Infrastructure and Energy Spotlight – Autumn/Winter 2025

With AI turbo-charging demand, strong Government support and the recent announcement of £38 billion in investment by the likes of Google, Microsoft, Nvidia and Blackrock, there's little doubt that data centres represent a major opportunity for investors in and operators of UK infrastructure. But what are the key challenges to development of new data centres – and how can investors and operators overcome them?

Making data centres happen

On 30 September 2025, Travers Smith hosted a bespoke event entitled "Making Data Centres Happen", exploring key themes in the evolution of this essential infrastructure asset class with a panel and a live audience. Our briefing looks at some of the key themes of that event, which included the following:

Finance and investment opportunities

The panel also outlined key trends in the financing of data centres, noting that opportunities for more sophisticated equity financing structures are emerging, including joint ventures which enable investors to pool their risk.  This is likely to prove particularly relevant, given the substantial (and increasing) capital requirements for data centre development.

AI Growth Zones: what are they and how will they help?

The UK Government has also announced the creation of AI Growth Zones, the first of which will be in Culham, Oxfordshire, a site that benefits from a major powerline connection that was previously used for an experimental nuclear reactor (now being decommissioned). This is expected to be used to power a 100MW AI data centre, with potential to scale up to 500MW. Over 200 applications for further zones have been received from local and regional authorities across the UK. The policy was specifically designed to promote investment in data centres and the application criteria reflect this, with local or regional authorities expected to demonstrate adequate power, water and land availability, together with strong digital connectivity, sufficient to support at least 500 MW of AI infrastructure.  Sites will also be expected to have existing planning consent or be able to demonstrate a viable pathway for full consent by 2028. The aim is to "crowd in" private capital by addressing many of the key barriers to data centre development upfront through the AI Growth Zone designation process. Whilst there has also been talk of streamlining the planning process for developments within AI Growth Zones, this would be likely to require additional measures. However, as explained above, the designation process itself should bring advantages from a planning perspective.

The next Budget is due to be delivered on 26 November 2025 and, against a challenging economic backdrop, speculation is rife that HM Treasury is considering a broad range of tax policy changes.

Our Tracker highlights some of the more prominent proposals that have surfaced in the run-up to the Budget – including a number that may be relevant to the infrastructure and energy sectors (see below - the Tracker provides more detail on all these issues). Whilst the Chancellor's "scene-setter" speech did not give much away, it has created expectations of significant tax raising measures.  On the other hand, with growth as the Government's number one priority, it's striking that a number of the proposals highlighted below relate to measures which might help investors and operators in the infrastructure and energy sector. 

See also our discussion in section 4 about whether budgetary pressures will lead to cuts in the amount of money allocated to Great British Energy.

Of course, whether HM Treasury will actually pursue any of these measures remains to be seen – we will find out at the end of November. ACCESS THE TRACKER.

Reforms contained in the Planning and Infrastructure Bill currently before Parliament are critical to the UK Government's plans for infrastructure and energy and its wider ambitions to drive economic growth. They also bring into sharp focus the inherent tensions between the Government's wider priorities, which include kick-starting a meaningful increase in housing delivery, and the effective functioning of the planning system, which is tasked with balancing the need for development against existing safeguards and protections, most notably environmental. An already difficult set of reforms may now be further complicated by reports of EU concerns over their environmental impact.

EU concerns

A recent newspaper report claimed that the EU has raised concerns with the UK Government about changes to environmental protections in the Bill, including whether these were compatible with the UK's commitments under the UK-EU Trade and Cooperation Agreement (TCA) (reflecting concerns raised in an EU report leaked earlier this year). 

It's unclear at this point how credible these reports are – but what if the EU were minded to pursue these objections? Could it undermine UK planning reform?  Certainly it seems that the Government has taken such criticisms seriously, having made a series of amendments to the environmental parts of the Bill over the summer with the intention of trying to quell some of the disquiet.

How challenging would it be for the EU to invoke the TCA provisions?

