For companies seeking to build a giant data centre in Great Britain right now, the biggest bottleneck isn’t a shortage of cutting-edge chips, a lack of capital eager to fund the next wave of large language models (LLMs) or inference workloads, or the availability of software engineers who understand neural networks. The bottleneck is the electricity grid and associated infrastructure, which currently features a waiting list that can stretch comfortably into the next decade.
For technology companies trying to build at scale, waiting seven or eight years to plug your servers into the grid creates a competitive and commercial problem. Software architectures evolve rapidly, investor timelines are finite, and competitors in other countries may advance more quickly.
Ofgem – the UK energy regulator – has released an update to its Demand Connections Reform strategy. It is a detailed look at what happens when trillion-dollar Silicon Valley ambitions run into the physical, regulated reality of a legacy electricity system.
Sisyphus of Grid Regulators
The government has been trying to reform the grid queue for some time. This is not a new crisis that caught everyone by surprise; it is a multi-year saga of policy papers, consultations, reviews, and un-priced options.
For years, the government, the regulator, and network operators have published policy papers, issued urgent strategy letters, and conducted “end-to-end reviews” aimed at clearing the backlog.
But the queue kept growing, largely because getting in line was historically cheap, and holding a spot acted like a free call option on the future value of having electricity.
Ofgem reports that contracted offers in the demand queue rose from 41 GW in November 2024 to 125 GW in June 2025, against GB peak electricity demand of 45 GW recorded on 11 Feb. 2026. NESO’s Demand Queue Call for Input identified around 140 data centres representing approximately 50 GW of demand, and 71 data centres with a financial commitment and Final Investment Decision, representing around 20 GW.
The result is a queue heavily populated with what the industry calls “speculative developments” – and what everyone else calls zombie projects. These are projects that may not be built, but are safely sitting in line, hoarding capacity, and blocking real, heavily capitalised infrastructure from getting power.
Three Pillars of Reform
To address this, Ofgem, NESO, and the government have organised their battle plan into three buckets: Curate, Plan, and Connect.
Curate is the queue management exercise. It introduces new or strengthened membership criteria so that viable projects progress and non-viable projects do not continue to block capacity. NESO and Ofgem’s work on readiness, financial commitment, and milestone-based progression sits within this category.
Plan is the strategic allocation exercise. The government is considering how to prioritise strategically important demand projects, including through mechanisms that could reserve future network capacity, reallocate capacity released when projects exit the queue, and support a strategic plan for data centres. In this context, “strategically important” reflects projects the government identifies as relevant to national priorities such as economic growth, AI infrastructure, clean energy, decarbonisation, and system planning.
Connect is the delivery and operating model. This is where Ofgem is considering new connection arrangements to accelerate and increase connections, while maintaining system security and operational integrity.
Connect Accelerate: DIY or Bring-Your-Own High-Voltage Infrastructure
First, within Connect, Ofgem is introducing a framework called “Connect Accelerate,” which is essentially a “DIY” or “BYO” approach to national infrastructure.
Historically, if you needed a massive high-voltage substation or dedicated transmission line built to feed your new data centre, you generally had to wait for the regulated transmission owners to design it, buy the parts, and build it. If they were short on engineers or buried in paperwork or competing priorities, developers were required to wait for the monopoly utility to get around to them.
Ofgem’s new proposal is pragmatic: if the regulated route is too slow, large users will have the option to build it themselves.
Under a framework that Ofgem plans to formally consult on in autumn 2026, large energy users will be given the legal right to self-build and own, or self-build and transfer, high-voltage transmission assets. Options under consideration include high-voltage connection offers for demand customers, a class exemption route, and the development of an independent transmission owner licence.
This shifts execution risk away from a backlogged utility and hands it to the connecting party – which, in the case of large data centre developers, is often a well-capitalised organization with a strong commercial incentive to move quickly.
Ofgem has been clear that any model must manage risks to the wider system, maintain service quality for customers connected to self-build networks, and avoid imposing higher costs on consumers connected to the wider network.
Connect Operate: The Data Centre Diet
The second, half of Connect is “Connect Operate,” which is about how you behave once you get plugged into the grid.
Data centres are what engineers call “flat baseload” demands – they draw large, consistent volumes of electricity around the clock. The modern grid, however, is increasingly volatile because it relies on whether the wind is blowing in the North Sea or if everyone in London just turned on their kettles at the exact same moment i.e., managing intermittent renewable generation, local constraints, and peak demand pressures.
So, Ofgem is setting up a new “Flex Technical Taskforce” alongside the government’s AI Energy Council to develop an arrangement where data centre operators who agree to operate flexibly – meaning they reduce non-essential computing loads during peak hours when the grid is stressed – the regulator will let you jump ahead in line and connect much sooner. Opporators accept an occasional, calculated power cap in exchange for immediate speed. Data centres offering operational flexibility may therefore be more compatible with a constrained electricity system than those requiring firm, round-the-clock capacity with no ability to adjust.
Connect Accelerate addresses how infrastructure is built and owned, while Connect Operate addresses how large loads use the system once connected. Both sit within the Connect pillar.
Gas Network Connections: An Adjacent Development
Because the electricity grid queue is so slow, some data centre developers have been looking at an alternative pathway: the gas network.
Ofgem revealed that there are currently around 117 active cases and enquiries where developers are applying to hook data centres up to the gas network instead of the electric grid.
The developers want to build private, localised, gas-fired power plants right next to their server farms. They will pipe in natural gas, burn it on-site to generate their own private electricity, run their AI models, and treat the gas network as a temporary bridge until the electric grid can finally hand them a wire.
Ofgem has expressed concern about this. The UK has legally binding net-zero targets, and having a hundred mini-fossil-fuel power plants pop up across the countryside to power AI chatbots may raise sustainability concerns. The regulator has stated it is considering the interactions, risks, and opportunities associated with this activity in line with its principal objective and statutory duties, including consumer protection, security of supply, net zero, and economic growth.
Carbon Capture Opportunity
But this is also where an entirely new industrial opportunity opens for the carbon capture sector.
If data centres are forced by physics to burn gas but forced by their institutional investors to maintain strong environmental credentials, they become a potential market for modular carbon capture solutions that can be attached to on-site gas turbines.
The data centre gets to bypass the electric grid queue by burning gas and the carbon capture unit manages the emissions profile. When the commercial value of getting computing capacity online quickly is high, that arrangement may make economic sense for both parties.
New Reality of Infrastructure
The broader takeaway from Ofgem’s update is that infrastructure is no longer a boring, back-office consideration for corporate strategy; it is a core strategic variable for any large technology or energy project in Great Britain. The era of waiting passively for a regulated utility to issue a connection date is giving way to a more active, capital-intensive approach to infrastructure delivery.
For those advising clients or deploying capital in the technology or energy space, the competitive advantage is not just about who has the best product anymore – it is about who understands how to navigate the physical, messy mechanics of the grid.