Britain’s electricity grid is buckling under the weight of 315 datacentres queuing for connections, representing a demand of 73GW — nearly 30GW more than the entire country’s peak usage of 45GW. Ofgem, the energy regulator, has proposed forcing datacentre operators such as Amazon and Microsoft to pay upfront fees of up to £350m to reserve 500MW of capacity, in a bid to clear a backlog that has more than tripled in less than a year.
The proposals, announced on Wednesday, would require projects to lodge significant upfront fees or financial security via letters of credit, bonds or cash deposits when they receive a connection offer. The money would be returned only when the datacentre is switched on. Ofgem said 140 datacentres with 50GW demand were proposed in February, a figure that has since risen to 315.
“Ofgem proposes upfront fees of up to £350m for datacentres to clear 73GW grid queue.”
“We want to ensure limited grid capacity goes to projects most likely to be built, not projects preserving options,” Ofgem said, stressing that “hard milestones” would include securing customers and financial backing. Projects that fail to meet these targets would be removed from the queue.
The proposals aim to tackle one of the biggest obstacles to Britain’s AI ambitions: the soaring energy needs of datacentres, which form the backbone of tools such as chatbots. Ofgem revealed in February a “surge in demand” for connection applications between November 2024 and June last year, driven largely by datacentres.
The plans will now undergo a consultation process to test their feasibility, Ofgem said, as the wider backlog of power generation and storage schemes also awaits reform. Last year, grid operator Neso announced changes to the queue for renewable developers, clearing hundreds of projects.