Ofgem warns speculative data centres risk delaying grid connections

The energy regulator Ofgem has cautioned that speculative data centre developments threaten to obstruct viable investments on the national electricity grid, following the approval of a new facility near Heathrow Airport by Hounslow Council. The watchdog highlighted concerns that projects securing grid capacity without firm intentions to build are creating uncertainty for network planning and delaying connections for serious developers. This warning emerges as local authorities continue to approve large-scale data centre projects despite growing pressure on infrastructure resources.

Hounslow Council has granted planning permission for a data centre on a 12.2-acre brownfield site at the Haslemere Heathrow Estate. The development requires an 80MVA high-capacity electricity connection, sufficient to power tens of thousands of homes. While councillors were assured that the facility would draw power through the Laleham Grid Supply Point outside the borough and not consume capacity reserved for local housing projects, the approval adds to a significant backlog of projects waiting to connect to the network.

An Ofgem spokesperson stated that the connections queue must serve both consumers and projects ready to invest, build, and connect. Speculative schemes occupying space in the queue can delay viable projects, prompting the regulator to consult on a new data centre commitment fee and stronger requirements. These measures aim to free up capacity and accelerate connections for developments that deliver tangible benefits for Britain. The regulator clarified that simply obtaining planning permission would not exempt developers from these proposed rules, which may require additional milestones and upfront fees to maintain a place in the grid queue.

The scale of proposed data centre development is testing London’s infrastructure limits. The Greater London Authority reported that requests for electricity capacity through the grid connection queue are approximately ten times greater than current usage by existing London data centres. As of November last year, there were 99 operational data centre sites in the capital and another 26 in the planning pipeline. London accounts for around 80 per cent of UK data centre capacity, intensifying the strain on local resources.

Water consumption has also become a point of contention. Affinity Water informed MPs in May that some data centres request up to three million litres of water daily, equivalent to the peak demand of roughly 3,500 homes. Consequently, the developer of the Hounslow site must submit a strategy to minimise water usage once operational. The GLA had previously noted that the proposal did not fully comply with the London Plan, citing concerns over transport impacts and high resource intensity.

Hounslow Council confirmed its planning committee considered electricity, water, and infrastructure demands before approving the scheme. A spokesperson noted that mitigation measures would be secured through the planning process, while matters under separate statutory utility regimes would be addressed by relevant bodies. The applicant is Brixton (Heathrow Estate) Ltd, though the council does not hold information identifying a separate ultimate operator or end-user.

This decision aligns with Ofgem’s broader efforts to prevent speculative projects from reserving unused electricity capacity. Applications for new data centre grid connections tripled from 41GW to 125GW between November 2024 and June 2025, with data centres accounting for at least 73GW across 315 projects. Under proposed rules, large developers could face refundable commitment fees when accepting grid connection offers, forfeited if they abandon their queue position. Both the Hounslow and recent Ealing approvals require Stage 2 referral to the Mayor of London before proceeding.