The EU would need to show that any weakening of environmental protections in the UK would affect "trade and investment" between the parties – for example, that as a result of the changes, a US data centre investor would be likely to choose the UK rather than the EU. This may not be entirely straightforward, as there are usually many reasons why investors choose one country over another. The TCA also affirms that the UK is entitled to set its own policies and priorities i.e. it is not required to align fully with the EU, provided that levels of protection do not drop below those in place at the end of the transition period on 31 December 2020.  

That said, if the EU were minded to take unilateral measures under the rebalancing mechanism, it could do so without first having to satisfy any panel or other neutral body that its actions were justified – it would simply need to have gone through the process of holding 90 days of consultations with the UK, as described above. Of course, the UK would be very likely to challenge the EU's measures – and at that point, the EU would have to justify its approach to a panel of arbitrators (including demonstrating that any unilateral measures were "proportionate"). However, in the meantime, the UK economy would be experiencing the "pain" of the unilateral measures – which would be likely to act as a further obstacle to the Government's growth ambitions. As a result, the way the TCA works gives the EU substantial negotiating leverage in this area.

Is there a significant risk to the UK's planning reforms?

As noted above, it's unclear whether the report accurately reflects the EU's position or its level of concern. It is possible that it sees the issue more as a negotiating tactic to be used to push back against UK demands for greater access to EU markets in the reset negotiations. Another possibility is that the EU raised the issue primarily in order to "fire a shot across the bows" of the UK in relation to proposals for more radical planning reform, which the Treasury is known to have been considering – but we simply don't know yet. 

Even if the EU has both genuine and significant concerns about the Planning and Infrastructure Bill, it's important to bear in mind the following:

• the Government has already rowed back on some of the more controversial aspects of reforms to environmental protection in the Bill;

• at this stage, it is difficult to say for sure what the overall effect of the proposed reforms would be on environmental protections – much of the commentary to date is speculative at best, with secondary legislation and supporting guidance being required to flesh out the detail; 

• many of the key reforms do not relate specifically to environmental protection and are focussed on streamlining the process of obtaining planning consent - such procedural measures should not be at risk; and

• there are strong incentives for the UK and EU not to allow any difference of views over environmental protections to derail the ongoing "reset", which – if successful – should benefit both sides.

On balance, therefore, our current view is that  - whilst there is some degree of risk from EU objections - the more likely outcome is that the UK will be able to proceed with many, if not most, of the key measures envisaged in its reform of the planning rules.

In our last issue, we focussed on the Spending Review and the UK Government's 10 year Infrastructure Strategy – but alongside the latter, the Government also published its 10 year Industrial Strategy, including a separate Sector Plan for Clean Energy Industries. Meanwhile, in September, it released its statement of priorities for Great British Energy. So what does all this tell us that we didn't already know?

How will the £8.3 billion be spent?

The Sector Plan makes clear that, of the £8.3 billion in funding for clean energy, £1 billion will be directed towards clean energy supply chains (this includes £300 million for offshore wind supply chains, which had already been announced). As regards how the remaining £7.3 billion will be spent, there is less clarity – because the statement of priorities for GBE is extremely high level. Specific mention is made of solar, with GBE directed to "take advantage of further opportunities to increase deployment of renewable generation and associated technologies on public buildings" – but no figures are attached to this. Whilst this support is directed primarily at the public sector through initiatives such as this one, there is likely to be a significant role for the private sector in installing new solar capacity.

Similarly, GBE is directed to "use its capital expertise to drive deployment of both nascent and established technologies" required to hit the Government's 2030 targets – although again, no figures are attached to how funds should be split between different technologies (GBE is merely directed to maintain a balance between the UK's short-term and long-term clean energy needs). However, the statement does make clear that "nascent" technologies only include those at Technology Readiness Levels 6-9, which is generally understood as the final stages of development (i.e. moving from a functional prototype to a fully operational, proven system). For technologies below this level, it would appear that the Government envisages funding from general R&D programmes (see below). Given the Government's ambitious 2030 net zero targets, it seems likely that a greater proportion of the remaining £7.3 billion of funding (i.e. £8.3 billion less the £1 billion allocated to supply chains) will be directed towards renewables projects based on more established technologies, including new nuclear projects. There is also an expectation that by 2030, GBE will have a plan in place to become self-financing i.e. by 2030, it will need to be making a portfolio level return on investment (even though there is an acceptance that not all projects will generate positive returns, given the need for GBE to take on a reasonable degree of risk).

