Ofgem’s proposed data-centre connection fee: what would change?

The short answer: Ofgem is consulting on a commitment fee for large data-centre developments accepting an electricity connection offer in Britain, alongside data-centre-specific milestones for keeping a place in the connections queue. The fee would be £237,500 to £712,500 per megawatt. The proposals should not be treated as requirements already in force on the basis of the available source: consultation responses are due by 16 September 2026 and will inform Ofgem’s final policy decisions. (L004, L008, L025, L032)

What would the fee require?

Under Ofgem’s proposal, a large data-centre development would pay the Data Centre Commitment Fee when accepting a connection offer. Ofgem says the fee would be refunded when the project reaches energisation and forfeited if the project exits the queue early. Its proposed range is £237,500–£712,500 per megawatt, which Ofgem describes as equivalent to around 2.5%–7.5% of average project costs. These are proposed terms, not a fee that this source establishes as payable today. (L008, L032)

For planning purposes, the distinction between accepting an offer and reaching energisation matters: the proposal puts payment at the former point and a stated refund at the latter. A developer assessing an application can therefore examine whether it could accommodate the proposed fee while the project progresses. Developers should check the final terms for any additional refund conditions. (L008)

What progress would a project have to show?

Ofgem is also consulting on data-centre-specific queue-management milestones. A developer wishing to retain its queue position would have to demonstrate tangible progress through evidence such as financial capability, commercial maturity and procurement activity. Those are the examples Ofgem gives; the available excerpt does not set out the detailed tests, deadlines or final eligibility thresholds. These are examples, not a complete checklist; the detailed tests and deadlines remain for the final terms. (L013, L029)

Why propose the changes—and what is the status?

Ofgem launched the consultation on 29 July 2026 as part of a wider effort concerning Britain’s electricity demand-connections queue. It reports that contracted demand offers rose from 41 GW to 125 GW between November 2024 and June 2025, driven largely by data-centre demand. Ofgem is concerned that some queued projects may not proceed, potentially delaying viable developments and distorting signals about future network investment. Those figures and concerns explain its proposal; they do not establish that any particular project is speculative. (L004, L010)

As of 17 August 2026, connection plans should treat the proposed fee and evidence requirements as uncertainties to monitor until Ofgem publishes its final decision. (L025, L032)