of homes, proves the exception.
The immediate future of the Charlton scheme now rests with the planning process, where Greenwich Council's opposition will carry significant weight. But the bigger picture is a policy collision that Whitehall has yet to resolve: ministers want both a housebuilding boom and a digital infrastructure boom, and on sites like Charlton Riverside those ambitions occupy the same ground.
For the data centre industry, the lesson of Charlton may be Pestridge's own: that winning the argument requires better honesty about resource use and clearer proof of local benefit. For councils, the challenge is the mirror image — showing that saying no to a data centre does not mean saying no to the infrastructure the homes of the future will themselves depend on. Whichever way Charlton goes, its verdict will be read closely by developers and town halls across the country.
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A 100,000 sq m (roughly one million sq ft) data centre on a riverside industrial estate in south-east London. Developer Charlton Gateway says the project is not aimed at AI workloads and will use closed-loop water cooling, with the development funding road and green-space infrastructure.
The council wants the site for 8,000 homes, improved public transport and around 1,000 jobs. Cabinet member Tom Creswell said the authority's priorities will "always be focused on serving local people".
Government figures put data centres' share of non-household water use in England at just 0.2%. Their annual drinking-quality water use is estimated at about 1.88 billion litres, compared with more than 3 billion litres lost daily to leaking pipes.
The designation puts data centres on the same footing as energy, water and emergency services. It brings a dedicated government team to monitor threats, prioritised access to the National Cyber Security Centre, and coordinated emergency support.
Yes. The UK hosts the most data centres in Western Europe, with an estimated £4.6bn in annual revenue. Recent announcements include a proposed £3.75bn facility in Hertfordshire and an £8bn AWS investment, while a Brick Lane data centre was approved in July.
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