The UK’s energy regulator is concerned that data centers are reserving large amounts of grid capacity years before fully needed, further threatening the efficiency of networks facing long queues for new supply.
Ofgem said some developers may be securing their eventual electricity requirements long before reaching full demand, potentially leaving network capacity underutilized while other new projects from users wait for access. It’s looking at reforms to tackle the surge in demand from data centers, which have become one of the biggest drivers of the queue to connect to the grid.
“When you look at the size of that connection queue, it is sending materially inaccurate signals about what needs to be built,” Liam King, Ofgem’s head of demand connections, said at an industry event in London on Wednesday. “That has consequences, which are then materializing in the length of queue for those viable projects that will connect.”
An overloaded grid risks constraining Britain’s economic growth, energy transition and artificial intelligence ambitions. Regulators have already focused on clearing a backlog of renewable energy projects seeking to connect to the network. They’re now looking at the demand side, where more applications from data centers — which require massive, constant flows of power — are creating a new bottleneck that could delay investment and slow new infrastructure.
Ofgem plans to in the coming weeks announce new proposals related to data centers that’s aimed at making the queue more effective, King said.
Ofgem has said that data centers represent about about 50 gigawatts of demand in the queue, an amount exceeding the UK’s peak-time demand last year. Of that, only about 20 gigawatts are reported to have reached final investment decision. The regulator has said the queue contains projects unlikely to progress to connection, creating distorted signals for network investment and slowing projects that are ready to proceed.
Under reforms being developed with the government and the grid operator, the National Energy System Operator, Ofgem is considering measures including financial commitment requirements for projects like data centers, stricter readiness tests and other steps designed to remove non-viable projects from the queue.