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Ofgem proposes data center commitment fee tied to grid queue status

The proposed charge would be refundable at grid connection, but forfeited if projects exit the queue early, with a fee range of £237,500 to £712,500 per MW.

Reported · Written up by our desk · Energy

Britain’s energy regulator, Ofgem, launched a consultation on a new Data Centre Commitment Fee aimed at managing demand for scarce power grid capacity, as data center connection applications have surged over the past two years.

Under the proposal, large data center developments would pay the fee when accepting a connection offer. Ofgem said the fee would be refunded once projects reach grid connection status, and forfeited if they leave the grid queue early.

Ofgem also proposed setting the fee within a range of £237,500 to £712,500 per megawatt, which it said is equivalent to about 2.5% to 7.5% of average project costs.

In explaining the plan, OilPrice, citing Ofgem, said the regulator wants to deter speculative projects that secure capacity without a firm intention to connect, and reduce the risk of delays for investment-ready projects. Ofgem also warned that some queue projects may never proceed, potentially creating misleading signals about future network investment needs.

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