Data centre developers could be forced to lodge millions of pounds in financial commitments before securing electricity grid capacity, under plans to remove speculative projects from Britain’s connections queue.
Ofgem is proposing a refundable Data Centre Commitment Fee alongside tougher delivery milestones after applications for new demand connections more than tripled in less than a year.
Contracted demand increased from 41GW in November 2024 to 125GW by June 2025, with data centres accounting for at least 80GW of the total. Ofgem said around 73GW of data centre demand is currently referenced in its consultation.
That is far above Britain’s peak electricity demand of around 45GW and has raised concerns that developers are reserving scarce network capacity for schemes that may never be built.
Under the proposals, large data centre projects would pay between £237,500 and £712,500 for every megawatt of capacity requested. The sum would represent around 2.5% to 7.5% of average project costs.
A 500MW development could therefore be required to provide financial security worth more than £350 million.
The money could be provided through cash deposits, bonds or letters of credit when a developer accepts a connection offer. It would be refunded once the data centre is energised but forfeited if the project leaves the queue early.
Developers would also need to meet specific milestones demonstrating financial capability, commercial maturity and procurement activity.
Projects that failed to show credible progress could lose their place, freeing network capacity for schemes more likely to be delivered.
Ofgem Director for Energy System Design and Development Eleanor Warburton 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.
“The connections system must work for consumers and for the projects that are ready to invest, build and connect.”
Ofgem is concerned that speculative applications are delaying viable developments and producing misleading signals about how much grid infrastructure Britain actually needs. The explosion in applications has been driven largely by the race to build computing capacity for artificial intelligence, cloud services and other digital infrastructure.
The reforms form part of a wider programme involving Ofgem, the Government and NESO, to curate the queue, prioritise strategically important projects and accelerate physical connections.
Ofgem said previous reforms have already brought forward 7.8GW of projects by an average of six years. The consultation closes on 16 September.
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