The UK government has introduced new energy and water efficiency expectations for data centers under its Data Centre Covenant, published by HM Treasury on October 28, 2026. The framework calls for new facilities to be designed to achieve a Power Usage Effectiveness (PUE) of 1.3 or better, while reducing water consumption and incorporating waste-heat recovery where viable.
The Covenant supports the expansion of the UK’s AI computing infrastructure, which government estimates indicate will require 6 GW of data center capacity by 2030. Developers are expected to minimize reliance on public water supplies through technologies such as closed-loop water systems and to consider waste-heat capture and reuse for nearby residential buildings, hospitals, schools and businesses.
Strategic data centers should publish annual reports covering energy and water consumption, efficiency, emissions, heat reuse and participation in electricity grid flexibility services. Existing operators are strongly encouraged to adopt similar reporting practices.
The efficiency expectations could increase demand for high-efficiency chillers, dry cooling technologies, closed-loop liquid cooling systems and heat-recovery solutions. Cooling system design will be an important consideration in meeting the PUE target while limiting water consumption.
The PUE 1.3 benchmark is a policy expectation rather than a universal statutory limit. While all data centers are encouraged to meet the Covenant’s requirements, strategically important projects must satisfy relevant criteria to qualify for additional government support, potentially including accelerated grid connections and planning assistance.
