UK Data Centre Grid Connections: Ofgem Queue Rules

10 Aug 2026

Ofgem wants data centre developers to provide stronger evidence that projects are commercially credible, technically viable and progressing towards delivery. Its proposals include a substantial commitment fee and new milestones covering customers, finance and electrical equipment procurement.

Britain’s data centre pipeline has expanded faster than the electricity connections system can comfortably accommodate.

Ofgem reports that contracted demand connection offers across Great Britain increased from 41GW in November 2024 to 125GW in June 2025. Its consultation document identifies approximately 73GW across around 315 data centre projects, while the accompanying press release uses the broader figure of “at least 80GW”. The precise reason for the difference between the two figures is not explained.

Not all this capacity is expected to be built or used. A connection offer represents capacity requested from the network, rather than an operational data centre consuming electricity.

Ofgem is therefore consulting on proposals designed to identify projects with credible evidence of delivery and remove developments that fail to progress.

The consultation opened on 29 July 2026 and closes on 16 September 2026. The measures remain proposals and are not currently in force. Ofgem expects to make decisions later in 2026.

Ofgem’s data centre proposals at a glance

Measure	Proposed application	What developers may need to provide	Possible consequence
Commitment fee	Qualifying data centre projects of 40MW or more	Financial security of £237,500 to £712,500 per MW	Fee could be forfeited if capacity is cancelled, reduced or changed from data centre use
Early project milestone	Data centres with at least 10MW rated IT load	Chosen operating pathway and initial evidence of a prospective computing customer	Removal from the connections queue
Procurement milestone	Data centres with at least 10MW rated IT load	Evidence of orders or commitments for long-lead equipment	Removal from the connections queue
Financial and technical milestone	Data centres with at least 10MW rated IT load	Financial support, recognised technical evidence and, for some projects, binding customer commitments	Removal from the connections queue

These thresholds, fee levels and requirements remain subject to consultation.

Why has the data centre connection queue grown?

Demand for cloud computing, artificial intelligence, data storage and digital services is supporting the development of larger and more electricity-intensive facilities.

The UK Government’s Compute Roadmap set an ambition for at least 6GW of AI-capable data centre capacity by 2030. Other projections vary considerably but consistently point towards increasing electricity demand.

NESO’s Future Energy Scenarios 2025 estimated that data centre electricity consumption in Great Britain could rise from 7.6TWh in 2024 to between 20TWh and 41TWh by 2035. Oxford Economics separately projected UK consumption rising from 5TWh in 2023 to 26.2TWh in 2030. Differences in geography, definitions and assumptions explain some of the variation between forecasts.

Developers also have sound commercial reasons for applying for electricity capacity early. Grid access can influence:

Site selection
Planning and technical design
Investor support
Customer agreements
Equipment procurement
Construction programmes
The commercial value of a development

However, the volume of contracted capacity now extends considerably beyond what is likely to be completed within current timescales.

Ofgem’s consultation identifies data centre connection requests ranging from 1MW to 1,500MW. It also reports that at least 9GW of capacity changed classification from battery storage to data centre use between May 2024 and August 2025. Ofgem does not state how many individual projects were involved or whether those developments will proceed.

“Power is now the primary constraint.”

Huw Owen, Chief Executive Officer, Ark Data Centres, February 2026.

Does an 80GW pipeline mean data centres will consume 80GW?

No.

The figure represents connection capacity associated with projects seeking or holding offers. It does not mean every project will be constructed or that completed facilities would use 80GW simultaneously.

Several definitions matter:

Term	What it means
Connection capacity	The maximum electrical capacity requested or agreed for a development
Rated IT load	The power allocated specifically to computing equipment
Total facility demand	IT load plus cooling, lighting, resilience systems and other infrastructure
Operational demand	The electricity a completed facility uses at a particular time
Electricity consumption	The amount of energy used over a defined period
Coincident peak demand	The combined demand placed on the network when multiple facilities reach their peaks simultaneously

Ofgem puts peak Great Britain electricity demand during 2025/26 at approximately 45GW, but uses this to illustrate the scale of the queue. It is not a like-for-like comparison with the requested data centre capacity.

What is Ofgem proposing?

The consultation, titled Curate: Demand Connections Reform, contains two principal measures for data centres.

1. A Data Centre Commitment Fee

Ofgem proposes a refundable financial commitment for qualifying projects.

The fee would range from £237,500 to £712,500 per MW, based on 2.5% to 7.5% of an assumed average data centre capital cost of £9.5 million per MW.

The £9.5 million figure is a modelling assumption used by Ofgem. It should not be treated as the verified cost of every data centre development.

