Ofgem Proposes Deposit Requirements to Clear UK Data-Center Queue

The UK energy regulator, Ofgem, has outlined a plan to require data-center developers to place a non-refundable deposit that could rise to hundreds of millions of dollars for the largest projects. Under the proposal, developers must also secure advance customer commitments and demonstrate sufficient financing before remaining in the power-grid queue. The regulator will review industry feedback through a process that concludes in September, after which the final rules are expected to be set. The aim is to remove “phantom” projects—applications unlikely to be built—that are clogging the queue and delaying genuine builds.

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The surge in artificial-intelligence investment is channeling hundreds of billions of dollars into data-center construction worldwide. In the UK, this influx has created a backlog that hampers accurate energy-demand forecasting and grid-expansion planning. Similar congestion problems are reported in the United States and across Europe, but the UK faces additional challenges from high energy costs and limited land availability.

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Alex Burgoyne, head of data centers at real-estate consultancy Knight Frank, warned that excessive burdens could “shoot the golden goose,” potentially driving projects to more attractive locations.

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• “We don’t want to shoot the golden goose.” — Ofgem

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If the reforms are perceived as too stringent, developers may relocate to markets with more favorable regulatory environments, potentially undermining the UK’s goal of becoming a hub for AI-driven compute capacity.

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