Ofgem Proposes Commitment Fees to Clear Data Centre Grid Queue

The energy regulator Ofgem has proposed a new commitment fee for large data centre projects to resolve a massive backlog of electricity grid connection requests in Great Britain. The proposal targets speculative developers who reserve scarce network capacity without a firm intention to connect, which Ofgem warns can delay essential services and distort investment signals. Between November 2024 and June 2025, grid connection requests surged from 41 gigawatts to 125 gigawatts; data centres alone account for 73 gigawatts of this demand, significantly exceeding the country's peak energy demand.

Under the plan, developers must pay refundable deposits ranging from £237,500 to £712,500 per megawatt, or approximately 2.5% to 7.5% of average project costs. These fees would be returned upon project energisation but forfeited if the project exits the queue. Additionally, developers must meet hard milestones regarding financial capability, commercial maturity, and equipment procurement to retain their position.

Energy Minister Michael Shanks and Ofgem Director Eleanor Warburton both stated that the measures ensure viable, connection-ready projects are not held up by speculative applications. This initiative follows broader government reforms introduced in March to clear the queue of zombie projects and a £24 billion investment program to expand the power grid. The consultation period for these proposals is open until September 16, 2026.