UK wants datacenters to pay a fee for grid connection requests

Ofgem is seeking feedback on proposals to levy a fee on datacenter development projects at the time they apply for a grid connection. The move aims to discourage companies from seeking approval for speculative applications that clog up the pipeline and cause connection delays, without ever resulting in finished datacenters. The …

[cyberdemon]

Refundable??

> The fee would be refunded once the facility is drawing power, or forfeited if the project exits the queue early instead.

If it's refundable, then it's not a "fee". It's a deposit.

Frankly I'm amazed that there isn't already a per-MW deposit payable - no wonder the UK grid connection queue is choked to death with bogus applications! If spamming the process can be done at no cost except to NESO/DSOs/Ofgem i.e. the Tax/Billpayer, then unscrupulous companies will obviously game that system to both speculatively submit applications (e.g. multiple sites for the same project), and perhaps even spuriously, to nobble their competitors.

It should NOT be fully refundable. At the very least, the cost of processing each application needs to be recovered, with an additional levy to support infrastructure upgrades. If there is anything left over, then refund that when a project is complete.

Also, will this be applied retroactively to the 125GW (3x the UK's peak winter demand!) of mostly-bogus projects (2/3 of which represent datacentres) already in the queue? They should be made to pay at least a portion of the new the fee in order to keep their place.

[Anonymous Coward]

Re: Refundable??

Ermm..you even quoted "or forfeited if the project exits the queue early instead" in your reply, and then overlooked it as you tilted at your windmill.

The whole idea is not to penalise genuine applicants, but to discourage and penalise speculative applicants.

[cyberdemon]

Re: Refundable??

A deposit can still be forfeited, that's generally the purpose of a deposit. It doesn't make it a fee.

E.g. you put a deposit on a house to secure purchase or enter a rent agreement. You get it back if you are a genuine buyer and complete purchase, or if you are renting you get it back if you return the hose in good condition. The estate agent's fees on the other hand, aren't refundable.

There's also a serious problem with these projects requesting absurd power requirements (to placate investors and contracted third-parties, to whom they have promised "gigawatts") and then only 50MW ends up being energised. That's a massive waste of resources for everyone involved and (as I put in my other post) should rightly be penalised.

[anothercynic]

Re: Refundable??

cyberdemon is correct though. It's a semi-refundable deposit. It becomes non-refundable when you cancel your connection, but when you start drawing power you get it back.

A fee is non-refundable and non-creditable. You pay for the connection, and that's it. You don't get given it back once you start drawing power.

[LybsterRoy]

Re: Refundable??

Even genuine applicants should have to pay. Especially since their requirements will probably be satisfied at the expense of the good old taxpayer.

[skwdenyer]

Re: Refundable??

The general principle of modern society relies upon the costs of adapting to meet changing demand being met collectively for the collective good. Otherwise there would never be another affordable home built, no business will ever expand, and folk will start buying local generators rather than grid connections.

Much as I understand your stance, that way lies madness.

[cyberdemon]

Also, having a linear scale is too weak for discouraging AI slop-farms. The fee could for example go with the square of megawatts, e.g. £10k * MWs^2 would mean that a "modest" 1MW datacentre only pays £10k to join the queue, a 50MW barn pays £25m, while a 500MW megafarm must pay £2.5b and a 2GW hyperscale behemoth pays £40b. This may seem harsh, but it reflects ACTUAL TECHNICAL REALITY in maintaining grid stability, i.e. the grid and each of its sub-networks must be able to cope with the sudden loss of its single largest element.

This is similar to what New York have done (i.e. outright banning datacentres above 50MW) but is more flexible, removing the risk from government and placing it on the tech companies instead.

If any is to be refunded, it should be done so similarly based on how much IT load is powered, i.e. if you applied for a 1GW connection but only built 100MW, then you only get 100MW worth of refund i.e. 1%

What's that? Your bubble is bursting and you can't pay for the other 900MW of GPUS? Oh dear, What a Shame, Never mind. Thanks for your contribution to His Majesty's Treasury.

[LybsterRoy]

Brilliant, vicious but brilliant

[heyrick]

Refundable?

Why?

It costs money to connect. It costs a fair chunk of money to connect something like that.

Stop spreading costs amongst the normal consumers - we're not an open wallet. If big business wants a billion watts, they can cough up for it.

[Catkin]

Re: Refundable?

If they're connected and operating, they're paying for infrastructure costs as part of the bill. This deposit means that the businesses, whether they use the power or not, will pay for the infrastructure.

[DS999]

Re: Refundable?

The problem is there may be LARGE up front costs required to deliver them that gigawatt of capacity, which are incurred before they receive their first power bill. Even after they start receiving bills, it will be years before they've paid off those up front costs. So someone else (i.e. the existing customers) are paying larger bills as well.

