UK Plans Fees to Weed Out Speculative Data Center Projects

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessUK Plans Fees to Weed Out Speculative Data Center ProjectsThe UK’s energy regulator is proposing new rules to stop speculative data centers from clogging up the grid connection queue by requiring hefty upfront financial commitments and tougher project milestones.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The UK’s energy regulator is proposing new rules to stop speculative data centers from clogging up the grid connection queue by requiring hefty upfront financial commitments and tougher project milestones.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountOfgem’s proposals would require data center projects to provide “significant” fees or other financial guarantees, such as letters of credit, performance bonds or cash deposits, according to an emailed statement from the regulator. Britain’s congested electricity grid has become a constraint on economic growth, the energy transition and the government’s artificial intelligence ambitions, and the proposal aims to ensure that only realistic projects with a firm intention to connect are given access to scarce network capacity.The proposed fee would range from £237,500 ($315,840) to £712,500 per megawatt, equivalent to about 2.5% to 7.5% of a project’s estimated capital expenditure. That means a 500-megawatt data center could be required to post financial security of up to £356 million, although the money would be returned if the project is completed and energized.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“Where speculative projects take up space in the queue, they can delay other schemes and create uncertainty about future network needs,” said Ofgem’s Director for Energy System Design and Development Eleanor Warburton.The proposals are open for consultation until Sept. 16, with Ofgem aiming to take a final decision later this year. They would apply to both existing and future projects in the grid connection queue, although Ofgem has proposed exemptions for projects due to energize within six months of the rules taking effect, as well as grace periods for developers that already hold connection offers.The plans come after a surge in applications from power-hungry data centers has created a bottleneck that may delay investment and slow the rollout of new infrastructure. Forty of the 315 data center projects in the connection queue are seeking more than 500 megawatts each — equivalent to the demand of roughly two million homes, according to government estimates. Altogether, the projects are requesting 73 gigawatts of capacity, almost double the UK’s peak electricity demand.Under the proposal, only data centers seeking connections of at least 40 megawatts would be subject to the financial commitment, a threshold Ofgem says captures almost all of the capacity currently in the queue, while avoiding unnecessary burdens on smaller projects.(Updates with details about fees in fourth paragraph, quote in fifth paragraph and other details from sixth paragraph.)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.