The commitment fee would apply to transmission projects and relevant distribution projects of 40MW or more. Ofgem selected that threshold because it says 99% of the capacity currently in the queue relates to projects above 40MW.

How could the security be provided?

Developers could provide the required security through:

A performance bond or letter of credit from a qualifying bank
A cash deposit
A performance bond from a qualifying company

The security would remain in place from acceptance of the relevant connection offer until the project is energised.

If the development progresses as a data centre, the fee would be returned at energisation. It could be forfeited if the developer:

Terminates the connection agreement
Reduces the capacity requested
Changes the project away from data centre use

Where capacity is reduced, the portion of the fee relating to the removed capacity could become payable. Security for the remaining capacity would then be recalculated.

Ofgem proposes returning forfeited funds to consumers through reductions in Transmission Network Use of System charges.

What could the fee mean in practice?

Project capacity	At £237,500 per MW	At £712,500 per MW
40MW	£9.5 million	£28.5 million
100MW	£23.75 million	£71.25 million
500MW	£118.75 million	£356.25 million

These are illustrative calculations based on Ofgem’s proposed range. They are not final charges and would not necessarily need to be provided entirely as cash.

Ofgem’s modelling suggests that the financial effect would become more significant for projects with later connection dates.

For a modelled 100MW development, Ofgem estimated a reduction in internal rate of return ranging from 20 basis points for some nearer-term scenarios to 170 basis points for a 2035 connection at the highest proposed fee level using a cash deposit.

The calculation depends on Ofgem’s assumptions and may not reflect the financing structure of individual developments.

2. New data centre progress milestones

The second part of the consultation would require developers to demonstrate that projects are progressing commercially, technically and financially.

The milestones would apply to facilities with a rated IT load of at least 10MW.

Early customer evidence

Six months after signing a connection agreement, a developer would select one of two routes:

Self-operation
Lease or sale

A developer following the lease or sale route would initially need to provide non-binding evidence of interest from a prospective computing customer. This could include heads of terms or a memorandum of understanding.

Long-lead equipment procurement

At a later milestone, developers would need to provide evidence that long-lead electrical equipment is being procured.

Ofgem identifies transformers and switchgear as relevant examples. Evidence could include:

A purchase invoice
An executed contract
A binding supplier commitment

Financial and technical capability

At a further project stage, developers could be required to demonstrate:

An investment-grade credit rating or legally enforceable credit support
Technical capability evidenced through recognised standards or certifications
Binding customer commitments for projects following the lease or sale route

The consultation refers to EN 50600, TIA-942 and Uptime Institute Tier certification as possible forms of technical evidence.

For binding computing demand, Ofgem’s current position is to consider evidence covering 20% of capacity for at least one year. That requirement remains open to consultation and has not been finalised.

A developer would be allowed to change its chosen pathway once, followed by a six-month period to provide the relevant evidence.

Failure to meet one of the proposed milestones could result in removal from the connections queue. The consultation does not specify a formal appeals process. Assessments would be undertaken by NESO or the relevant distribution network operator.

Proposed connection journey

A simplified version of the proposed process would look like this:

Connection application submitted
Connection agreement signed
Operating pathway selected
Initial prospective customer evidence provided
Long-lead electrical equipment secured
Financial and technical capability demonstrated
Connection offer accepted and commitment fee secured
Network and data centre construction progresses
Project reaches energisation
Commitment fee returned if the development proceeds

Projects that fail to meet the proposed evidence requirements could lose their position in the queue.

Why equipment procurement matters

Requiring evidence of procurement could provide a practical indication that a project is moving beyond an early development concept.

Data centres depend on substantial power and resilience infrastructure, including:

High-voltage transformers
Switchgear
Substations
Cables
Protection and control systems
Uninterruptible power supplies
Backup generators
Cooling and heat-rejection systems

Many of these components must be specified and secured long before installation.

Research cited in Ofgem’s wider supply-chain analysis indicates that transformer lead times have increased by 75% since 2021, while cable lead times have doubled. Other industry evidence puts the average lead time for large power transformers at 128 weeks, with some manufacturers quoting considerably longer periods.

Indicative supply-chain lead times identified in the research include:

Equipment	Reported lead-time range
132kV transformers	Around 18 months
400kV transformers	Around 24 months
Switchgear	Six to 12 months
Uninterruptible power systems	30 to 48 weeks
Diesel generators of 2MW or more	52 to 80 weeks

These are broad industry indications rather than guaranteed procurement periods. Voltage, specification, manufacturing capacity and market conditions will affect individual orders.

Early procurement may demonstrate commitment, but it also introduces risk. Equipment could need to be ordered before planning, finance, customer agreements and final connection arrangements are fully resolved.

What makes a connection application speculative?

