The UK's energy regulator, Ofgem, is proposing new measures, including upfront commitment fees and queue management milestones, to address the growing demand from large data centers and free up the nation's electricity grid. The move aims to ensure that grid capacity is prioritized for projects that are ready to connect, while deterring speculative developments that are clogging the connection queue.
Ofgem is considering an upfront but refundable "commitment fee" for large data center development projects. This fee would be levied when a project receives a connection offer and returned upon the data center's activation. If a developer abandons their place in the queue, the fee would be forfeited. The proposed fee range is between £237,500 and £712,500 per megawatt, representing approximately 2.5% to 7.5% of average project costs.
In addition to the fee, Ofgem is consulting on introducing "queue management milestones" for these projects. Developers would need to demonstrate tangible progress, including financial capability, commercial maturity, and procurement activity, to maintain their position in the queue. Ofgem expressed concern that a substantial number of projects in the queue may not proceed, potentially delaying viable developments and creating misleading signals about future network investment needs.
Currently, 315 data centers are awaiting connection, with a combined demand of 73 gigawatts (GW). This figure significantly exceeds the country's peak energy demand of 45 GW. Eleanor Warburton, Ofgem's director for energy system design and development, stated that the electricity demand connections queue has more than tripled in size within a year. She emphasized that consumers should not bear the risks associated with speculative projects occupying grid capacity, and the connections system should serve consumers and projects ready to invest and connect.
Data centers, buildings housing IT equipment for data storage, processing, and distribution, are crucial for cloud computing and artificial intelligence (AI). In September 2024, the UK government designated data centers as critical national infrastructure. As AI tools and their capabilities expand, data centers' energy requirements have grown substantially. Britain has approximately 450 large data centers, with London hosting the most capacity. The Slough Trading Estate, in particular, has the highest concentration in Europe with 30 data centers within one square mile.
Ofgem noted a surge in connection applications between November 2024 and June 2025, with a significant portion coming from data centers. In February, Ofgem reported 140 proposed data centers with energy demands of 50 GW. These numbers have continued to rise, with applications for new power connections more than tripling in less than a year. In July 2025, it was estimated that data centers consumed about 2% of the UK's electricity, with roughly one-third of this energy used for cooling.
Emissions forecasts for AI data centers were recently revised upwards significantly, with officials acknowledging a prior underestimation of the sector's future energy demands.