About 140 datacenters are in the queue to be connected to Britain’s power grid, and their combined energy requirements are estimated to be more than the current peak electricity use for the entire country.
Ofgem, the energy regulator for England, Scotland, and Wales, recently published a call for input on Demand Connections Reform [PDF], inviting views from interested parties on how to improve the demand connections process.
The problem faced is that the demand queue is large and growing, and is said to contain a significant number of projects that are “likely non-viable.” At the same time, viable projects are being held up because of the length of time needed for network or generation building.
The document claims these issues are exacerbated because there are no mechanisms to prioritize strategically important demand projects.
For “strategically important projects,” read “datacenters.” The UK government unveiled its AI Opportunities Action Plan last year, aimed at driving economic recovery, and this includes the establishment of “AI Growth Zones” with streamlined planning processes to encourage the rapid building of more datacenters.
Ofgem says that since November 2024, total contracted offers in the demand queue rose sharply from 41 GW to 125 GW by June 2025. It contrasts this with the peak electricity use in Britain on February 11 this year, which stood at 45 GW.
A call for input from the National Energy System Operator (NESO), which manages and plans the country’s electricity and gas systems, found that a significant portion of those projects in the demand queue are datacenters. It identified about 140 facilities, the majority of which are likely to receive a Gate 2 offer, which is a “ready-to-connect” agreement, and these add up to a total of 50 GW of demand for electricity.
These are not likely to all be connected at the same time, of course, as many are in the early stages of construction or still being planned.
But it isn’t just that these server farms are being held up. There is also the question of extra grid and generating capacity. Ofgem says that demand-side projects are only required to meet “readiness” criteria under the Connections Reform Package (TMO4+) introduced last year, unlike generation, storage, and interconnection projects that must be “ready” and “needed” under the Clean Power 2030 Action Plan.
Ofgem states that it, the government and NESO are together taking a phased approach to reforming demand connections. This starts with immediate measures to strengthen financial commitments and weed out non-viable datacenters in the demand queue and prioritize strategic projects.
A second phase will see further measures to implement a strategic plan for data facilities, alongside additional measures to strengthen project commitments and address non-viable demand projects, Ofgem says.
We must confess to being puzzled, since we recall Ofgem announcing new rules some time ago aimed at speeding up electricity grid connections for viable projects and pushing stalled or speculative developers out of the queue. We asked the regulator if it could clarify the situation, and will update if we get an answer.
Omdia principal analyst for Colocation and DC Building Alan Howard told us that the power interconnection queue issue is a big problem, not just in the UK, but also in the US and other global markets.
“The strategy for many datacenter operators is to secure multiple land parcel rights, request a grid load connection for each (often requiring a costly load study), and see what gets approved so they can build. The capital investment to take all these projects seriously is clearly untenable and a huge financial risk for the energy sector if the demand doesn’t fully materialize,” he said.
This was highlighted in a report from Uptime Institute last year, which found that developers try to reserve power for projects that may never be built, while datacenter operators apply for more than they need to accommodate future growth and planning uncertainty.
“The Ofgem Demand Connections Reform initiative is a great idea whereby an evidence-based system would be created to weed out or deprioritize the inevitable non-viable datacenter projects,” Howard said.
“Using evidence such as a Final Investment Decision (FID) to show financing commitment or the ability to secure project planning permission from regulators would prioritize projects that are in the best interest of communities and the energy ecosystem at large.”
The government also instituted an “AI Energy Council” when it launched the AI Opportunities Action Plan, in order to address the growing energy demands from all those AI facilities. This comprises Ofgem and NESO, along with energy companies and some of the big datacenter operators – Google, AWS, Microsoft and Equinix.
We asked what the AI Energy Council is doing to ensure there will be enough energy to meet all this anticipated demand from new datacenters.
A spokesperson for the Department for Energy Security and Net Zero (DESNZ) told us: “Datacenters will only be connected where the grid can support them. The AI Energy Council is exploring opportunities to attract investment in new clean power sources for the industry, as we work with Ofgem and network companies to free up grid capacity.”
“Our AI Growth Zones are driving their development in areas with new clean power generation such as North Wales, the home of our first small modular reactors,” the spokesperson added.
The small modular reactor (SMR) was announced last year, and will be sited at Wylfa on Anglesey, an island off northwest Wales, but it won’t generate power until the mid-2030s.
Earlier this month, the government unveiled an Advanced Nuclear Framework initiative to attract private investment into next-generation nuclear technology to power factories and datacenters.
We understand there are currently five AI Growth Zones across England, Scotland, and Wales, including one recently announced in North Lanarkshire and one at the Culham Science Centre (UKAEA) in Oxfordshire. ®