What is the AI Opportunities Action Plan?
Artificial Intelligence has the potential to revolutionise the way work is carried out. The government has recognised the potential of AI to be the "single biggest lever to deliver" economic growth in the UK and appointed tech entrepreneur, Matt Clifford CBE, to be the Prime Minister’s AI Opportunities Adviser tasked with compiling the AI Opportunities Action Plan, which includes 50 recommendations to seize the opportunities which come with AI, with the aim of driving Britain's economic prosperity, improving public services and increasing opportunities for people to develop careers in this growing sector.
AI is a political priority for Kier Starmer's government
At the launch of the AI Opprtunities Action Plan, Sir Kier Starmer said that the "full weight of Whitehall" will be used to ensure that Britain becomes "the world leader" in AI. Therefore, AI is a political priority and we can expect a quick roll out of the initiatives within the AI Opportunities Action Plan.
The UK is engaged in a global race to become an AI superpower. Hot on the PM’s heels, on 21 January newly inaugurated President Trump announced that $500bn of private funding would be invested in “Project Stargate”, an initiative to deliver AI infrastructure in the US over the next five years. Recent analysis from the European Commission shows only the US and China invests more in AI than the UK so the country is in the running to seize the opportunities which come with this new technology, but not in pole position.
What are AI Growth Zones?
AIGZs are designated sites where businesses will benefit from time-limited incentives, streamlined planning processes and specialist infrastructure designed to attract investment from AI companies, including data centres. The aim is to create an environment which is " best placed to secure investment" from AI companies that are looking to grow.
Culham Science Centre is the first AIGZ
Culham Science Centre in Oxfordshire, which houses the UK Atomic Energy Authority’s headquarters, has been chosen as the pilot AIGZ. Culham is a stand out location because it is a large site (a former air base) that already offers access to significant power supply.
Where will the next AIGZs be located?
It seems very likely that the government will invite public authorities to submit expressions of interest to create new AIGZs in the coming months.
A steady baseload power supply is vital for data centres, which need to operate with continuous processing and cooling. Therefore locations with existing substantial baseload power supply are well positioned to become AIGZs. Other sites which are likely to be attractive include locations with a fast route to such a supply (which could include sites near a consented, but not built NSIP or an operating power station, even the landfall for the offshore wind fleet or even a mothballed station where a new application would be uncontroversial).
Data centres are grid connected but increasingly dedicated private wire supply is considered viable, particularly given frustration over delays to grid connection (for the data centre itself or any linked power generation). Planning delays are however a significant risk for new power projects whether gas or any shade of green, therefore the Government is also reforming planning with the aim of reducing delays and address concerns about – so called - "NIMBY activism" unnecessarily delaying projects. Interestingly, the government has also opened the door to establishing small modular reactors to provide the energy needed. This trend began in the US with the tech hyperscalers (Google, Amazon, Microsoft) entering into agreements to help bring advanced nuclear projects online (both taking power from new SMRs or by extension of life to existing nuclear plants, such as the notorious 3 mile island) to supply the tech revolution. The UK fleet is also extending its life where it can, for example EDF.
Doctor Jonathan Aitken from the University of Sheffield predicts that many of the AIGZs that emerge will be in "places with access to large scale supercomputers", including Bristol, Cambridge, the ‘cyber corridor’ in the North West and Edinburgh.
Other AIGZs are expected to emerge where existing AI investment is happening. This includes Merseyside (where Kyndryl has announced plans to create 1,000 AI related jobs in the next three years), Loughton (where NScale will invest £2bn in a new data centre), Bridgend (where Vantage Data Centres is working to build one of Europe’s largest data centre campuses) and Northumberland (where Blackstone is investing £10bn in a new artificial intelligence data centre will create about 4,000 jobs).
Fundamentally, given the growth opportunities, many public authorities will be assessing whether there are existing sites, which might be repurposed as AIGZs.
What incentives and infrastructure will be offered at AIGZs?
It appears that the Government intends to take stock of the pilot AIGZ in Oxfordshire before announcing the full package of support which will be on offer, however the strategy refers to interventions that will:
• accelerate the construction of such sites, which is expected to include dedicated funding as well as accelerated planning processes; and
• attract inward investment such as subsidies such as "relevant relief schemes that incentivise private sector investment".
What legal issues are likely to arise from the AIGZs?
