Britain's energy regulator Ofgem has put forward new measures that could require data centre developers to pay hundreds of millions of pounds in refundable deposits before connecting to the electricity grid, according to a BBC report. The proposal targets a surge in speculative projects seeking grid capacity amid the artificial intelligence boom.
Deposit Structure and Scale
Ofgem is proposing a refundable fee between £237,500 and £712,500 per megawatt (MW) of requested power capacity. For a data centre seeking 1 gigawatt (GW) of power, this translates to deposits of hundreds of millions of pounds upfront, which would be returned if the project reaches completion. The exact amount depends on the connection size and risk profile.
Grid Connection Queue Surge
The regulator reported that the amount of electricity capacity requested by projects seeking grid connections has rocketed from 41 GW to 125 GW in the past year. That is significantly more than double the UK's peak electricity demand of around 46 GW in 2025. Ofgem said the proposals aim to tackle "speculative projects from securing scarce network capacity without any firm intention to connect."
| Metric | Value | Source |
|---|---|---|
| Proposed deposit per MW | £237,500 – £712,500 | Ofgem proposal |
| Electricity capacity requests (past year) | 41 GW → 125 GW | Ofgem |
| UK peak electricity demand (2025) | ~46 GW | Ofgem |
| Data centres in UK | 564 | Data centre map |
| Data centres in planning in Scotland | 24 | Data centre map |
Consultation and Timeline
Ofgem has launched a consultation on the proposals, which will run until 16 September. Developers will need to hit key milestones to retain their place in the grid connection queue, which has seen a surge in demand. The regulator is seeking feedback from industry and the public before finalising the rules.
Industry and Local Concerns
Data centres are large buildings housing computer servers that store and process data, powering digital services and AI workloads. While essential for the AI boom, they have drawn growing opposition from residents in parts of the country. Concerns include noise, high electricity demand, and the large amounts of water sometimes used to cool high-performance chips that generate vast amounts of heat.
Scotland is viewed as a favourable location for future data centre projects due to its abundant renewable energy supply. There are currently 24 data centres in the planning process in Scotland, according to the data centre map.
Regulator's Statement
Eleanor Warburton, Ofgem's director for energy system design and development, said: "Britain's electricity demand connections queue has more than tripled in size in less than a year, and consumers should not bear the risks created by speculative projects taking up space in the system."