Ofgem’s proposals are intended to remove non-viable developments from the queue, but “speculative” should not automatically be read as fraudulent.

A project may lack delivery certainty because:

A final end user has not been secured
Finance remains incomplete
Land or planning permission is unresolved
Several possible locations are being considered
The requested capacity is not supported by a detailed technical design
Equipment procurement has not started
There is no firm construction or energisation programme

There are also legitimate reasons for applying at an early stage.

Developers often need connection certainty before investors, computing customers and equipment suppliers will commit. Long connection lead times can make an early grid application commercially necessary, even while other parts of the development remain unresolved.

This creates one of the central tensions within Ofgem’s proposals.

The connection certainty problem

Several legal commentators have highlighted a potential circularity in the proposed milestones.

A developer may need a credible connection date before a computing customer will sign a binding agreement. The developer may then need that agreement to retain its grid position.

Vinson & Elkins describes this as a dependency loop where financing depends on the connection date, while connection certainty depends on financing. Watson Farley & Williams identifies a similar “chicken and egg” problem between customer commitments and grid access.

The effect may differ by business model.

A large organisation planning to operate its own facility may already have the end use, balance sheet and technical resources needed to demonstrate progress. An independent developer intending to lease capacity could face greater difficulty securing customers before the electricity connection is sufficiently certain.

“We’re consulting on stronger requirements to ensure projects demonstrate real commitment before securing scarce network capacity.”

Eleanor Warburton, Director for Energy System Design and Development, Ofgem, 29 July 2026.

How has the industry responded?

There appears to be broad support for making the grid queue more credible, but the size and structure of the proposed fee have attracted concern.

techUK welcomed the principle of reform and described the connections queue as one of the most significant barriers to UK data centre development. However, the association warned that the proposed commitment fee risks making the UK less attractive as an investment destination.

Legal analysis has also identified concerns about:

Large amounts of capital being tied up
Borrowing capacity being diverted away from construction
Disproportionate effects on independent developers
New requirements being applied to existing connection offers
Limited opportunities to remedy missed milestones
The absence of a stated force majeure provision
The lack of detail on interest for cash deposits
Greater market concentration among well-capitalised developers

Watson Farley & Williams argues that large hyperscalers and infrastructure funds may be better able to absorb the financial commitment than independent developers or joint ventures.

Vinson & Elkins warns that the proposed security could consume borrowing capacity otherwise available to fund construction.

These remain stakeholder predictions. The actual effect will depend on the final fee, accepted forms of security, implementation date and treatment of existing projects.

Could developers seek alternatives to a conventional grid connection?

Connection delays are already encouraging some developers to investigate alternative energy arrangements, including:

Private-wire electricity supplies
Behind-the-meter generation
On-site microgrids
Direct renewable-power arrangements
Connections to the gas network

Legal commentators have suggested that a substantial commitment fee could increase interest in these options, particularly among developers seeking greater control over their electricity supply and development timetable.

These approaches bring their own challenges. Developers must finance and operate additional infrastructure, while gas-fired power could create tension with energy-efficiency and decarbonisation objectives.

Ofgem’s consultation does not provide a detailed assessment of how the proposed measures could affect behind-the-meter development.

How do the proposals fit into wider grid reform?

The data centre consultation forms part of Ofgem’s wider Curate, Plan, Connect programme.

Curate

Identify projects with credible evidence of progress and remove or deprioritise those that do not meet the requirements.

Plan

Create a more realistic picture of future electricity demand so network investment can be planned more effectively.

Connect

Improve connection outcomes for developments that are ready and able to proceed.

The approach follows the TMO4+ reforms introduced for generation and storage projects in June 2025. Those reforms moved the system away from a simple first-come, first-served model towards project readiness and strategic alignment.

NESO’s reformed queue, published in December 2025, included 283GW of generation and storage projects and approximately 100GW of transmission-connected demand. More than 300GW of projects were deprioritised after failing to meet the relevant criteria.

The data centre proposals would apply a similar principle to large electricity users. A connection position would need to be supported by evidence that the development is moving towards delivery.

Would existing data centre projects be affected?

Yes, under the current proposals.

Ofgem envisages applying the measures to existing and future connection offers, although some transitional protections are proposed.

These include:

An exemption for projects expected to energise within six months of implementation
A three-month grace period for signed offers
A two-month grace period for unsigned offers
Milestone exemptions for projects already beyond the relevant stage
A six-month milestone extension for some existing projects
The opportunity to terminate before implementation without paying the fee

The implementation date has not been confirmed.

Stakeholders are expected to argue that some or all of the measures should apply only to future projects, particularly where investment decisions were made under the existing arrangements.

Where is data centre pressure concentrated?

