Ofgem, the UK’s energy regulator, has launched a new review of the electricity grid and energy demand as plans for data centres continue to crop up across the nation.

The regulator’s Call for Input on Demand Connections Report attempts to address the surging demand for energy in the UK, which skyrocketed from 41GW in November 2024 to 125GW in June 2025.

In this interconnection queue, about 50GW is connected to data centre projects, which are only set to grow as the UK attempts to cement itself as an AI powerhouse, and the nation tries to achieve more data sovereignty.

The surge in energy demand has exposed weaknesses in the grid’s energy collection, Ofgem has found. These weaknesses include an increasingly lengthening queue of prospective projects with little viability, delays for progressing projects, and a lack of structure in the prioritisation of developments.

The potential reforms would take place in two phases, the first of which would see data centres needing to adhere to more stringent readiness tests and financial requirements in an effort to narrow down the influx of speculative data centre projects being proposed across the UK.

Options to address these concerns include the introduction of refundable deposits tied to delivery targets, fees tied to the development lifecycle, the demonstration of secure financing, and the potential of non-refundable deposits for projects upfront.

Phase two would see these proposed changes rolled out beyond data centres, and would see the re-prioritisiation of data centre projects to favour those in AI Growth Zones or those that can strategically align themselves with the UK’s energy plans.

The call for input will also seek ways to make capacity delivery more efficient.

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This may mean companies could construct their own high-voltage equipment to increase grid capacity.

Ofgem is also considering the creation of a new Independent Transmission Owner licence which would allow mixed grid or flexible grid designs. It will also consider increasing the use of flexible connection agreements which would allow data centre operators to power their facilities in stages instead of waiting for a full grid development.

The consultation, which is aimed at customers connecting to networks, data centre developers, and network companies, is open until 13 March.