Ghost Data Centres Are Jamming Britain's Power Grid, and AI Is to Blame

Key points

• Between November 2024 and June 2025, the total electricity demand of projects queuing to join the UK power grid jumped from 41 gigawatts to 125 gigawatts, according to the UK's energy regulator, Ofgem.
• New data centres account for 73 gigawatts of that demand, roughly one and a half times the peak electricity use of the entire UK last year.
• Ofgem proposed in July 2025 that developers pay a large, non-refundable deposit, potentially hundreds of millions of dollars for the biggest sites, to secure a grid connection.
• Industry experts warn the fee could push data centre investment away from Britain to cheaper locations in the US and continental Europe.
• An industry feedback period on the proposals closes in September 2025, after which Ofgem will set a final fee.

Imagine buying a concert ticket just to resell it at a profit, except the ticket is access to Britain's national power grid and the price of entry is almost nothing. That, in miniature, is what has been happening with data centres across the UK.

Data centres, the vast buildings packed with computer servers that run AI software, need enormous amounts of electricity. Getting a grid connection takes years. So developers have been reserving spots in the queue for sites they have no firm plan to build, betting that if AI keeps booming they can either develop the site later or flip it to someone who will, with the grid slot included as a sweetener.

Until recently, joining the queue cost only a few thousand dollars. A no-lose gamble.

What is the actual size of the problem?

It is large enough that experts describe it as "absolutely insane." Between November 2024 and June 2025, Wired AI first reported, the electricity demand of all projects in the UK grid connection queue tripled, from 41 gigawatts to 125 gigawatts. Data centres alone account for 73 gigawatts of that, equivalent to one and a half times the peak electricity demand of the entire UK last year.

The government believes most of those applications are phantom projects: reservations made without real funding, real customers, or real plans.

The consequences are not just bureaucratic. Grid operators, the teams responsible for keeping the national electricity network stable, must treat every application as if it were genuine when they calculate whether the system can handle the load. More ghost projects mean longer, costlier studies for every serious developer waiting behind them. Real AI infrastructure gets delayed.

"They have to treat every project as serious," says Olivier Darmouni, associate professor of finance at HEC Paris Business School. "The more speculative projects are especially damaging because they make these studies more complex, more expensive, longer."

How does Ofgem plan to fix it?

Ofgem, the UK's official energy regulator, wants to raise the cost of queue-jumping high enough that speculators walk away. Its July 2025 proposal would require developers to pay a steep, non-refundable deposit, potentially running to hundreds of millions of dollars for the largest sites, and to show they have paying customers lined up and funding secured before they can hold a grid slot.

The logic is straightforward: if the gamble costs real money, only serious builders will take it.

"It's going to pour water on a lot of the speculative data centre applications," says Alex Burgoyne, head of data centres at property consultancy Knight Frank. A cleaner queue would also help grid planners spend upgrade money where it is actually needed, rather than building capacity for sites that will never switch on.

Could the cure be worse than the disease?

Yes, possibly. Britain already has two strikes against it as a data centre destination: high energy costs and a shortage of large, affordable land. A third strike, steep upfront fees, could tip decisions toward the US or parts of Europe that offer cheaper power and faster permitting.

Smaller AI-focused data centre operators, some of whom have pledged billions to UK projects, may simply refuse to commit hundreds of millions before they have a single customer signed up. That would hand the market to a handful of giant players and slow the very growth the government wants to encourage.

"If you set it too high, you risk killing viable projects," says Daniel Newton, a digital infrastructure partner at law firm Slaughter and May.

Ofgem says it will consider industry responses before finalising the fee, and acknowledges that direct comparisons with other countries are complicated by differences in how energy markets work. The feedback window closes in September 2025.

Get the fee right, and Britain gets a cleaner queue, faster connections, and a realistic shot at hosting the AI infrastructure of the next decade. Get it wrong, and the ghost data centres disappear, but so do the real ones.

Common questions

Why does this matter to ordinary people, not just tech companies?

Data centres power the AI tools, streaming services, and cloud apps that most people use every day. If Britain cannot attract reliable data centre investment, those services may become slower or more expensive for UK users, and the economic benefits of the AI industry flow elsewhere.

What is a gigawatt, and how much power is 73 of them?

A gigawatt is one billion watts, roughly the output of a large nuclear power station. Seventy-three gigawatts is more electricity than the whole of the UK typically uses at its busiest moment on a winter evening.

Will the Ofgem fee affect my energy bill?

Not directly. The fee targets developers, not consumers. But if the reforms help grid planners invest in the right places, it could reduce wasted spending on infrastructure that was never needed, which eventually feeds into network costs that do appear on bills.