Markets by

Fears grow over surge in electricity demand from data centres

Ofgem, the energy regulator, sounds alarm over the increase in applications from developers seeking to connect to the UK’s power network

Emily Gosden, Energy Editor

Friday November 14 2025, 5.41pm GMT, The Times

A worker in the National Grid control room in Sindlesham, Berkshire, overseeing the electricity supply. — The National Energy System Operator control room in Sindlesham, Berkshire.

The energy regulator is scrambling to deal with a flood of requests from data centre developers to connect to Britain’s electricity grid amid fears that viable projects will be thwarted by speculative applications.

Britain’s power networks have been inundated with new connection requests over the past year, resulting in the queue of projects seeking to draw electricity from the grid jumping from 41 gigawatts last November to 125 gigawatts by June. By contrast, peak winter electricity demand across Britain in a cold snap is estimated to be only about 60 gigawatts.

Ofgem has sounded the alarm over the situation, warning that the volume of applications “exceeds even the most ambitious forecasts for future demand” and poses “a serious risk to the timely connection of strategically important demand projects”.

At a critical moment, Ofgem is not fit for purpose

SSE to upgrade electricity networks in £33bn investment plan

• Climate goals out of reach as demand for energy surges

As much as 100 gigawatts of the demand connection queue is estimated to come from data centres, according to UK Networks Services, a consultancy. Simon Gallagher, its managing director, said this was ten times the data centre capacity envisaged in the government’s clean power 2030 plans. He said that 100 gigawatts of data centres — equivalent to many dozens of the world’s biggest such sites — would “never, ever get built” in Britain.

Ofgem has confirmed that “data centres account for a significant share of growth in the demand queue” and says it is working with the National Energy System Operator (Neso), networks and the government on “urgent” reforms to prioritise viable projects.

Neso is already implementing an Ofgem-approved process to try to whittle down the queue of both generation and demand projects seeking to connect to the network by prioritising generation that is ready to build and necessary for the government’s clean power plans. Backing the process earlier this year, the government said it would also see “industries of the future such as data centres accelerated for quicker grid connections”.

However, prospective electricity users seeking connections are only subject to readiness criteria, not any assessment of necessity. “This has unintentionally led to excessive growth in the demand queue,” Ofgem said, in a letter to the industry.

Aerial view of the new Google data center under construction in Waltham Cross, UK.

The Google data centre under construction in Waltham Cross, Hertfordshire, is just one of many requiring electricity from the grid

The queue was “a mix of credible data centre projects with the potential to unlock value for consumers and citizens, as well as less viable projects that may crowd out those with genuine merit and block progress for those behind them in the queue”, it said.

• Centrica boss Chris O’Shea: Ofgem is no longer fit for purpose

Gallagher said: “At some stage the government will have to decide how much of this data centre [capacity] do we want to connect, and where.”

Matthew Evans, director of markets at TechUK, the trade body for the technology sector, said: “Data centres are essential for the UK’s plans for AI. We are working with Ofgem on a robust plan to address speculation in grid connection requests while safeguarding capacity for genuine projects.”

He called for government departments to work together to ensure their AI and clean energy plans were aligned. “Current misalignments between economic growth objectives and the forecasting of the energy required to support that growth risk undermining delivery,” he said.

• Ed Miliband’s split with Starmer over a £100bn mega-project

Lisa Water, director of Waters Wye Associates, an energy consultancy, said: “We now seem to be in a position where there is too much generation and too much demand. The focus should shift to: how has the regulatory regime resulted in not enough network capacity for both sides to grow? The government must be worried that its industrial strategy is going to be derailed as the energy regulator has been asleep at the wheel.”

Increasing numbers of data centres are already seeking to bypass the queue for the electricity grid and connect to gas networks instead, using gas to generate their own power. However, some in the industry believe the government will seek to block such connections because of the emissions they would generate.Business & Money Energy