However, there have also been some suggestions that the Government is watering down its commitment to GBE, with reports in the summer that the Government had effectively cut £2.5 billion from the £8.3 billion budget to fund Great British Energy - Nuclear (which has just announced that the UK’s first small modular nuclear reactors will be built in North Wales). With a difficult budget for the Government coming up, many stakeholders will be watching to see if GBE funding commitments are further reduced or redirected.

Other funding commitments

The Sector Plan for Clean Energy Industries also lists a number of other funding commitments which – though not solely directed at the clean energy sector – are expected to provide at least some additional support for it:

• At least some of the British Business Bank's £4 billion of financing for scale-up and start-up (expected to crowd in £12 billion in private funding) is expected to be deployed in support of climate tech.

• Similarly, some of the economy-wide R&D funding (e.g. £86 million for fast growing sectors and £500 million for the R&D Missions Accelerator Programme) is expected to be directed towards clean energy.

• £20 million will be provided over 7 years through UK Research and Innovation's Sustainable Industrial Futures programme to support transition of UK manufacturing to net zero.

On 12 November 2025, the UK Government introduced the long-awaited Cyber Security and Resilience (Network and Information Systems) Bill to Parliament.   The Bill will reform the UK's existing cyber security regime, which is based on the Network and Information Systems Regulations 2018 (NIS). We will report on this in more detail in the coming months, but key headline points for the infrastructure and energy sectors include the following:

• Data centres in scope: The scope of the current regime will be expanded to include data centres, with Ofcom and the Department for Science, Innovation and Technology (DSIT) acting as joint regulators. As a general rule, data centres with a rated IT load of 1 MW or more will be in scope, although for enterprise data centres (those operated solely for the IT needs of the person who owns the facility), a higher threshold of 10 MW or more will apply.

• Large load controllers: Organisations managing electrical load for smart appliances (for example, to support electric vehicle charging during peak times) will also be brought within the scope of the cyber-security regime.  For example, load controllers for EV charging smart appliances with a combined potential electrical capacity of 300MW or more will be in scope.

• "Critical suppliers": Other players in the infrastructure and energy sectors could also be brought within scope because regulators will gain the ability to designate certain businesses as "critical suppliers", even where they are not otherwise caught by the new regime. For example, this could include certain key suppliers to businesses in the energy, transport, digital infrastructure and water sectors, where the latter are already caught by the existing regime.

• Managed service providers: The Bill also brings IT managed service providers within scope. Since many businesses – including those in the infrastructure and energy sectors – outsource much of their IT provision to such entities, this is probably a positive move, as it will mean that managed service providers will face additional pressure from regulators to ensure robust cyber-security and resilience.

We will provide a fuller analysis of the implications of the Bill for the infrastructure and energy sectors in our next issue.

While 2025 has seen the EU roll back its ambitions on sustainability reporting (see our briefings on the EU's sustainability omnibus and delays to EU sustainability reporting rules), the UK Government cautiously pushed forward with its own, somewhat delayed, sustainability reporting rules. Three key consultations were held relating to these proposals over the summer as follows:

• UK Sustainability Reporting Standards ("SRS"): This set out the proposals for a disclosure and assurance framework for sustainability-related financial disclosures

• Sustainability Reporting Assurance Framework: A further related consultation on the design of a potential assurance framework for sustainability related information; and

• Transition Plans: This discussed the options for the potential introduction and design of climate transition plan-related requirements for certain UK entities.

The tone of the consultations suggest the Government is mindful of the recent shift in emphasis, particularly in the EU, towards competitiveness (and, arguably, deregulation) and will be mindful of not appearing to overly burden businesses with new reporting requirements. That said, it made a manifesto commitment on transition planning (more on this below).

