Ofgem Raises UK Data Centre Power Demand Estimate 40%, Complicating Grid Crackdown
Ofgem's 40% upward demand revision arrives less than two months after it proposed fees to control a connections queue that tripled in eight months.
Britain's energy regulator has revised its estimate of data centre electricity demand upward by about 40% against projections made earlier in 2026, Energy Voice reported on Thursday (2026-09-17). The shift complicates grid planning already strained by a connections queue Ofgem has spent months trying to bring under control.5
The revision arrives less than two months after Ofgem launched a formal crackdown on speculative projects. On Wednesday (2026-07-29), the regulator proposed a commitment fee of £237,500 to £712,500 per megawatt for data centre developers (roughly 2.5% to 7.5% of average project costs, and potentially tens of millions of pounds for the largest facilities) after applications for electricity demand connections surged from 41 GW in November 2024 to 125 GW by June 2025, Montel reported.1,23
The tripling of connection applications in eight months was treated by Ofgem as a symptom of speculative activity rather than genuine load. Many applicants, the regulator said in its July (2026-07-29) consultation, had no financing or construction intent and were reserving network slots purely to hold optionality, pushing back schemes that were ready to build. The stated aim of the fee was to flush those applicants out and free capacity for investment-ready developers.2,3
The commitment fee range was calibrated at roughly 2.5% to 7.5% of average project costs. That was a proportion of project economics, not a measure of how much network capacity was actually worth. With demand estimates now 40% above the baseline against which that range was set, the financial signal the fee sends may not be strong enough to perform the filtering function Ofgem intended.3,5
The broader investment picture faces the same pressure. The £24 billion ($32 billion) grid expansion programme Ofgem approved in 2025 was costed and scoped against demand forecasts that now appear materially too low. Analysts told Montel in the week of 2026-08-03 that projected data centre power demand had already reached nearly three times Britain's current peak winter electricity consumption, though they cautioned that grid capacity constraints would prevent most of those projects from connecting for years.4,3
But that constraint does not dissolve the planning gap. Grid expansion operates on timescales of a decade or more. Data centres running AI workloads draw electricity at a near-constant rate around the clock — baseload demand rather than peak demand, and the hardest category to absorb on a grid still decommissioning thermal generation. A 40% forecasting error means the gap between planned grid capacity and likely future load is larger than official models were showing through the first half of 2026.5,4
Ofgem's July (2026-07-29) consultation on the commitment fee remained open for industry comment as of Thursday (2026-09-17). The regulator must decide whether the proposed fee range requires recalibration before any policy is finalised. A charge sized against a smaller demand scenario may produce a different filter effect against a larger one, letting through projects that would not have cleared a tighter screen.5,23
The practical consequence for developers in the queue is straightforward: longer waits, regardless of how the fee is ultimately structured. Every speculative application displacing an investment-ready scheme lengthens the backlog. Ofgem's decision about whether to revise its demand projections formally, or to proceed with the consultation on its current numbers, may reveal as much about its confidence in its own modelling as about its policy intent.5,2