Government Proposes Priority Grid Access for AI Data Centres
Artificial intelligence (AI) data centres may receive priority access to the electricity grid under new government proposals aimed at addressing rapidly increasing energy demands.
Currently, all new infrastructure projects, including hospitals and industrial sites, must enter a virtual queue to obtain an electricity connection.
During the first half of 2025, this queue expanded by 460%, largely driven by the high power consumption of data centres, resulting in some projects facing multi-year delays before becoming operational.
Economic Growth and Job Creation Could Influence Queue Priority
The proposals announced on Wednesday suggest that projects promising the greatest economic growth and job creation could be allowed to bypass the queue.
However, the Home Builders Federation (HBF) has expressed concerns that deprioritising housing developments for electricity connections could effectively impose a "moratorium" on new home construction.
Ofgem Highlights Surge in Electricity Connection Demand
In November, Ofgem, the energy sector regulator, reported that the queue for electricity supply connections had surged beyond "even the most ambitious forecasts for future demand," primarily due to demand from AI data centres.
Ofgem also noted that some projects in the queue were "speculative," lacking sufficient financing, proper planning permission, or land rights, meaning that even if granted a connection, they might not materialise into actual developments.
This situation risks blocking genuine projects further back in the queue that could generate new jobs and stimulate local economic growth.
Government Plans to Prioritise Strategically Important Projects
To address this issue, the government intends to prioritise projects that contribute significantly to economic development and job creation.
A consultation will be launched on allowing "strategically important" projects to skip the queue. These projects include AI infrastructure, electric vehicle (EV) charging hubs, and industrial sites transitioning from fossil fuels to electricity.
Concurrently, Ofgem is considering consulting on stricter rules for joining the queue initially.
AI Minister Supports Reforms to Accelerate AI Development
"Delivering data centres... relies on access to the grid. These timely reforms will help us move at pace, to seize AI's potential to help build a wealthier and fairer Britain," said AI Minister Kanishka Narayan.
Home Builders Federation Raises Concerns Over Housing Prioritisation
The Home Builders Federation expressed concerns that new housing projects were not included among the priority infrastructure.
"As we continue to face into a housing crisis it is frustrating that regulatory, planning and policy arrangements effectively prioritise energy intensive data centres over energy efficient homes for families," said Steve Turner, executive director at HBF.
Data centres already benefit from preferential planning treatment, being designated as critical national infrastructure, which prevents local objections from blocking them.
Turner added that if housing is not prioritised, it would represent an "effective moratorium on new homes in areas where capacity is constrained."
London Assembly Reports Housing Delays Due to Grid Capacity
In December, members of the London Assembly warned that parts of the capital were already experiencing this reality.
The Planning and Regeneration committee noted that some new housing developments in west London had been temporarily delayed after the electricity grid reached capacity.
Data Centres’ Growing Electricity Demand
There are currently nearly 500 data centres across the UK supporting digital services such as banking transactions and online gaming, accounting for approximately 2% of the country’s electricity consumption.
However, the expansion of AI is expected to increase the number of data centres, as more processing power is required. According to the grid operator, their electricity demand could increase up to six-fold between now and 2050.
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