A range of legal issues will arise in the roll out of the AIGZ programme:
Energy Infrastructure – Data Centres are essential to AI and notoriously power hungry. It took an estimated 2,300MWh to train a large language model like chatGPT and every process consumes power (10 times more for a ChatGPT search than a standard google). Global energy consumption by data centres is expected to more than double by the end of the decade, according to Goldman Sachs. Tech companies are also under pressure to use more green power and have been investing heavily in solar wind and BESS, and now nuclear. Hungry data centres are piling more strain on the already stressed grid (struggling with the growth in EVs, charging, greening industry and reshoring, on top of creaking ageing grid infrastructure and extreme weather events causing disruption. Internationally, the technology hyperscalers (the largest data centre operated by the likes of Amazon, Microsoft, Meta, Google, and Apple) are talking to the grid and energy companies about private wire contracts and getting access to green energy through synthetic PPAs. More are now turning to dedicated renewables and nuclear and private wire connections. Collocating AI with power supply is the holy grail.
Public Funding – dedicated funding programmes are expected to be established to accelerate the construction of infrastructure but also in respect of the subsidies, which will be offered, to businesses relocating to the AIGZs. Care will need to be taken to ensure appropriate conditions are attached to the funding streams, balancing the need to protect public funding and to minimise bureaucracy.
Subsidy Control – When public funding is awarded, it will be necessary for public authorities to comply with the Subsidy Control Act 2022. DWF has a market leading team in this area of law and can advise on how to navigate the rules quickly and efficiently.
Procurement law - with the Procurement Act 2023 coming into force in February 2024, public authorities looking to select contractors will want to get legal input to avoid challenges, which can delay the delivery of projects.
Planning – inevitably planning is one of the first considerations when an administration wishes to put in place specialist infrastructure but the rules in this area have been identified as a pinch point in delivery. Indeed, Prime Minister Sir Keir Starmer has said the current rules act as "a major brake on economic growth" and intends to “reform the planning rules”.
On 26 January 2025, the government published a "Planning Reform Working Paper: Streamlining Infrastructure Planning" which sets out plans to "streamline the development of critical infrastructure, in particular Nationally Significant Infrastructure Projects (NSIPs), across England". Therefore, this will be an area where the rules will change significantly in the coming months.
Acquisitions and Compulsory Purchase Orders – when the State is engaged in delivery, whether this be the delivery of highways or other infrastructure, there is a need to take control of strategic sites. The quickest and simplest route is usually an agreed purchase, however if landowners are reluctant to sell, authorities may also need to consider making a compulsory purchase order (CPO). Labour is in the process of reforming the system with the aim of ensuring that compensation paid to landowners is fair, but not excessive, when important infrastructure is being delivered and modernising planning committees.
Engagement, Consultation and Challenges – the impact of developments on local residents and stakeholders is not to be underestimated. Legal support is often required to manage the process of taking the views of local communities into account, but at the same time ensuring other considerations are properly taken into account and that balanced decisions are reached. Particularly with energy projects, there is pressure to do more than consult and share community benefits, rather, bold and forward looking public authorities are facilitating community and municipal shared ownership in such projects – giving real “skin in the game”. GB Energy intends to back such involvement. These proactive actors are trying to utilise public land and procure locally produced power for themselves, and in some cases using public land as the host.
Real Estate – legal input will be required to deliver State owned infrastructure but also to ensure this investment unlocks private development. The government will closely monitor progress of the AIGZs, meaning that it is important to plan the steps, which need to be taken at the outset, in order to ensure no delays arise.
The ability of the government to roll out the AIGZ initiative efficiently and effectively will turn on many issues, including the ability to spot legal issues in advance and navigate through these with the minimum of fuss.
Conclusion
Public authorities across the country will be eagerly watching the AI Growth Zone initiative develop, hoping that their locality might be next to benefit from the incentives and infrastructure which come with AIGZ designation. In preparing for the government's expression of interest process, we recommend that the legal issues set out above are properly considered and planned for, recognising that this may well have a bearing on the success of such an application.
DWF is a trusted adviser on large projects. Not only do we have a market leading Public Sector advisory team, but our Energy team comprises over 125 lawyers with in-depth energy sector and decarbonisation experience, including advising upon groundbreaking innovative public and private sector energy projects and novel PPA structures. Our planning team has substantial data centre experience and is well placed to assist you deliver green AI infrastructure.
Please do get in touch if we can help you deliver an AIGZ or similar project.
