Over 315 proposed data centre developments are now queuing for an electricity grid connection in Britain. If they all hooked up to the grid, Britain would need to nearly double the power it generates to meet their needs.

That’s according to energy regulator Ofgem, which is proposing an upfront fee of up to £712,500 for each MW sought by prospective data centre operators, in a bid to filter out “speculative” applications for connections.

The proposal [pdf] from Ofgem comes as grid connection applications tripled in under a year to June 2025 to 125GW.

Data centre projects account for “at least 80GWs,” of that, said Ofgem in a July 29 press release.

(That 80GWs figure is a mistake, a spokesperson subsequently told The Stack, after we clarified some inconsistencies in the figures provided, saying "73GW is the best estimate we have from NESO as the system operator.")

Regardless, the figure is striking: Peak electricity demand in 2025/26 was an estimated 45GW – and the data centre development pipeline represents £693 billion of implied total CapEx, said Ofgem; equivalent to a quarter of UK GDP.

Ofgem is concerned that a “significant number of projects in the queue may not ultimately proceed… delaying viable developments and creating misleading signals about future network investment needs,” it said.   

40MW+ projects targeted

The proposal would affect data centre projects of over 40MW. The fee would be returned if the project “proceeds as planned but forfeited if the project terminates or fails to comply with… requirements," said Ofgem.

Ofgem is also consulting on milestones that would force data centre developers to ”demonstrate tangible progress through evidence such as financial capability, commercial maturity and procurement activity.”

This might include “demonstrating a credible compute customer or end-user, procurement of long-lead electrical equipment, financial capability, and technical readiness. Separate pathways are proposed for self-operated facilities and projects intended for lease or sale.”

The consultation closes September 16. All documentation is here.

“Demand Connections Reform”

The moves are part of a combined “demand connections reform” programme being run by the Department for Energy Security and Net Zero (DESNZ), the National Energy System Operator (NESO) and Ofgem.

Adhum Carter Wolde-Luhl, Director and Chief Strategy Officer for Prism Power Group, a  provider of electrical switchgear and power infrastructure, told The Stack: “There’s obviously a problem to fix here. 

“Demand applications have tripled to 125GW in under a year, and nobody in this industry believes all of that is real. We build the power infrastructure behind these projects, so we see which ones are actually ordering equipment and which are just sitting in a queue position," he added.

"My worry is the level of the fee. On a 50MW project you’d need to find somewhere between £12m and £36m just to accept a connection offer… The mid-sized and edge operators mostly can’t [sign that cheque], and they’re often the best fit for a constrained grid because they build in small modular tranches. Milestone tests would do the filtering job better…”

"Hands the grid to the hyperscalers"?

Elliott Meighan, energy consultant at Equity Energies said: “It's tempting to say this hands the grid to the hyperscalers, and on first glance a refundable deposit worth hundreds of millions might seem to favour the biggest balance sheets. But because it's refunded on connection and sits alongside the ongoing readiness tests, a deep-pocketed applicant with a thin project behind it isn't going to sail through the process either. That is the important part, and incidentally, the part that is easily overlook…”

He told The Stack: “The practical response to Ofgem's proposal is unglamorous but decisive: build the evidence from the outset, don't over-reserve capacity you then have to pay to retain, and review whether some of that demand pressure could be met through other means, like on-site generation and storage, rather than fight for capacity in the queue."

A big upfront commitment...

In relation to the £/MW fee, Ofgem is proposing £237,000/MW to £712,500/MW. A yet-to-be-built data centre with 100MW of import capacity… would need to pay a data centre commitment fee (DCCF) of £23,700,000, noted Alex Whiter, a partner at law firm Burges Salmon. 

He wrote today: “Ofgem believes the £/MW fee (when multiplied by capacity) represents between 2.5% and 7.5% of its assessment of an average GB data centre project’s capital expenditure of £9,500,000 per MW.”

That’s far higher than benchmarks “of €40,000 per MW based on the Spanish Government’s approach, $50,000 per MW figure from Texas, USA and an $70,000 per MW figure from Georgia, USA,” he noted.

The proposal, he concluded, is evidence of the regulators' "desire to reduce rapidly the number of data centre projects in the GB connection queue."

Smaller DCs still have ample capacity

Rob Garbutt, MD at co-location provider Asanti told The Stack: “It’s important to recognise that the UK isn’t universally out of capacity.”

