Developers, sharpen your elbows: Consultation on reforms to the grid queue amid the data centre boom. 

By Jago Brockway – Senior Account Manager

The Government has repeatedly stated its intention to leverage the country’s already strong position in the global AI market (third only behind the USA and China) for further growth, using the development of data centres to attract investment from around the world and provide jobs for a new era and forecast increase in AI uptake and adoption.

The Chancellor’s AI announcements in her Mais Lecture this last week add to the list of policies rolled out in the past 18 months, from the development of AI Growth Zones and now to the development of a new AI Economic Institute. Combined with a broad cross-party consensus carried over from the previous Government, an atmosphere has been created that sells the UK as a place to bring forward proposals for data centres. The reaction from the market has been overwhelming. So overwhelming, in fact, that the grid queue grew by 460% in the six months to June 2025, with approximately 140 energy-hungry data centre proposals taking up huge chunks of the theoretical demand capacity.

Recognising that many of these projects will be speculative, and the impact that the connections queue repositioning had on investor confidence across all sectors at the end of 2025, the Government has decided that reforms are necessary to reprioritise the grid and to let the right projects proceed first. These will be those with the most economic potential, so AI Growth Zones, EV charging infrastructure and electrified industry – leaving questions about the Government’s parallel commitments on new towns and large housing developments. For data centres in particular, projects are being assessed on their proximity to and impact on the grid, seeking where there is sufficient capacity to bring some projects forward before others.

There is a risk that for businesses looking at these proposals from the outside, it looks like another consultation (with the resulting pause in engagement) on top of so many others, creating a regulatory environment that does not deliver certainty in the short- to -medium term. One alternative view for the Government to consider through this consultation is whether a queue is ultimately the best way to manage a national and scarce resource that is highly prized.

Often the Government can underestimate the amount that developers would be willing to formally commit in order to guarantee a level of certainty over timelines – whether the answer is positive or negative for their project, knowing allows for investment to be made with more confidence. One undeveloped but intriguing idea would be to auction the slots in the queue, using the price mechanism to skim off the speculative applications. With the slots sold at their value, rather than at cost, the contributions could be flipped into paying for the significant resource needed to upgrade the grid and to accelerate the grid connections supply chain, while crucially reducing the pressure on household bills through rising non-commodity costs.

Regardless of which direction the Government takes, this consultation is the best opportunity at the moment for developers to be making the case for their projects and demonstrating their respective alignment with the Government’s ambitions – essential when the grid queue is rejigged to pick winners.

The consultation on the proposed reforms is available here, and is open until 15th April. 

Against this backdrop, Cavendish commissioned polling from YouGov to understand public attitudes toward data centres. This has established that: 

• 56% support data centres in their area, with job creation as the key reason (58%), despite data centres creating relatively few direct roles.
• Gen Z is the most opposed group, driven by environmental concerns (61%), including water use (48%).
• 43% worry about pressure on the electricity grid and costs to billpayers.

How can those promoting data centres ensure that the positive momentum behind them is maintained? Download the full report here.