If you have these huge companies coming in spending billions on a hyperscale datacenter, they should pay the ENTIRE up front cost of capacity upgrades in generation and transmission. Have them pay for it by taking out a bond which will fund those upgrades. Then when they start paying bills they get to deduct the debt service on that bond against a portion of their bill.

After the 20 year term of the bond is up, providing they've been up and running for that whole 20 years, they'll have written off the whole cost of that bond. But if the AI bubble burst and they shut down that datacenter in four years, they are still on the hook for that bond because they are the reason those upgrades were necessary - the existing customers shouldn't be stuck paying off that infrastructure they neither needed nor wanted.

The hyperscale datacenter players have loads of money, having them take out a bond is nothing to them, because there are plenty of investors who will buy that bond thus providing the cash for the upgrades. Of course those investors will lose if the datacenter owner ends up going bankrupt. But that's as it should be - they priced the risk in when they set the rate on the bond. The important thing is that the utility and customers should be completely unharmed no matter what happens with the datacenter or its owner.

[Catkin]

Re: Refundable?

Do correct me if my maths is wrong but it looks like that 80GW in queued demand (only a fraction of which materialises) from data centers would be worth £19B-£57B in deposits. Given the low translation rate from requests to construction, if that trend continues, that's a lot of money for the National Grid to keep hold of.

[DS999]

Re: Refundable?

Sure but some of that queued demand would evaporate if they were having to chip in that amount of money and knowing they won't get it back.

My "bond to build" strategy would accomplish sort of the same thing since there would inevitably be bonds taken out to perform upgrades for datacenters that weren't built. They'd want to get their place in line (since you can't do all the upgrades at the same time no matter how much money there is) so they'd take out the bond and then the project would not happen for one reason or another.

You'd even be nice and refund all uncommitted funds in the event of a project cancellation. So for example if you'd already started adding a new solar field with battery capacity you aren't going to stop halfway through, you'll finish that so that part of the bond won't be refunded, nor any transmission upgrades necessary to get that new PV/battery capacity onto the grid, but anything that hadn't broken ground at all and didn't have any other dependencies would be refunded.

That insures that datacenters pay 100% of their added cost burden leaving zero for other ratepayers, and you'd get some free upgrades to the grid and generating capacity from projects that were cancelled after the bond had been purchased but the datacenter never got built.

[skwdenyer]

Re: Refundable?

So would you like to apply that to anything else? Healthcare? Roads? You seem to be advocating for an end to modern society.

[cyberdemon]

Re: Refundable?

Er, no, hospitals have a very useful purpose (whereas AI on the other hand, even if its output were free of cost and had zero resource impact, has questionable benefit to society and plenty of negative consequences), and roads require little maintenance post construction, i.e. do not require a constant stream of resources (gigawatts of baseload i.e. fossil or nuclear powered electricity and billions in replacement GPUs) just to keep them open.

And both are (traditionally at least) funded up front by the taxpayer anyway, so your argument is nonsense.

[AtomicDog]

I'm sorry...

They want to TRIPLE the connected load to the grid!? And for what!? What the hell is that going to do to our energy prices!?

How about "fuck right off"!

[Catkin]

Re: I'm sorry...

"Britain's electricity demand connections queue has more than tripled in size in less than a year"

[cyberdemon]

Re: I'm sorry...

Yes, and if all the projects were genuine (which they are not) then we'd be adding 125GW of mostly 24h baseload onto a grid that currently handles 40GW peak, i.e. quadrupling rather than tripling the load on the grid.

[Catkin]

Re: I'm sorry...

The reality is that it's well below just some data centers not getting built, according to Reuters, it's around 7% actuallyr reaching operational status as of April.

https://www.reuters.com/world/europe/powered-land-zombie-projects-real-estate-age-ai-2026-04-24/

So as you correctly identified, it's not realistic comparing the current peak loads (46GW in 2025) to applications, which is the purpose of the fee. Namely, the queue is being clogged. Prospective data center builders don't 'want' to draw 120GW, they want to be at the front of the queue to push up the value of their investment.

[cyberdemon]

Re: I'm sorry...

There may be Other Reasons why only 7% are getting built.

Perhaps because it's a toxic bubble, a Big Tech equivalent of the South Sea bubble, where every Megawatt they build costs them $40 million in capex, but they continue pouring money down the drain (perhaps because their bosses have succumbed to AI psychosis themselves) despite the facts that a) no bugger wants it! and b) operating profit margins are in the negative numbers! i.e. every megawatt they bring online just loses them more money faster.

Not all of the UK grid connections queue is datacentres, 2/3 of it (80GW) is. 7% of 80GW is still 6GW, or two Hinkley Point C nuclear plants, which apparently cost £50 billion each and take 15 years to build.

