Data centre developers could be required to pay refundable commitment fees worth hundreds of millions of pounds to secure electricity grid connections under new proposals from energy regulator Ofgem, aimed at freeing up network capacity and reducing speculative projects clogging the connection queue.1
The regulator has launched a consultation on introducing a Data Centre Commitment Fee for larger developments seeking new electricity connections. The proposed measure is intended to ensure only projects with a genuine prospect of being built occupy scarce network capacity, while allowing viable schemes to connect more quickly.2
Under the proposals, developers would pay between £237,500 and £712,500 per megawatt of requested capacity when accepting a connection offer. The fee, equivalent to around 2.5% to 7.5% of average project costs, would be refunded once the facility is energised, but forfeited if the project withdraws from the connection queue or fails to meet agreed milestones.3
Ofgem said the proposals respond to an unprecedented rise in electricity demand from prospective data centres, fuelled largely by investment in artificial intelligence infrastructure. Between November 2024 and June 2025, contracted demand from data centre connection requests increased from 41GW to 125GW, with data centres accounting for at least 80GW of that total.4
According to the regulator, the transmission connection queue currently contains 315 data centre projects, together requesting around 73GW of capacity – substantially more than Britain’s peak electricity demand of approximately 45GW last year.5
Alongside the proposed fee, developers would also be required to demonstrate continued progress to retain their place in the queue. Proposed milestones include evidence of financial capability and planning progress, with projects that fail to advance at the required pace facing removal from the queue.6
The consultation remains open until 16 September 2026, after which Ofgem will consider responses before deciding whether to introduce the measures.7
Notes
[1] “Ofgem acts to free up grid capacity by tackling speculative data centre projects”, Ofgem, 29 July 2026.
[2] “Proposed data centre connection reforms (consultation)”, Ofgem, 29 July 2026.
[3] ibid.
[4] “UK’s Ofgem proposes grid-connection fee to deter speculative data centre projects”, Reuters, 29 July 2026.
[5] “Datacentre projects face fees for grid access to ease connection queue, Ofgem says”, The Guardian, 29 July 2026.
[6] Reuters, ibid.
[7] Reuters, ibid.