“Hyperscale projects may be facing 7–10 year grid timelines, yet real, connected, ready‑to‑use capacity already exists at the edge today…

“The market is uneven: London‑centric hyperscale demand is tight, but regional edge facilities with secured power can support workloads immediately, without waiting for future CCGTs or long‑lead transmission upgrades. If Ofgem’s proposal helps prioritise real projects over paper ones, that’s a positive step, but the conversation shouldn’t ignore the fact that deployable UK data centre capacity is available right now…”

Pressed by The Stack on the fact that most data centres with capacity simply can’t handle the GPU-heavy workloads most applicants are seeking to service (which require far more than the 6 kVA per rack many provide) he commented that “with technologies like rear‑door heat exchangers, close‑coupled cooling, and high‑efficiency chilled water loops, it’s entirely feasible to run 15–20 kVA racks at the edge without hyperscale‑scale mechanical plant, with secured grid capacity already in place…” 

Chris Carreiro, CTO, Park Place Technologies, concluded: "The UK has committed £14 billion to large data centres and technology hubs and designated them Critical National Infrastructure, which signals just how central this sector is to national strategy. That level of commitment cannot be undermined by grid capacity sitting locked up against projects that never get built. If speculative applications are blocking genuine, ready-to-deploy projects from securing connections, that is a direct obstacle to the government's own stated ambitions.

"The proposal will not fix the broader supply and demand imbalance on its own, but it addresses a specific and fixable inefficiency: capacity being reserved without commitment. Introducing a financial cost to that behaviour should encourage more honest applications and free up space for developments that are actually going to be delivered. Given the pace at which the sector needs to scale to support the UK's AI ambitions, that kind of discipline in the system is a necessary, practical step rather than a heavy-handed intervention."

Footnote.

Ofgem noted to The Stack that "there is no central register of data centre projects (as defined by the Cyber Security & Resilience Act) because information is fragmented across NESO and network companies (National Grid, SSE, Scottish Power). We are having to reverse engineer the data we get from the (a) the type of data centre model it is; (b) where in planning process it is; and (c) the GW required on the grid; and (d) assessing whether some speculative or unviable projects are more speculative or unviable than others. NESO’s industry analysis is the most accurate picture we have - but clearly it is a fast moving picture. Barbour ABI (last month) and others have credible tracking but we are cautious about comparing apples and pears."

Ofgem's assessment of the "state of the queue."

  • Total contracted offers in the demand queue rose from 41GW in November 2024 to 125GW in June 2025 – with a rise on transmission grid from 17GW to 97GW of projects (Ofgem call for input, Feb 2026)
  • NESO analysis reports 73GW from data centres alone up to 2039 – across 315 projects on the queue. NESO analysis is c59GW are waiting for connection at transmission level.
  • NESO’s Triad Data 2025/26 estimates peak GB electricity demand is 45GW, compared to 73GW of data centre projects seeking grid capacity.
  • NESO’s Future Energy Scenarios 2025’s:
    • 2.4GW connected data centres with estimated 7.6TWh
    • 10-year forecast of 5.2GW of connected data centres with estimated 33Twh demand
    • modelled 3.7GW and 6.3GW of connected capacity and 20TWh of demand by 2030 NESO is explicit the forecasts reflect project attrition, project viability, 
  • Ofgem’s breakdown of the 73GW:
    • Small (0-10MW) – 11 projects – 76MW in total
    • Medium (10-50MW) – 47 projects – 1370MW
    • Large (50-100MW) – 51 projects – 3492MW
    • Extra-large (100-500MW) – 166 projects – 36,632MW
    • Hyperscale (500MW to 1.5GW) – 40 projects – 31,408MW
  • The shift from traditional enterprise data centres to hyperscale/AI scale demand - 500MW is a Sizewell B-level load, 1500MW larger than UK cities peak demand. NESO’s estimates the existing GB data centre size was 12MW in 2025, the vast majority on distribution network.
  • The UK Government’s Compute Roadmap (2025) aims for “at least 6 GW of AI capable data centre capacity by 2030”. The government is aiming to increase AI compute capacity from to two ExaFLOPs in 2024 to 420 ExaFLOPs in 2030. The DSIT AI Growth Zones want to areas 500GW+

See also: Cloud fallout? Nuclear bunker data centre touts "sovereign" security

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