Ofgem targets speculative data centre projects in the grid queue

Ofgem has launched a consultation on plans to tackle speculative data centre projects in Britain’s electricity connections queue after demand applications rose from 41GW to 125GW in under a year.

The regulator said the increase had been driven largely by data centre projects, which accounted for at least 80GW of contracted demand offers. It warned that speculative projects could secure scarce network capacity without a firm intention to connect, delaying viable developments and distorting future network planning.

The consultation proposes a refundable Data Centre Commitment Fee and new project milestones designed to ensure queue capacity is used by projects actively moving towards delivery.

Grid Access Becomes a Test of Readiness

Contracted demand offers rose from 41GW in November 2024 to 125GW by June 2025. Ofgem said around 73GW of data centre demand was referenced in the consultation.

The regulator said a queue with a significant number of non-viable projects risked slowing schemes that were ready to proceed and making future network investment harder to plan.

“Britain’s electricity demand connections queue has more than tripled in size in less than a year, and consumers should not bear the risks created by speculative projects taking up space in the system,” said Eleanor Warburton, Ofgem’s Director for Energy System Design and Development.

She added that “where speculative projects take up space in the queue, they can delay other schemes and create uncertainty about future network needs.”

Ofgem Proposes a Commitment Fee

Under the consultation, large data centre developments would pay a fee when accepting a connection offer.

The proposed charge ranges from £237,500 ($319,564) to £712,500 ($958,693) per MW, which Ofgem said is equivalent to around 2.5% to 7.5% of average project costs.

The fee would be refunded when the project reaches energisation, but forfeited if it leaves the queue early.

Ofgem also proposed data centre-specific queue management milestones. Developers wanting to keep their place would need to show progress through evidence of:

• financial capability
• commercial maturity
• procurement activity

Together, the measures are intended to keep scarce grid capacity available for projects moving towards delivery.

Retaining a Position Would Require Proof of Progress

The reforms would make it harder for projects to hold a place in the queue on the basis of intent alone.

Developers would need to show that a scheme has reached a sufficient level of financial, commercial and procurement maturity.

“These reforms will help free up capacity for viable projects, improve confidence in network planning and support faster connections where they are needed most,” said Warburton.

Ofgem pointed to earlier connections reforms, which it said had already accelerated around 7.8GW of projects by an average of six years. The regulator said it expects the proposed demand reforms to have a similar effect.

A More Selective Approach to Demand Connections

The consultation is part of the wider Demand Connections Reform programme led by Ofgem, the Department for Energy Security and Net Zero and the National Energy System Operator.

The programme is built around three pillars:

• Curate, to ensure only viable projects enter and remain in the queue;
• Plan, to support government-led prioritisation of strategically important projects; and
• Connect, to accelerate physical grid connections.

The consultation remains open until 16 September 2026.

For the data centre sector, the direction is clear. Ofgem wants projects to demonstrate tangible progress before they hold scarce connection capacity in the queue.