This move comes as contracted demand connection applications in the national queue increased from 41GW in November 2024 to 125GW in June 2025. Out of this surge, data centre developments account for at least 80GW of the total connection applications submitted. In total, Ofgem’s consultation document explicitly identifies approximately 73GW of data centre demand within the existing queue.

‘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, Director for Energy System Design and Development at Ofgem. ‘The connections system must work for consumers and for the projects that are ready to invest, build and connect. Where speculative projects take up space in the queue, they can delay other schemes and create uncertainty about future network needs.’

‘We’re consulting on a new data centre commitment fee and stronger requirements to ensure projects demonstrate real commitment before securing scarce network capacity,’ Warburton added. ‘These reforms will help free up capacity for viable projects, improve confidence in network planning and support faster connections where they are needed most.’

Under the regulatory proposal, large data centre developers must pay the data centre commitment fee upon accepting a grid connection offer. To enforce this, Ofgem has proposed setting the fee within a range of £237,500–712,500/MW, which represents approximately 2.5–7.5% of average project costs. The network operator will refund the fee when the data centre reaches energisation, but the developer will forfeit the money if the project exits the queue early. In tandem with the fee, Ofgem is also consulting on queue management milestones that mandate developers to provide evidence of financial capability, commercial maturity and procurement activity to hold their queue position.

These initiatives form part of the Demand Connections Reform Programme managed jointly by Ofgem, the Department for Energy Security and Net Zero (DESNZ) and the National Energy System Operator (NESO). To achieve its targets, the Demand Connections Reform Programme structures its strategy around three primary pillars: Curate, Plan and Connect. First, the ‘Curate’ pillar focuses on preventing non-viable applications from entering or remaining in the queue, so active projects advance. Second, the ‘Plan’ pillar establishes government-led prioritisation for demand projects that hold strategic importance. Finally, the ‘Connect’ pillar creates new operational arrangements to accelerate physical connections to the electricity grid.

Under previous connection reforms applying to generation, network operators accelerated 7.8GW of projects by an average of six years. Meanwhile, electrification across industrial sectors continues to raise baseline demand for power connections alongside data centre expansion. Because of these dynamics, grid connection delays documented in London align with the national queue volume increases identified in Ofgem’s regulatory assessment.

Highlighting these local challenges is a related study released on 27 July 2026 by engineering consultancy Buro Happold, which consists of research for the Greater London Authority regarding capital data centre demand. The report, titled London’s data centre future growth forecasts and strategic insights, establishes an infrastructure evidence base for City Hall. To build this foundation, the study evaluated infrastructure constraints across four primary urban systems: energy, water, land use and digital infrastructure networks. From this evaluation, Buro Happold identified energy availability as the main physical constraint limiting future data centre construction in the capital, highlighting that data centre projects in London face grid connection queue wait times averaging 7–13 years. By comparison, competing European cities maintain average grid connection queue wait times ranging 3–7 years.

Applications currently in grid connection queues represent roughly 10 times the operational data centre capacity functioning in London today. At the moment, London operates approximately 1GW of active data centre capacity. However, Buro Happold’s analysis of grid connection data indicates that data centre demand in London will expand by 8–11 GW by 2050. Greater London reflects a heavy concentration of this infrastructure, hosting approximately 80% of the total data centre capacity operating across the UK.

Financially, the UK data centre sector currently generates an estimated £4.7bn in gross value added (GVA) to the economy. Looking ahead, Buro Happold projects that the economic potential of the nation’s data centre industry could reach £44bn by 2035. Driven largely by new technology, AI compute processing in the UK currently consumes approximately 5TWh of electricity per year. Expanding rapidly, UK AI energy consumption will exceed 100TWh/y by 2030, according to Buro Happold forecasts.  

‘Digital infrastructure has become fundamental to economic growth,’ Yalena Coleman, Director at Buro Happold, said. ‘Yet until now, there has been no comprehensive way of understanding how data centre demand will evolve across London and what that means for the underlying infrastructure systems as well as other potentially competing priorities.’

‘Our hope is that this report will give London a guide to prepare for the infrastructure challenges and opportunities ahead and act as a blueprint for other cities to replicate,’ Coleman said.