Ofgem proposes new fees to curb speculative data centre projects in UK electricity grid
Britain’s energy regulator Ofgem has opened a consultation on reforms aimed at clearing speculative data‑centre projects from the UK electricity connections queue. Applications for new grid capacity have surged from 41 GW in November 2024 to 125 GW by June 2025, with data‑centre proposals accounting for at least 73 GW of that pipeline.
The regulator’s plan includes a refundable Data Centre Commitment Fee payable when a large data centre accepts a connection offer; the fee would be returned once the project is energised and forfeited if it leaves the queue early. Proposed fee levels range from £237,500 to £712,500 per MW, and refundable deposits tied to development milestones may also be required. Developers would need to demonstrate financial capability, commercial maturity and procurement progress to retain their place in the queue.
Ofgem argues the measures will free scarce grid capacity for projects that are ready to build, protect consumers and improve confidence in network planning. Industry voices welcome the effort to remove stalled schemes but warn that fees must not deter genuine AI and compute‑infrastructure investment in the UK.
Entities: Data centre projects · Eleanor Warburton · Matt Evans · Michael Shanks · Office of Gas and Electricity Markets (Ofgem) · Ofgem · TechUK · United Kingdom electricity grid
Claims
What the coverage asserts, and how well corroborated each claim is across sources.
- [○ 1 SOURCE] Energy Minister Michael Shanks said Britain needs a grid connections system that works for the 21st century.
- [○ 1 SOURCE] Ofgem's proposed refundable deposits could be worth hundreds of millions of dollars.
- [○ 1 SOURCE] The UK's operational data centre capacity is about 2 GW.
- [● 4 SOURCES] The UK electricity connections queue grew from 41 GW in November 2024 to 125 GW by June 2025.
- [● 2 SOURCES] Data centre projects account for at least 73 GW of the current connections pipeline, representing about 315 projects.
- [○ 1 SOURCE] Around 140 data centre projects are seeking roughly 50 GW of connection capacity, while the UK's peak electricity demand is about 45 GW.
- [○ 1 SOURCE] Ofgem opened a consultation on demand connections reform on 13 February 2026, with responses due by 13 March 2026.
- [● 3 SOURCES] Ofgem proposed a refundable Data Centre Commitment Fee of £237,500 to £712,500 per MW for large data centres. (The fee would be paid when a large data centre accepts a connection offer and refunded once the project is energised, or)
- [● 4 SOURCES] Demand for electricity grid connections in the UK rose from 41 GW in November 2024 to 125 GW by June 2025, driven largely by data‑centre projects. (Ofgem consultation documents and news reports)
- [○ 1 SOURCE] Industry groups warn that the new fees could deter AI and compute‑infrastructure investment in the UK. (TechUK and Energy UK comments)
- [○ 1 SOURCE] The proposed fee level is between £237,500 and £712,500 per megawatt for large data‑centre projects. (TechUK/City AM statements)
- [● 4 SOURCES] Ofgem proposes a refundable Data Centre Commitment Fee payable when a large data centre accepts a connection offer, refunded upon energisation and forfeited if withdrawn early. (Ofgem consultation proposal)