A Chamber of Commerce panel said the North East could become a world hub for data centres and AI. Energy costs, grid capacity and skills stand in the way.

The North East could become a major international hub for data centres and AI within five years, a data centre boss told a business audience in Newcastle this week, but only if the region sorts out energy costs, electricity capacity, planning and skills.

The warning came from a panel at a North East Chamber of Commerce Thought Leadership event, The Future of Connectivity in the North East, held at Newcastle Racecourse on Wednesday 4 November as part of North East Expo.

On the panel were Ed Bissell, sales director at Stellium Datacentres; Will Wilcock, external affairs advisor at National Grid; and Joe Weston, design team manager at Northern Powergrid. Adam Heather, a partner at the law firm Womble Bond Dickinson, chaired it.

“No reason why the region can’t”

The Chamber says the discussion turned on the region’s place in global digital connectivity, with subsea cables linking it to international markets and drawing interest from major technology businesses. Mr Bissell said that connectivity was helping Newcastle compete with established European data centre locations.

“We’ve already got the connectivity in place, and that’s putting the North East on the map for some of the world’s biggest technology companies. With the right energy infrastructure and skills, there’s no reason why the region can’t become a major international hub for data centres and AI over the next five years.”

The power problem

Data centres use a lot of electricity, and the fast growth of AI is driving significant new demand, the Chamber said. National Grid set out the investment it says is needed to modernise the transmission network through its Great Grid Upgrade, including major projects across the North East meant to add capacity, improve resilience and support new development.

Mr Wilcock named two of them, at Blyth, a few miles up the coast from Whitley Bay, and at Tees Dock:

“The North East has a huge opportunity from the growth of AI and we’re investing in the network to support the region’s future needs, including at Blyth and Tees Dock. Early engagement is absolutely key. By working collaboratively across the region, we can unlock investment, strengthen business confidence and deliver lasting benefits for communities.”

Getting big developments connected to the network was the harder part of the conversation. Mr Weston of Northern Powergrid stressed strategic planning, realistic timescales and coordination between developers and network operators.

Panellists agreed that high energy costs, planning processes and the amount of electricity capacity available could all sway future investment decisions, according to the Chamber, and that more joint working was needed to keep infrastructure projects in step with the region’s economic plans.

National Grid’s work on the Tyne is already visible from North Tyneside. In October it asked the council about a 1.6km power tunnel under the river from Howdon so the two tall river-crossing pylons can come down.

Jobs: fewer than you might think, but a wider chain

Speakers were frank that data centres may not directly create thousands of permanent jobs. The opportunities they pointed to were wider: regional supply chains, technology businesses, engineering, construction and specialist skills. The panel also stressed investment in education and workforce training, so that local people and firms are ready to benefit from new industries.

Tim Marsden, knowledge manager at the Chamber, said:

“Today’s discussion highlighted the scale of the opportunity ahead of us. The North East already has many of the foundations needed to become a leading centre for digital connectivity and innovation.

“The challenge now is bringing business, government and infrastructure providers together to turn that potential into investment, jobs and lasting economic growth for our region.”

What it means for you

For people in Whitley Bay and North Tyneside the practical points are about work and bills rather than buildings:

  • Jobs come mainly through the supply chain. The panel’s own view is that data centres employ relatively few people directly; the work is in construction, engineering, technology firms and specialist skills.
  • Training is where the region says it will put effort. The Chamber wants more investment in skills provision, set out in its Unlocking the North East Economy policy plan for 2025 to 2027, which also calls for more spending on physical and digital infrastructure.
  • The grid is the bottleneck. Every large new user, data centre or otherwise, has to be connected to a network National Grid and Northern Powergrid say is still being upgraded.

The event was sponsored by Stellium Datacentres, with NCG as associate sponsor of the Chamber’s Knowledge and Learning Programme. The Chamber says it represents around 1,800 organisations employing more than a third of the region’s workforce.