Ofgem warns on grid squeeze after Heathrow data centre approved

The energy watchdog Ofgem has warned that speculative data centre projects risk holding up viable investments on Britain’s electricity grid, after councillors approved another power-hungry facility near Heathrow Airport.

Hounslow Council has backed plans for a data centre on a 12.2-acre brownfield site at the Haslemere Heathrow Estate, which would require an 80MVA high-capacity electricity connection. This would be enough to power tens of thousands of homes.

The approval comes amid a rush to build data centres around London to meet booming AI demand, piling pressure on an electricity network already facing a huge backlog of projects waiting to connect.

“The connections queue must work for consumers and for projects ready to invest, build and connect,” an Ofgem spokesperson told City AM. “Speculative schemes taking up space can delay viable projects and create uncertainty for network planning.”

“That’s why we’re consulting on a new data centre commitment fee and stronger commitment requirements, helping free up capacity and speed up connections for projects that will deliver for Britain.”

The regulator told City AM that simply securing planning permission would not allow a data centre to escape the proposed tougher rules, which could require developers to meet additional milestones and pay an upfront fee to hold their place in the grid queue.

The plans are still under consultation and no final decision has been taken.

London’s data centre rush

The intervention comes as the scale of proposed data centre development begins to test London’s infrastructure.

The Greater London Authority has said around ten times as much electricity capacity as that currently used by existing London data centres has already been requested through the grid connection queue.

There were 99 operational data centre sites in London and another 26 in the planning pipeline as of November last year, according to the GLA, with the capital accounting for around 80 per cent of UK data centre capacity.

Hounslow councillors were told the Heathrow development would draw its electricity through the Laleham Grid Supply Point, outside the borough, and would not use capacity earmarked for other local developments such as housing.

But Affinity Water, which supplies parts of Hounslow, told MPs in May that some data centres were requesting as much as three million litres a day, equivalent to the peak demand of around 3,500 homes.

The GLA had previously warned that the proposed development did not fully comply with the London Plan, raising concerns around transport as well as its high water and energy intensity.

As a condition of the scheme, the developer will be required to submit a strategy aimed at minimising water consumption once the site is operational.

Hounslow Council told City AM its planning committee had considered the electricity, water and infrastructure demands of the project before approving it.

“Where appropriate, mitigation will be secured through the planning process, while matters falling within separate statutory utility and regulatory regimes will be addressed by the relevant bodies,” a spokesperson said.

The council said the applicant was Brixton (Heathrow Estate) Ltd and that it did not hold information identifying a separate ultimate operator or end-user.

Grid queue under scrutiny

The development lands in the middle of Ofgem’s efforts to stop speculative AI and data centre projects from reserving electricity capacity they may never use.

Applications for new data centre grid connections more than tripled from 41GW to 125GW between November 2024 and June 2025, with data centres accounting for at least 73GW across 315 projects.

Under proposals announced by the regulator, large data centre developers could be required to pay a refundable commitment fee when accepting a grid connection offer and demonstrate that projects are commercially serious as they progress.

The money would ultimately be returned to projects that connect to the grid but could be forfeited by developers that abandon their place in the queue.

Planning permission would remain one milestone under the proposed regime, but Ofgem told City AM that data centres could face additional requirements intended to demonstrate genuine demand for their requested capacity.

The Hounslow decision follows a string of approvals across west London. Ealing Council last month approved a 52,000 square metre data centre on the former Honey Monster factory site in Southall, close to four other data centre units approved on the Southall Industrial Estate last year.

Both the Ealing and Hounslow schemes still require a Stage 2 referral to the Mayor of London before proceeding.

Hounslow Council said there was currently no confirmed timeframe for that process.