A UK sustainability assurance framework

The Government's consultation on the UK SRS also discusses the potential creation of a framework for the registration of service providers for sustainability assurance, which is currently served by a limited market dominated by accountancy firms. These approved assurers could potentially provide assurance for the purposes of multiple sustainability reporting regimes (including under UK SRS as well as under EU and other international IFRS-based sustainability reporting regimes).

While assurance requirements may increase investor confidence in disclosures, they can also add significantly to compliance costs. Indeed, this cost issue has been one of the early thorns in the side of the EU's sustainability reporting regime, with recent Omnibus proposals walking back on the move in future years from limited to (a more intensive and costly) reasonable assurance requirement. The Government will no doubt be keeping this in mind – the consultation positions it firmly on the fence as to whether or not assurance might be required over UK SRS reports in future.

Disclosure of transition plans

The consultation also sought views on the extension of the transition plan disclosure rules to all "economically significant entities", potentially including large private companies, not just FTSE 100 companies. With wider adoption comes greater exposure to and understanding at both investor and consumer level of the climate-related financial risks and opportunities of UK businesses.  For this group, a one-size-fits-all approach is particularly jarring, given that the climate impact of large companies across the economy and their ability to manage that impact varies enormously.

Results of the consultations and final texts of the UK SRS were expected this autumn, but at the time of writing (mid-November 2025) had yet to appear.  It remains to be seen therefore whether the Government and the Financial Conduct Authority can meet their own ambitious timetables to consult on mandating reporting (and critically, the scope of any such reporting) prior to the end of the year.

For more information on the consultations on sustainability reporting and transition plans, see our detailed briefings.

The National Security and Investment Act 2021 (NSI Act) has now been in force since January 2022. We look at the latest developments, including the fourth NSI annual report.

What does the fourth NSI Act annual report tell us about the direction of travel?

The latest NSI Act annual report is the first to cover almost a year of the Labour Government. Whilst sectors involving Defence and Military/Dual-Use still top the numbers of notifications and deal interventions, the application of the NSI Act to wider infrastructure remains clear. Our briefing covers the key findings, including:

• Notification numbers are on an upwards trajectory. Whilst "call-ins" are also up, they still amount to less than 5% of deals (i.e. a 95% clearance rate without further investigation).

• Although defence tops the list for numbers of notifications, Data Infrastructure, Energy and Communications still feature heavily (accounting for well over 20%).

• There's a significant up-tick in final orders – 17 cases, up from 5 last year. Only one case, in the semiconductor space, required divestment but 5 deals were abandoned after call-in. Whilst Defence and Military/Dual-Use still top the numbers of final orders, Energy projects amounted to the sixth highest number (5).

• The largest number of final orders involved UK-based investors, followed by China and the USA. However, of those UK investors, a relatively large number involved corporate links associated with other countries.

• Whilst time taken from call-in to final order is up, caution should be used in drawing any trends yet, given the relatively small number of final orders last year.

So, largely a continuation of existing trends – but watch this space for more changes afoot in the NSI Act space, intended by Government to make the regime more targeted whilst also supporting its "pro-growth" agenda.

The National Underground Asset Register (NUAR) is a digital map of underground infrastructure such as pipes and cables. It's expected to be fully operational by the end of 2025, although it will not be fully comprehensive until 2027. Our briefing explains the NUAR in more detail, but the key points for investors and operators to be aware of are as follows:

The transition to net zero requires consumers as well as business to start using low carbon technology, ranging from new types of heating such as heat pumps and heat networks through to charging infrastructure for electric vehicles.  Consumers are protected by a combination of sector-specific measures and general UK consumer law – both of which have seen recent changes.

For example, UK consumer law has recently undergone a significant overhaul as a result of the Digital Markets, Competition and Consumers Act 2024 (DMCCA), most of which came into force in April 2025. In particular, there have been important changes to the law on presentation of prices, fake or misleading consumer reviews and subscription contracts. Meanwhile, from 27 January 2026, a new sector-specific regulatory regime will see heat networks being required to comply with new consumer protection obligations. We look at what investors and operators in the infrastructure and energy sectors need to watch out for.

