Ofgem has proposed new measures which could see developers of data centres made to pay hundreds of millions of pounds up front.
The British energy regulator said a refundable fee should be charged for projects that want to connect to the network, amid mounting demand for connections to the electricity grid.
It is proposing developers pay a deposit between £237,500 to £712,500 per megawatt – meaning data centres seeking 1 gigawatt (GW) of power would have to pay hundreds of millions up front, paid back if the project was completed.
The proposal follows growing opposition in parts of the country to plans for new data centres, which are needed to power the artificial intelligence boom.
Data centres are large buildings which house computer servers used to store and process data and run the digital services which power the internet.
Ofgem has started a consultation on its proposals, which will run until 16 September.
It said the amount of electricity capacity being requested by projects seeking to connect to the grid had risen from 41 GW to 125 GW in the past year, reflecting a sharp increase in demand.
This is significantly more than double 2025’s peak electricity demand in Britain of around 46 GW.
The regulator said the projects would have to hit key milestones to keep their place in the grid connection queue, which has seen a surge in demand.
An increasing number of centres 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 who live near them.
Residents have raised concerns about noise, electricity demand and the large amounts of water sometimes used to cool the high-performance chips that generate vast amounts of heat.
There are currently 564 data centres listed in the UK, according to the data centre map, external.
Scotland in particular is seen as a good location for future projects due to its supply of renewable energy to power the centres, with 24 currently in the planning process.
Ofgem said the plans were aimed at tackling “speculative projects from securing scarce network capacity without any firm intention to connect”.
Eleanor Warburton, the regulator’s director for energy system design and development, said: “Britain’s electricity demand connections queue has more than tripled in size in less than a year, and consumers should not bear the risks created by speculative projects taking up space in the system.”
Energy minister Michael Shanks from the Department for Energy Security and Net Zero said he believed Ofgem’s actions would “help ensure that viable connection-ready projects can get going and not be held up by speculative applications”.
“Britain needs a grid connections system that works for the 21st century and allows businesses to invest and grow, creating jobs across the country,” he said.
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