Data Centre Connection Woes and Wins

On 14 November 2025 the Times highlighted the alarm sounded by the energy regulatory over the flood of connection requests from data centres in the UK. See article here on how fears grow over surge in electricity demand from data centres.

The current situation is not new. In July 2025 Charles Russell Speechlys with co-partners Copper Consultancy, teckUK and the Data Centre Alliance produced a report on how to make the UK an AI leader, highlighting the urgent need to accelerate data centre development by removing one of the major barriers holding the sector back - long grid connection delays.

The recent surge of connection requests from data centre developers has exposed a structural tension at the heart of Great Britain’s grid connection framework: the National Energy System Operator’s (NESO) emerging “gated” approach to timetabling connections treats generation and demand differently.

NESO’s current approach

NESO is already applying an Ofgem‑approved process to triage, reorder and timetable connections across the combined pipeline of generation and demand projects. That process expressly prioritises generation that is both “ready to build” and “necessary for the government’s clean power plans.” However, for prospective electricity users—such as data centres—NESO applies “readiness” criteria but not any assessment of “necessity.” Ofgem has acknowledged that this asymmetry has “unintentionally led to excessive growth in the demand queue,” crowding out viable projects and creating a backlog that materially exceeds any plausible peak demand. The absence of a “necessity” gate on the demand side has facilitated a volume of speculative applications that dwarfs realistic build‑out.

NESO’s “gate system” for generators

NESO’s process for generation is clear in substance. First, projects are assessed for deliverability (“ready to build”), which, in practice, captures concrete indicators such as site control, progressed planning and grid design maturity, supply chain and financing readiness, and the ability to meet connection milestones. Secondly, they are assessed for system necessity in the context of the government’s clean power trajectory i.e., whether the project’s attributes align with decarbonisation objectives and system needs within the relevant timeframe.

This two‑stage gating translates into timetabling consequences. Projects that satisfy both gates can be accelerated within the queue, receive earlier connection dates and move ahead of less‑ready or non‑aligned schemes. Conversely, generation that is not demonstrably ready or does not contribute to the near‑term system plan faces deferred or conditional dates, or must meet additional milestones to retain queue position. The legal significance of this approach is that it couples project‑specific readiness with a planning‑led necessity test, allowing NESO to actively curate the connection sequence in service of policy‑backed system outcomes.

NESO’s readiness only system for users

By contrast, the demand pipeline, where data centres dominate the headline numbers, has been subject only to readiness criteria. In other words, NESO does not presently apply an explicit “necessity” filter to demand connections analogous to the generation gate. That means timetabling is driven by whether a project appears capable of delivery against readiness indicators, without any accompanying determination that the specific load is necessary, timely or optimally located in light of system development, industrial strategy or net‑zero constraints.

The consequences of this design choice are readily observable in the reported statistics. With applications far outstripping even ambitious demand forecasts, technically “ready” but economically or strategically marginal projects can secure queue positions and provisional dates, impeding progress for more valuable projects behind them.

Government action

In January 2025 the Secretary of State for Science, Innovation and Technology (DSIT) announced measures to support the rapid growth of AI infrastructure including identifying AI Growth Zones to facilitate the accelerated build out of AI data centres.  Recognising that connection to the electricity grid for AI data centres is the single biggest blocker for establishing AI Growth Zones, on 13 November 2025 DSIT published its latest proposals on Delivering AI Growth Zone.

The sites announced to date are Culham, Oxfordshire (pilot site).  North East of England (second Zone), two linked sites at Cobalt Park (North Tyneside) and Blyth (Northumberland) and new sites confirmed on 13 November 2025 in North Wales at Prosperity Parc (Anglesey) and Trawsfynydd (Gwynedd).

For those AI Growth Zones and sites still to be announced, the Government is working with Ofgem and NESO to accelerate connection times for specific sites including:

• Removing speculative demand in the grid connections queue with mechanisms to reallocate the released capacity and reserve future capacity so that only the most strategic and credible projects are taken forward.
• To enable viable options for AI Growth Zone developers to build their own high voltage grid infrastructure.
• Supporting all AI Growth Zones through the Connections Accelerator Service.

Anticipated convergence

With the Government’s backing for accelerating data centre growth in AI Growth Zones made clear, the question is whether outside AI Growth Zones, Ofgem’s intention now is to curb speculative demand applications while safeguarding capacity for “genuine projects.” Read together with NESO’s generation gates, this points toward a likely evolution of the demand rule with the introduction of a necessity‑style gate that distinguishes strategically important, location‑efficient demand (for example, co‑located with low‑carbon generation or network headroom) from speculative or poorly sited schemes. If implemented, tempered to fit statutory non‑discrimination, such a gate would allow NESO to timetable earlier connections for strategic demand that meets readiness and necessity criteria, while deferring, conditioning or removing projects that do not. 

Behind‑the‑meter strategies – how the industry is responding

In the meantime, data centres facing long or uncertain firm‑capacity dates are increasingly deploying behind‑the‑meter (BtM) solutions to de‑risk delivery, manage costs and improve sustainability credentials. The most common approaches combine on‑site generation, storage and flexible operation including:

• On-site large lithium battery energy storage systems (BESS)
• Private‑wire renewable generation - where land permits, on‑site solar with BESS are common
• High‑efficiency CHP or gas engines to provide resilient power for absorption cooling
• Fuel cells and emerging options initially on natural gas with a path to low‑carbon hydrogen
• Small Modular Reactor (SMR) – an embryonic but growing technology favoured by some of the largest hyperscale data centre operators. Indeed, the latest AI Growth Zones announced on 13 November 2025 in North Wales was combined with the announcement of the UK’s first SMR programme at Wylfa in the mid‑2030s.

As heavy users of energy, the industry is responding positively to UK’s net zero targets, with Sundar Pichai, the CEO of Google remarking that its Waltham Cross Data Centre, opened in September this year, being projected to run at or near 95% carbon-free-energy in 2026. The company has reportedly entered into an agreement with Shell Energy Europe Limited to manage a power portfolio for Google that addresses the intermittency of clean energy generation through access to battery energy storage systems (BESS).

Legally, BtM schemes need to consider (i) staying within supply‑licence exemptions or securing an appropriate supply arrangement; (ii) obtaining planning permission and environmental permits for on‑site plant and (iii) satisfying technical standards for connection and protection.

Conclusion

For data centre developers, strategic energy planning to support operation is vital with particular regard to the emerging connection reforms. Speculative connection applications may no longer be adequate without strategic positioning, sustainability and decarbonisation objectives being considered at the outset.

Our data centre practice at Charles Russell Speechlys advises on the life cycle of data centre deployment including  (i) early strategic energy options, connection arrangements, power purchase agreements and regulatory advice (ii) advice on technology, planning, property and operational issues and (iii) emerging heat network options.