The UK Power Grid Has a Phantom Data Center Problem
The UK’s energy regulator is using a variety of tricks to keep speculative data center projects from plugging into the power grid. The country’s AI ambitions hang in the balance.
In July, the UK's energy regulator, Ofgem, proposed measures to eliminate "phantom data centers" from the congested power grid. These measures, to be finalized after industry feedback in September, would require developers to deposit hundreds of millions of dollars and secure customers ahead of time. However, Ofgem faces a challenge in making the reforms stringent enough to deter speculators without driving legitimate projects out of the UK.
Data center developers face delays globally, but the UK's high energy costs and limited land make it particularly unattractive. Despite this, the frenzied buildout is driving significant capital investment into the UK. Ofgem hopes to balance these concerns by setting a fee that discourages speculators but does not frustrate legitimate projects.
The queue for grid connections grew by over 80% in the first half of 2025, with phantom data centers making up a significant portion of the demand. These speculative projects complicate grid planning and add costs to the system. While Ofgem's reforms aim to reduce speculation, there are concerns that the new fees could deter developers and hinder the UK's AI ambitions.
Written by urgent.news from Wired Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
