According to WIRED, the UK’s power grid connection queue has become jammed with “phantom” data center projects that will likely never be built. The snarl is exacerbating already years-long wait times for viable projects and messing with attempts to forecast energy demand and plan grid expansions, as developers compete for a share of the hundreds of billions of dollars flowing into the artificial intelligence industry.
Grid Queue Balloons From 41 GW to 125 GW
The UK’s grid connection queue began to balloon toward the end of 2024, around the time the government designated data centers “critical national infrastructure,” WIRED reported. Between November 2024 and June 2025, the total energy demand of projects in the connection queue increased from 41 gigawatts to 125 gigawatts, according to Ofgem. New data centers make up 73 gigawatts of that — equivalent to one and a half times the peak demand for the entire UK last year — and counting.
| Metric | Value |
|---|---|
| Queue demand, November 2024 | 41 GW |
| Queue demand, June 2025 | 125 GW |
| Data center share, June 2025 | 73 GW |
| UK peak demand equivalent | 1.5x |
The government has said it believes much of that demand is a mirage, WIRED reported.
Ofgem’s Plan: Deposits, Customers, Proof of Funding
In July, the UK energy regulator Ofgem laid out a proposal meant to force phantom data centers out of the swollen queue, WIRED reported. The plans, set to be finalized after an industry feedback process that ends in September, would require developers to:
- Put down a steep, nonrefundable deposit that could balloon to hundreds of millions of dollars for the very largest data centers.
- Line up customers in advance.
- Prove they have the funding to complete their builds.
However, Ofgem faces a “Goldilocks conundrum,” according to WIRED: the reforms must be burdensome enough to deter speculators but not so much that they drive legitimate data center projects to other shores, undermining the UK’s ambitions to meet the voracious demand for the compute required to run sophisticated AI models.
Nathan Macwhinnie, deputy director of strategic planning and connections at Ofgem, said in a statement: “We recognize data centers are a key part of the UK's AI ambitions and future economic growth. Enabling viable data centers to connect more quickly is an enabler of this.” Ofgem says it will take into account industry concerns before settling on a fee, but differences between international energy markets make like-for-like comparison difficult, WIRED reported.
‘We Don’t Want to Shoot the Golden Goose’
The frenzied data center buildout “is bringing a huge amount of capital investment into the UK,” says Alex Burgoyne, head of data centers at real estate consultancy Knight Frank. “We don’t want to shoot the golden goose.”
It’s absolutely insane. No one really understands … what the real grid demand will be because of these phantom projects.
— Taco Engelaar, managing director at grid optimization company Neara
Olivier Darmouni, associate professor of finance at HEC Paris Business School, who has published research on the impact of AI on power grids, said: “They have to treat every project as serious when they try to study whether the system can handle them.” The more speculative projects are especially damaging because they make these studies harder, WIRED reported.
Industry experts believe Ofgem’s reforms risk making the UK — already unattractive for the high cost of energy and dearth of land — one of the world’s most expensive places to build a data center, according to WIRED. Data center developers face delays almost everywhere; similar grid congestion issues afflict the US and countries across Europe. But whereas the US is a highly desirable market, the UK’s position is more precarious.
Why Phantom Projects Accumulate
The crowded queue is largely the product of an incentives problem, WIRED reported. Because developers face a years-long wait for grid access, and it has previously cost only a few thousand dollars to join the queue, they might as well apply for power, even if they do not have a watertight plan to develop a site. It’s a no-downside bet that allows developers to hedge for a future in which demand for compute remains sky-high.
Because grid operators have to account for the combined effect of large infrastructure proposals on network stability before granting individual connections, phantom data centers can exacerbate already-lengthy delays for viable projects. For commodity and energy traders, the queue balloon signals rising uncertainty in UK electricity demand forecasting, which complicates grid expansion planning and investment decisions across the power sector.
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