UK's Ofgem proposes grid-connection fee to deter speculative data centre projects

July 29 (Reuters) - Britain's energy regulator Ofgem launched a consultation on Wednesday on proposals to tighten electricity grid-connection requirements for data centre projects, as it moves to free up scarce network capacity from speculative applicants.

The proposal, which include a new financial commitment fee and project milestones for grid connection applicants, comes after demand surged from 41 gigawatts to 125 gigawatts between November 2024 and June 2025, with data centres accounting for at least 80GW of that total, Ofgem said.

The proposed data centre commitment fee, set within a range of £237,500 to £712,500 per megawatt — equivalent to around 2.5% to 7.5% of average project costs — would be refunded upon energisation but forfeited if a project exits the queue early.

(Reporting by Yamini Kalia in Bengaluru; Editing by Sherry Jacob-Phillips)