- Ofgem has proposed new measures which could see developers of data centres made to pay hundreds of millions of pounds up front.
- Developers are proposed to pay a deposit between £37,500 to £37,500 per megawatt, meaning data centres seeking 1 gigawatt (GW) of power would have to pay hundreds of millions up front.
- Energy minister Michael Shanks stated that Ofgem's actions would 'help ensure that viable connection-ready projects can get going and not be held up by speculative applications.'
Ofgem's new proposal aims to address the soaring demand for electricity from data centres, which has surged from 41 GW to 125 GW in just one year. The proposed fees, ranging from £237,500 to £712,500 per megawatt, could require developers to pay up to hundreds of millions upfront for 1 gigawatt of power.12
The consultation on these measures will run until 16 September, as Ofgem seeks to ensure that only viable projects secure grid connections. Energy minister Michael Shanks stated that the initiative would help facilitate connection-ready projects and prevent speculative applications from clogging the system.
The current electricity demand connections queue has more than tripled in size within a year, highlighting the urgent need for regulatory changes to manage the increasing requests for grid access. Consumers should not bear the risks associated with speculative projects that occupy valuable space in the energy system.
Ofgem's actions reflect a proactive approach to managing the energy landscape in Britain, ensuring that the grid can support genuine demand while mitigating the risks posed by speculative developments.
“Developers are proposed to pay a deposit between £37,500 to £37,500 per megawatt, meaning those seeking 1 gigawatt (GW) of power would need to pay hundreds of millions up front. Energy minister Michael Shanks emphasized that these measures would 'help ensure that viable connection-ready projects can get going and not be held up by speculative applications.'”
