Ofgem proposes upfront fees for data centre grid connections

July 29, 2026

has proposed forcing data centre developers to pay significant upfront fees to secure a grid connection.

The deposit would range from £237,500 to £712,500 per megawatt of capacity requested.

A data centre seeking 1 gigawatt of power — the scale of the largest projects — would need to put up hundreds of millions of pounds, refundable only if the project is completed.

Developers could provide the financial security through , or cash deposits, demanded when they receive a connection offer and returned when the data centre switches on.

Under the proposal, reserving 500 megawatts of capacity would cost £350 million.

Projects would also need to hit , including securing customers and financial backing, or lose their place in the queue.

The amount of electricity capacity requested by projects seeking grid connections has risen from 41 gigawatts to 125 gigawatts in the past year.

That is more than double Britain's peak electricity demand in 2025 of around 46 gigawatts.

There are currently 315 data centres queueing to connect, representing 73 gigawatts of demand — almost 30 gigawatts above the entire country's peak demand of 45 gigawatts.

In February, reported 140 proposed data centres with energy demands of 50 gigawatts; both numbers have risen since.

The grid operator Neso has already cleared stalled from the queue for renewable developers, removing schemes without planning permission or financing.

Residents near proposed data centre sites have raised concerns about noise, electricity demand and the large amounts of water sometimes used for cooling.

has opened a consultation on the proposals, running until 16 September.