Key facts
- UK energy regulator Ofgem is concerned data centers are hoarding grid capacity.
- Data centers' demand for grid connections has surged, exceeding forecasts and potentially delaying other projects.
- Around 140 proposed data center projects could require 50 gigawatts of electricity, surpassing current national peak demand.
- Ofgem is proposing stricter financial and readiness tests for data center developers to filter out speculative applications.
- The regulator is considering charging data center providers for grid access or having them build their own infrastructure.
The UK's energy regulator, Ofgem, has raised concerns that data centers are reserving significant amounts of grid capacity years in advance of their actual needs. This practice is exacerbating the strain on the national electricity network, which is already facing long queues for new connections. Ofgem noted that some developers may be securing their eventual electricity requirements before reaching full demand, potentially leaving capacity underutilized while other new projects await access.
Driven by the increasing demand for artificial intelligence, approximately 140 proposed data center projects could collectively require 50 gigawatts of electricity. This figure exceeds Great Britain's current peak electricity consumption by 5 gigawatts. The surge in applications for grid connections, particularly from data centers, has outpaced even the most ambitious forecasts. This situation poses a challenge to the UK's goal of achieving a virtually carbon-free power system by 2030, as the energy required for these facilities could necessitate increased reliance on fossil fuels.
In response, Ofgem is considering reforms to the grid connection process. These include implementing stricter financial and readiness tests for data center developers to filter out speculative projects. Proposed measures involve refundable deposits tied to delivery milestones, progressive commitment fees, upfront non-refundable deposits, and evidence of secured financing or planning permission. The regulator is also exploring charging data center providers for grid access or requiring them to build their own infrastructure to accelerate connections and reduce the backlog. Ofgem expects to publish its position on these initial reforms in spring 2026, with broader reforms for all demand sectors to follow.