UK datacenter demand threatens to overwhelm national grid capacity

The UK's datacenter industry is creating unprecedented pressure on the national electricity grid, with 140 facilities collectively requesting 50 GW of power connections - more than the country's current peak electricity demand of 45 GW recorded earlier this year.

This massive backlog emerged as Ofgem, the energy regulator for England, Scotland, and Wales, published a call for input on Demand Connections Reform [PDF]. The regulator identified a critical problem: the demand queue has grown to 125 GW since November 2024, containing numerous "likely non-viable" projects that are blocking progress for viable facilities.

The scale of the issue becomes clear when considering that Britain's peak electricity use on February 11, 2025, was just 45 GW. The 50 GW of datacenter demand represents facilities that have reached "Gate 2" status - a "ready-to-connect" agreement stage. However, these projects won't all connect simultaneously, as many remain in early planning or construction phases.

Ofgem's reform initiative aims to address several interconnected challenges. Currently, demand-side projects only need to meet "readiness" criteria under the Connections Reform Package (TMO4+), while generation, storage, and interconnection projects must demonstrate both "ready" and "needed" status under the Clean Power 2030 Action Plan. This disparity has contributed to the growing backlog.

Alan Howard, principal analyst for Colocation and DC Building at Omdia, explained the problematic strategy many operators employ: "The strategy for many datacenter operators is to secure multiple land parcel rights, request a grid load connection for each (often requiring a costly load study), and see what gets approved so they can build."

This approach creates significant financial risk for the energy sector if demand fails to materialize. The Uptime Institute previously highlighted similar concerns, finding that developers often reserve power for projects that may never be built, while operators apply for more capacity than needed to accommodate future growth and planning uncertainty.

To tackle these issues, Ofgem is implementing a phased reform approach. The first phase focuses on strengthening financial commitments and removing non-viable projects from the queue. A second phase will establish a strategic plan for data facilities and implement additional measures to ensure project commitments are met.

The UK government's AI Opportunities Action Plan, launched last year, has intensified focus on datacenter development. The plan includes establishing "AI Growth Zones" with streamlined planning processes to accelerate datacenter construction. These zones are being developed in areas with new clean power generation, including North Wales - home to the UK's first small modular reactor (SMR) at Wylfa on Anglesey.

However, the SMR won't generate power until the mid-2030s, creating a potential gap between datacenter demand and clean energy supply. To address this longer-term challenge, the government recently unveiled an Advanced Nuclear Framework initiative to attract private investment in next-generation nuclear technology for powering factories and datacenters.

Currently, five AI Growth Zones operate across England, Scotland, and Wales, with recent announcements including North Lanarkshire and the Culham Science Centre (UKAEA) in Oxfordshire. The government has also established an "AI Energy Council" comprising Ofgem, NESO, energy companies, and major datacenter operators including Google, AWS, Microsoft, and Equinix.

A Department for Energy Security and Net Zero spokesperson emphasized that datacenters will only connect where the grid can support them. The AI Energy Council is exploring opportunities to attract investment in new clean power sources while working with Ofgem and network companies to free up grid capacity.

The datacenter industry's explosive growth reflects the broader AI boom, with companies racing to build infrastructure to meet anticipated demand. However, this rush has created a complex challenge: balancing the need for rapid digital infrastructure development against the physical limitations of energy generation and grid capacity, while ensuring only viable projects proceed to avoid wasting resources and grid space.

As the UK positions itself as a leader in AI development, resolving these energy infrastructure challenges will be crucial for maintaining competitiveness while meeting climate commitments and ensuring reliable power for all users.