The UK Power Grid Has a Phantom Data Center Problem

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As data center developers compete for a cut of the hundreds of billions of dollars flowing into the artificial intelligence industry, the queue to join the UK’s power grid has become jammed with projects that will likely never get built. The snarl is exacerbating already years-long wait times for viable projects, and it's messing with attempts to forecast energy demand and plan grid expansions.

In July, the UK’s energy regulator, Ofgem, laid out a proposal meant to force phantom data centers out of the swollen queue. Under the plans, set to be finalized after an industry feedback process that ends in September, developers would be required to put down a steep, nonrefundable deposit that could balloon to hundreds of millions of dollars for the very largest data centers. Developers would also be required to line up customers in advance and prove they have the funding to complete their builds.

However, Ofgem faces a Goldilocks conundrum: The reforms must be burdensome enough to deter speculators but not so much that they drive legitimate data center projects to other shores, undermining the UK’s ambitions to meet the voracious demand for the compute required to run sophisticated AI models.

Data center developers face delays almost everywhere; similar grid congestion issues afflict the US and countries across Europe . But whereas the US is a highly desirable market , Ofgem’s reforms risk making the UK—already unattractive for the high cost of energy and dearth of land—one of the world’s most expensive places to build a data center, industry experts believe.

The frenzied data center buildout “is bringing a huge amount of capital investment into the UK,” says Alex Burgoyne, head of data centers at real estate consultancy Knight Frank. “We don’t want to shoot the golden goose.”

Ofgem says that it will take into account industry concerns before settling on a fee, but that differences between international energy markets make like-for-like comparison difficult. “We recognize data centers are a key part of the UK's AI ambitions and future economic growth. Enabling viable data centers to connect more quickly is an enabler of this,” Nathan Macwhinnie, deputy director of strategic planning and connections at Ofgem, tells WIRED in a statement.

The queue to join the UK grid began to balloon toward the end of 2024, around the time the government designated data centers “critical national infrastructure.” Between November 2024 and June 2025, the total energy demand of the projects in the connection queue increased from 41 gigawatts to 125 gigawatts, according to Ofgem . New data centers make up 73 gigawatts of that—equivalent to one and a half times the peak demand for the entire UK last year—and counting.