Ofgem, the British energy regulator, has put forward new proposals that could see data centre developers paying hundreds of millions of pounds in upfront deposits for electricity grid connections. The proposed refundable fee would apply to projects seeking to connect to the network, amid a significant increase in demand for grid capacity.
The regulator suggests a deposit ranging from £237,500 to £712,500 per megawatt. This means a data centre requiring 1 gigawatt of power could be liable for hundreds of millions upfront, which would be refunded upon project completion.
This move follows growing opposition in some areas to new data centres, which are essential for the artificial intelligence boom. The amount of electricity capacity requested by projects seeking grid connection has more than tripled in less than a year, rising from 41 GW to 125 GW. This figure is significantly more than double Britain's peak electricity demand of approximately 46 GW in 2025.
Ofgem stated the plans aim to prevent "speculative projects from securing scarce network capacity without any firm intention to connect." Eleanor Warburton, Ofgem's director for energy system design and development, said consumers should not bear the risks created by such projects.
A consultation on these proposals has commenced and will run until 16 September.