Britain stuck with phantom data-center queue for power grid

The regulator Ofgem is working to clean a queue for connections to the British electricity network that swelled to 125 GW by June 2025, three times the level recorded in November 2024, with 73 GW of that representing new data-center requests. That amount equals one and a half times the United Kingdom’s peak demand last year. Government officials estimate that most of the requests will never be built.

Ofgem’s draft proposal, expected after a feedback round that ends in September, would require developers to post a non-refundable deposit that could reach hundreds of millions of dollars (hundreds of millions of shekels) for the largest projects, and to provide pre-signed customer contracts and proof of financing before construction can begin. The aim is to turn a speculative queue into a costly commitment.

The challenge is to set the deposit high enough to weed out impostors without making it so prohibitive that legitimate projects relocate to Europe or the United States. Britain already faces some of the world’s highest energy costs and a shortage of available land; a heavy financial barrier could make it one of the most expensive places to build a data-center. “We don’t want to shoot the duck that lays golden eggs,” says Alex Burgoyne, head of data-centers at Knight Frank.

The surge in the queue began at the end of 2024, shortly after the government classified data-centers as critical national infrastructure. Between November 2024 and June 2025 the cumulative queue demand jumped from 41 GW to 125 GW. “It’s completely crazy,” says Taco Engelaar, chief executive of Neara, a network-optimization firm. “No one really knows what the real demand will be because of these phantom projects.”

The root of the problem lies in incentives: waiting for a connection can take years, yet joining the queue has so far cost only a few thousand dollars. A developer can submit an application without a firm plan, essentially a free gamble on a future where computing demand stays high. Grid operators must treat every project as serious to safeguard network stability. “The more speculative projects there are, the longer the checks take and the delay for real projects grows,” explains Olivier Darmouni, professor of finance at HEC Paris.

Ofgem acknowledges the difficulty of benchmarking costs against foreign markets but stresses that data-centers are central to Britain’s AI ambitions. Nathan Macwhinnie, deputy director of strategic planning and connections, says the regulator will take industry concerns into account before fixing the final deposit level. The open question remains whether the solution will arrive in time to relieve the bottleneck, or whether the reform itself will become the next obstacle.