Ofgem proposes hefty deposits to weed out speculative data centers from UK grid queue

In July, Ofgem released a proposal that would make data-center developers place substantial, non-refundable deposits—potentially hundreds of millions of dollars for the largest sites—and demonstrate secured customers and financing before joining the power-grid connection queue. The measure seeks to purge “phantom” data centers that have flooded the queue, which grew from 41 GW to 125 GW of projected demand between November 2024 and June 2025, with speculative projects comprising roughly three-quarters of the increase.

Officials argue the reforms are needed to prevent speculative applications from delaying viable builds and to give grid operators clearer data for expansion planning. Industry voices such as Alex Burgoyne of Knight Frank and Taco Engelaar of Neara warn that overly burdensome fees could make the UK less attractive compared with the US and Europe, potentially sidelining smaller AI-focused operators. Yet Ofgem’s deputy director Nathan Macwhinnie says the regulator will balance concerns and that a cleaner queue will better support the country’s AI-driven growth goals. The proposal will be refined after a consultation that ends in September.