Data centres could pay hundreds of millions in deposits for power demands
Ofgem has proposed new measures that could see data center developers pay hundreds of millions of pounds upfront.
At a time when demand for connection to the electricity grid is increasing, the British energy regulator has said there should be a refundable fee for projects wanting to connect to the network.
It proposes developers pay a deposit of between £237,500 and £712,500 per megawatt; This means data centers seeking 1 gigawatt (GW) of power will have to pay hundreds of millions of dollars upfront, which will be repaid if the project is completed.
The proposal comes after growing opposition in some parts of the country to plans for new data centers needed to power the AI boom.
Data centers are large buildings that house computer servers used to store and process data and run the digital services that power the internet.
Ofgem has begun consultations on its proposals, which will run until 16 September.
He said that the amount of electricity capacity requested by projects that want to connect to the grid increased from 41 GW to 125 GW last year, reflecting the sharp increase in demand.
This is significantly more than double Britain’s peak electricity demand in 2025 of around 46 GW.
The regulator said projects must hit key milestones to maintain their place in the grid connection queue, which is seeing increased demand.
A growing number of centers have been built around the world in recent years to provide the computing power needed to train and run AI systems.
But they are controversial, especially for people living nearby.
Residents have expressed concerns about noise, electricity demand and the large amounts of water used to cool high-performance chips that sometimes produce large amounts of heat.
