Ofgem has proposed new grid connection rules that could require data centre developers to pay deposits worth hundreds of millions of pounds upfront.
The UK energy regulator is considering a refundable fee for projects seeking to connect to the electricity network, as demand for grid connections continues to rise.
Under the proposal, developers would pay between £237,500 and £712,500 per megawatt of requested capacity. A data centre seeking a 1 gigawatt (GW) connection could therefore face an upfront deposit of between £237.5m and £712.5m. The money would be returned if the project reached completion.
Ofgem’s proposals come amid growing opposition to new data centre developments in parts of the UK. These facilities are increasingly needed to provide the computing power required for the rapid expansion of artificial intelligence.
Data centres are large facilities that house computer servers. They store and process data and support the digital services that underpin much of the internet.
Ofgem has opened a consultation on the proposed data centre grid connection fees, which will remain open until 16 September.
The regulator said the amount of electricity capacity requested by projects seeking to connect to the grid had increased from 41 GW to 125 GW in the past year, highlighting the sharp rise in demand for electricity connections.
The figure is more than double Britain’s peak electricity demand in 2025, which was approximately 46 GW.
Ofgem also said projects would need to meet key development milestones to retain their position in the electricity grid connection queue, where demand has surged.
Data centres have been built in increasing numbers around the world to supply the computing power needed to train and operate artificial intelligence systems.
However, the developments remain controversial, particularly among communities located nearby.
Residents have raised concerns about noise, high electricity consumption and the substantial quantities of water sometimes required to cool high-performance computer chips, which generate significant amounts of heat.
Source: www.bbc.co.uk