London and the Thames Valley remain the largest established UK data centre market, accounting for an estimated 75% to 80% of UK colocation capacity. Slough is the densest cluster within that market.

The area also faces severe connection constraints, with lead times in west London and Slough reported at more than 10 years in some cases.

This is encouraging developers to consider locations outside the established market, including:

South Wales
The North East
The North West
Scotland
Cumbria

The Government has designated AI Growth Zones intended to support data centre and computing infrastructure. A 720MW campus has also been proposed at Cambois in Northumberland.

New locations may offer land, electricity generation and economic incentives, but they can also face constraints involving:

Transmission capacity
Fibre connectivity
Planning
Equipment availability
Construction capability
Specialist workforce availability

What could the proposals mean for engineering delivery?

A more credible connections queue could help clients, contractors and suppliers plan against developments with stronger evidence of delivery.

It would not remove the underlying infrastructure challenge.

A mature data centre programme still requires land, planning, finance, customers, network capacity, technical design, equipment and workforce capability to progress together.

Grid and electrical infrastructure

Relevant capability includes:

Power systems engineering
High-voltage connection design
Substations
Protection and control
Cable systems
Grid compliance
Testing and commissioning

Design and construction

Data centre delivery also requires:

Mechanical and electrical building services
Cooling and ventilation
Civil and structural engineering
Project controls
Cost and commercial management
Procurement
Construction management
Quality and safety assurance

Operations and resilience

Once operational, facilities require:

Facilities engineering
Reliability and maintenance
Energy management
Controls and automation
Cyber and physical security
Emergency power
Operational assurance

Data centre demand does not exist in isolation. Employers compete for many of the same specialists needed by grid programmes, energy projects, advanced manufacturing and other forms of critical infrastructure.

The IET’s 2025 skills survey found that 76% of engineering employers were struggling to recruit for key roles. Separate data centre research cited by JLL indicated that 46% of operators had difficulty finding qualified candidates.

Demand is particularly strong for power-network design engineers, commissioning engineers, project managers, installers, electricians, cable jointers and senior authorised persons.

Developing a fully qualified power networks engineer can require between three and seven years of post-university experience, placing a natural limit on how quickly supply can respond to increasing demand.

What happens next?

The consultation remains open until 16 September 2026.

Ofgem is seeking responses from organisations including:

Data centre developers and operators
Network operators
Investors and funders
Prospective computing customers
Electrical equipment suppliers
Other organisations involved in demand connections

Ofgem expects to make decisions later in 2026 but has not confirmed an implementation date.

The final measures may differ from those currently proposed, particularly around:

The fee level
Accepted forms of security
Milestone evidence
Transitional arrangements
Treatment of existing projects
Opportunities to remedy missed milestones

Millbank’s perspective

Britain’s data centre connection queue demonstrates the scale of interest in new digital infrastructure, but reserved electricity capacity alone does not make a project deliverable.

A credible development must align its commercial case, planning, electrical design, equipment procurement, construction programme and workforce strategy.

If Ofgem’s reforms produce a more realistic pipeline, employers and contractors could gain a clearer basis for planning capability around projects with stronger prospects of progressing.

That planning will need to begin early. Long equipment lead times and sustained competition for high-voltage, commissioning, project controls and technical delivery professionals mean workforce requirements cannot wait until main construction is ready to begin.

Frequently asked questions

What is Ofgem proposing for data centre grid connections?

Ofgem is consulting on a refundable commitment fee for qualifying projects and three new progress milestones. The milestones would require evidence of prospective customers, long-lead procurement, financial capability and technical competence. The proposals are not yet in force.

What would the Data Centre Commitment Fee be?

The proposed fee ranges from £237,500 to £712,500 per MW, based on 2.5% to 7.5% of an assumed project capital cost of £9.5 million per MW. It would apply to qualifying projects of at least 40MW.

Would developers get the fee back?

The security would be returned at energisation if the project proceeds as a data centre. It could be forfeited if the developer terminates the agreement, reduces capacity or changes the development away from data centre use.

Does the 80GW queue mean data centres will consume 80GW?

No. The figure represents connection capacity associated with projects in the queue. It does not mean every project will be constructed or that completed facilities would use 80GW simultaneously.

What happens if a project misses a milestone?

Under the proposals, failure to meet one of the new data centre milestones could result in removal from the connections queue. The consultation does not specify a formal appeals process.

Would the proposals apply to existing projects?

Under the consultation, the reforms could apply to existing and future connection offers, subject to specified exemptions and grace periods. The final transitional arrangements have not yet been decided.

When does the consultation close?

The consultation closes on 16 September 2026. Ofgem expects to make decisions later in 2026, but no implementation date has been confirmed.

Sources

Primary and supporting sources used in the research include: