Data centres could pay hundreds of millions in deposits for power demands

Ofgem is proposing that developers of new data centres pay refundable deposits of between £237,500 and £712,500 for each megawatt of grid connection capacity they seek. For a project aiming to secure one gigawatt of power, the upfront cost could therefore run into hundreds of millions of pounds, with the amount returned if the development is completed. The British energy regulator said the measure is intended to manage a sharp rise in requests for network connections. According to Ofgem, the total capacity sought by prospective projects has climbed from 41 gigawatts to 125 gigawatts over the past year. This figure, the regulator noted, is “importantly much more than triple 2025's highest energy request in Britain of around 46 GW.” Ofgem has opened a consultation on the proposal, which will run until 16 September. Under the plan, developers must meet specified milestones to retain their place in the grid connection queue, a queue that has experienced a surge in demand as interest in data‑centre construction grows. The regulator linked the increase to the expanding need for computing power to support artificial‑intelligence workloads. Data centres—large facilities housing computer servers that store, process and distribute digital information—have proliferated worldwide in recent years to meet that demand. Nevertheless, the projects remain contentious, especially among local residents. Communities near proposed sites have voiced worries about noise, heightened electricity consumption and the substantial volumes of water sometimes required to cool the high‑performance chips that generate considerable heat.