Ofgem has proposed charging large data centre projects a commitment fee of up to £712,500 per megawatt as it seeks to remove speculative developments from Britain's congested electricity grid queue.
The energy regulator said the refundable fee would range from £237,500 to £712,500 per megawatt – equivalent to around 2.5%-7.5% of average project costs.
Developers would pay when accepting a grid connection offer and recover the money once the project was energised. Those leaving the queue early would forfeit the fee.
The proposals follow a surge in contracted demand connection offers from 41 gigawatts to 125 gigawatts between November 2024 and June 2025. Data centres account for at least 73 gigawatts across 315 proposed projects.
Ofgem fears that many of these developments will never proceed but are occupying scarce capacity, delaying investment-ready schemes and distorting decisions about future network spending.
"Consumers should not bear the risks created by speculative projects taking up space in the system," said Eleanor Warburton, Ofgem's director for energy system design and development.
Alongside the fee, developers would face new milestones requiring evidence of financial capacity, commercial maturity and procurement activity to retain their position in the queue.
Ofgem said earlier reforms had already accelerated about 7.8 gigawatts of projects by an average of six years. It expects the proposed measures to have a similar effect on large electricity users.
Energy minister Michael Shanks said viable projects should not be "held up by speculative applications".
The consultation will remain open until September 16.