But if Ed Zitron's numbers from TD Cowen are to be believed, then a 70MW datacentre costs $3 billion to build and to fill with nvidia hardware. That's $42 billion per GW (almost twice as much as Hinkley), or $214Bn for the portion of the 80GW backlog that you/Reuters believe could actually get built. (with almost none of that money ever touching UK pockets, naturally).

The reason that only 7% get built is not just that they are speculatively submitting applications - it's because it's technically and economically impossible to build them any faster.

What baffles me is WHY do these tech companies continue to pour resources into a money furnace that just consumes more and more money the bigger it gets.

When the bubble inevitably collapses, it will leave behind a depression of staggering proportions, and we will be left with noting but a pile of incredibly expensive yet worthless junk. The pikeys will have a field day with all the heavy copper busbars, but that's about it.

[AtomicDog]

Re: I'm sorry...

The current national demand for the whole UK at 4pm on a Friday afternoon is about 28GW.

The average demand over the last year has been a shade over 30GW.

Assuming the 80GW of "proposed" datacentre capacity actually draws anything like full power, that's more than a tripling of power demand.

The entire installed generating capacity for the whole country is currently only about 80GW, and that includes renewables that can't generate all the time, nuclear power stations that are slated for decommissioning, and other power stations that need to be able to go offline for maintenance.

So I might have misunderstood the precise nature of the figures being discussed, but I think my general point still stands, no?

[Catkin]

Re: I'm sorry...

I disagree on the basis that, as per the intent of the charges, the issue isn't one of actual demand increases but abuse of the queue. If anywhere near the requests translated into actual demand, the fee would be pointless because the prospective operators would get their money back (before spending orders more on consumed energy).

[Tron]

£1m per application, non-refundable.

You'll need to supply your own power and fund the construction of a public reservoir for each datashed. And have enough insulation so that standing outside it, there is no hum.

[elsergiovolador]

Re: £1m per application, non-refundable.

Not only that. They should be required to be fully sound insulated. Sound pollution should be illegal. Perhaps they should also have to pay extra levy on generated revenue (not profit) that would go to National Trust directly.

[RuffianXion]

Re: £1m per application, non-refundable.

£1million? I was thinking more like £1billion.

[Yet Another Anonymous coward]

Re: £1m per application, non-refundable.

Not only that, it should apply to all industrial electricity customers not just data centers. Car makers, steel works, Dutchy Original Shortbread bakers and pubs.

Together we can deindustrialise Britain and return it to its proper state, before all those Romans arrived with their water mills and cities

[Richard 12]

There's a massive difference

A car plant or steelworks employs thousands of people.

A bakery employs hundreds.

A datacentre employs five, at most

[running with nukes]

Data centres

And require prominent Vault Boy logos on the outside of each data centre, for easy identification.

[elsergiovolador]

Grid

Data centre should build their own power grid if they want to operate in the UK.

Otherwise F Off.

These eye sores have no benefit to society. ZERO.

Their business model is hoard the compute resources and resell at huge markup draining the economy and making ordinary lives more miserable.

I'll vote for any government who will ban this business model.

[Yet Another Anonymous coward]

Re: Grid

And they should be powered with British coal, from British coalfields

As part of Burnham's No10 North, all data centers and web sites will be built in S. Yorkshire and Durham.

[Anonymous Coward]

Rule of thumb for the cost of building an LLM-platform datacenter is £50 million per MW, so £50 billion for a 1GW center ( used to be closer to £40 billion, but each gpu rack uses TBs of memory... ).

Those suggested deposits look to be on the low side.

[Anonymous Coward]

Offshore pirate data centres!

Goodie Goodie, yum yum….

[Fred Dibnah]

Re: Offshore pirate data centres!

And now, A Walk In The Black Forest.

[Anonymous Coward]

Re: Offshore pirate data centres!

That sir, is the only correct answer!!

[Sproggit]

UK National Grid - Live

If you're curious, you can see the demand and generation profile for the UK National Grid, live, here:-

https://grid.iamkate.com/

Courtesy of Kare Morley

[retiredFool]

Really good idea

As the article points out, they would just be requiring what the lease options are doing. Just like the datacenter has to pay for an option to lease or buy the land pending approval for the site, they are simply making the datacenter pay for the option to connect to the grid. Really brilliant idea. I'm pretty surprised they are just now suggesting it. Please power providers in the US, copy this idea!

[frankyunderwood123]

also planning regs should be WAY stricter

Closed loop water cooling should be mandatory.

Large Buffer zone between site and residential areas.

Light pollution level requirements should be stricter - no reason for stupidly bright illumination around the facility.

No slop farms and offer incentives for data centres that benefit humanity, e.g. cancer research and other health research, alternative energy research etc.

Then again, I don’t expect anything even remotely as sensible as this to ever happen, especially given AI tech leaders are currently haemorrhaging money and the cost of energy in the UK is not competitive