Heat networks

Historically, heat networks have not been regulated in the same way as other utility providers – although they were subject to general consumer protection legislation. However, from 27 January 2026, a new supervisory regime will be introduced under the Energy Act 2023, with Ofgem as regulator. Among other things, this will require heat network operators – and some landlords – to comply with specific consumer protection obligations relating to:

• pricing and billing

• performance standards and compensation

• unbundling of the service charge from heat supply (so consumers can easily see how much their heating/hot water is costing); and 

• treatment of vulnerable consumers, such as the elderly or disabled.

Ofgem will be able to enforce these obligations as licence conditions i.e. in more serious cases, it will be able to impose fines and require consumer redress payments. For more detail, see our briefing: Heat networks: less than 3 months until "go live" date for regulation

Fake or misleading consumer reviews

Customer service is now a key driver of competition between utility providers – and firms will often point to consumer reviews as evidence of high levels of customer satisfaction. Although regulators are likely to welcome such competition, they are also keen to ensure that reviews are genuine and that aggregate review information (e.g. "average rating 4.8 stars") is fairly presented.  The DMCCA has introduced a new requirement on businesses to take reasonable and proportionate steps to prevent publication of fake or misleading review information. As we explain in our briefing, this new duty is likely to require most businesses to take at least some action to comply – and now that the DMCCA has been in force for over 6 months, the CMA will be looking for potential enforcement targets.

Greenwashing

With many consumers keen to "do their bit" for the environment, promoting the "green attributes" of a particular product or service is an attractive marketing strategy. However, regulators have taken action against businesses over potentially misleading environmental claims. Examples include the CMA's 2023-4 investigation into boiler manufacturer Worcester Bosch, which agreed to amend its marketing practices relating to its description of its boilers as "hydrogen blend ready". The CMA has also published guidance to the heating and insulation sector on misleading green claims. It's worth noting that the Worcester Bosch case predated the DMCCA;  if a similar case came to the CMA's attention now, it would not only be able to order the relevant business to change its practices (without having to go to court, as previously) but also impose a fine for non-compliance and, potentially, require compensation to be paid to any consumers who had been misled.

The EU Carbon Border Adjustment Mechanism ("CBAM") Regulation introduced an innovative framework to discourage the offshoring of manufacture of carbon intensive goods destined for the EU.  But as we explain below, it has recently been modified in response to concerns that it was overly burdensome for business.

EU simplification measures

Earlier this year, the European Commission put forward two 'Omnibus' legislative packages, designed to simplify existing legislation in the fields of sustainability and investment, respectively. The first package - “Omnibus I” – proposed several simplification and cost efficiency compliance improvements to the CBAM, aiming to reduce its regulatory and administrative burden whilst preserving its environmental integrity (i.e. ensuring that it covers the majority of emissions). The changes to the CBAM Regulation became effective on 20 October 2025.

What next?

The Commission launched a call for evidence in August aiming to gather stakeholder views on three central elements of the mechanism that still need to be finalised:

• the methodology for calculating embedded emissions;

• the rules on adjustment of CBAM certificates to reflect ETS free allocation; and

• the rules on the deduction of the carbon price paid in a third country.

The Commission announced plans in July to introduce a new measure to address the risk of carbon leakage for EU-manufactured goods produced in sectors affected by the CBAM. Although details have not yet been published, the proposal, expected by the end of 2025, should support producers of carbon intensive goods and improve the efficiency of the mechanism, even in the context of wider regulatory simplification. Seemingly separately, the Commission is also seeking views on the extension of the CBAM into downstream products rather than just raw materials, and to introduce further anti-circumvention measures.

The recent changes to the CBAM, and the proposal for its extension, reflect a growing tension between the EU's efforts to reduce the regulatory burden imposed on industry by regulations such as the CBAM and the achievement of its broader climate goals, which – though currently experiencing some turbulence – remain in place.