TL;DR

Ofgem has opened a consultation on forcing datacentre developers to lodge substantial refundable deposits before they can hold a grid connection. There are 315 datacentres in the queue representing 73GW of demand — nearly 30GW more than Britain’s entire peak demand of 45GW. Developers would put down roughly £350m to reserve 500MW, returned when the site switches on and forfeited if they abandon the project.

The regulator wants to strip out schemes that exist mainly to hold a place. Security could be lodged as letters of credit, bonds or cash deposits, payable once a project receives its connection offer. Ofgem also proposes hard milestones during the application process — securing customers and financial backing among them — with projects removed from the queue if they miss them. The stated aim is to reserve scarce capacity for “projects most likely to be built, not projects preserving options”.

Reuters reports the commitment fee would sit between £237,500 and £712,500 per megawatt, equivalent to around 2.5% to 7.5% of average project costs, and that total connection demand climbed from 41GW to 125GW between November 2024 and June 2025 with datacentres accounting for at least 80GW of it. Ofgem’s own February assessment counted 140 proposed datacentres seeking 50GW — both figures have since risen.

The queue problem is not new and not confined to datacentres. Last year the grid operator Neso reformed the renewables connection queue, clearing out hundreds of “zombie” projects lacking planning permission or financing to make room for schemes that could actually deliver.

Nor is it a purely British difficulty. The Uptime Institute has identified 250 global datacentre projects above 100MW announced between 2021 and 2024 — each roughly equivalent to the demand of 300,000 homes — and expects half to be cancelled or delayed.

Looking Forward

For UK businesses, the significance is less about who pays and more about what the queue has been concealing. A 73GW pipeline against 45GW of peak national demand was never a forecast of real construction, and pricing the option to hold capacity should reveal how much of the AI infrastructure buildout is funded rather than announced. Hyperscalers including Amazon and Microsoft can absorb a £350m deposit comfortably; smaller UK operators and colocation providers cannot, which makes the consultation’s treatment of project size worth watching closely.