Ofgem warns on grid squeeze after Heathrow data centre approved

Ofgem, Britain's energy regulator, has issued a caution about speculative data center projects potentially impeding viable investments on the country's electricity grid, following the approval of another power-intensive facility near Heathrow Airport. Hounslow Council endorsed plans for a 12.2-acre data center on a brownfield site at the Haslemere Heathrow Estate, which would necessitate an 80MVA high-capacity electricity connection—enough to power tens of thousands of homes.

This approval follows a surge in data center construction around London to meet the increasing demand for AI technology, adding pressure to an electricity network already grappling with a significant backlog of projects awaiting connection.

An Ofgem spokesperson emphasized, "The connections queue must work for consumers and for projects ready to invest, build and connect. Speculative schemes taking up space can delay viable projects and create uncertainty for network planning." Consequently, Ofgem is consulting on a data center commitment fee and stricter commitment requirements to free up capacity and expedite connections for projects delivering value to Britain.

Securing planning permission is not sufficient to bypass the impending stricter rules, which could entail developers meeting additional milestones and paying an upfront fee to secure their position in the grid queue. The plans are still under consultation and have not been finalized.

The development of data centers in London has reached such a scale that it is straining the infrastructure. The Greater London Authority revealed that proposals for around ten times the existing electricity capacity utilized by current London data centers have been submitted through the grid connection queue. As of November last year, there were 99 operational data center sites in London and an additional 26 in the planning phase, representing approximately 80% of the UK's data center capacity.

Hounslow Council was informed that the electricity for the Heathrow development would be sourced from the Laleham Grid Supply Point, outside the borough, and would not utilize capacity designated for other local projects such as housing. However, Affinity Water, which provides water to parts of Hounslow, warned in May that some data centers were requesting up to three million liters daily, equivalent to the peak demand of approximately 3,500 homes.

The London Plan, which the proposed development purportedly does not fully comply with, also raised concerns regarding transport and the high energy and water intensity of the project. As a condition of the scheme, the developer must submit a water consumption strategy once operational. Hounslow Council stated that its planning committee had assessed the electricity, water, and infrastructure demands of the project before approval.

The council, representing Brixton (Heathrow Estate) Ltd as the applicant and not identifying a separate ultimate operator or end-user, stated that planning mitigation would be sought through the process, while matters outside the statutory utility and regulatory regimes would be handled by the respective bodies. The council highlighted that the developer's approval alone does not exempt the project from the proposed additional requirements, which include a refundable commitment fee and demonstration of genuine demand for the requested capacity.

Hounslow Council's approval comes amid a series of similar approvals in west London, with Ealing Council recently authorizing a 52,000 square meter data center on the former Honey Monster factory site in Southall, near four other approved data centers. Both projects still require a Stage 2 referral to the Mayor of London before completion. Hounslow Council noted there is currently no definite timeline for this process.