Written submission from NESO (DCU0081)

 

Written Evidence submitted by NESO to the Environmental Audit Committee

Executive summary

Data centre electricity demand is rising quickly and could materially reshape the GB energy system, driven by the UK’s ambition to be a global AI and digital leader. Current NESO analysis points to around 5.2 GW of connected capacity and just over 20 TWh of demand by 2030, but connection requests now exceed 70 GW, with a clear shift towards very large, transmission‑connected sites. This suggests growing hyperscale and AI‑related demand. Future outcomes remain highly uncertain due to project attrition, long ramp‑up times and variable utilisation.

Background

The National Energy System Operator (NESO) is the world’s first whole energy system operator, entrusted with operating the electricity networks and strategic planning of Great Britain’s whole energy system. We are an independent, not‑for‑profit public corporation at the heart of the energy system, serving the needs of society by working alongside industry to deliver a future energy system that is reliable, sustainable, and where possible reduces costs for consumers across the country.

We perform several important functions, and all of these are undertaken through a whole system approach:

Reasons for submitting evidence

NESO, as the independent system operator and strategic planner, plays a crucial role in overseeing and coordinating the energy needs of Great Britain. The anticipated growth in electricity demand from data centres is likely to play a significant role in the future energy system. Tracking developments in this sector is, therefore, critical for NESO to manage impacts on the electricity network, which we do annually as part of our ten-year forecast, published each summer.


Written submission from NESO (DCU0081)

 

Context

Data centres form the backbone of the nation’s digital infrastructure and are central to the UK Government’s ambition to remain a global AI and digital superpower.

New pipeline data collected in 2025 from distribution and transmission network operators shows around 72.8 GW of connection requests through to 2039. This is a huge step change in demand in the sector.

This rapid increase has implications for energy strategic planning, grid connections and electricity markets. Coordinated action is essential to ensure data centre growth can be accommodated alongside other growing future energy needs to deliver a secure, affordable and low-carbon energy system. For example, strategically siting these large loads and enabling flexibility presents opportunities to minimise network build whilst keeping costs and emissions down.

However, growth projections for data centres remain highly uncertain. This relatively new sector is evolving rapidly and is characterised by significant speculation around future development.

Data centre profiles today

Data centres are facilities that host servers, storage and fibre network equipment, to process, store and transmit digital information. For our analysis, NESO considers dedicated data centre facilities and excludes servers within other commercial buildings.

Data centres support different services which shapes how they operate and, in turn, how their power, infrastructure, and location requirements are assessed. Many applications (such as financial hubs, telecommunications networks, high-performance computing or gaming) are sensitive to latency (the delay in data transmission between users and data centres) and, therefore, data centres have historically sought to locate close to population centres and end-users to mitigate this. In GB, this means that most existing data centres are currently located around London and South-East England, which has resulted in additional network pressures for some areas.


Written submission from NESO (DCU0081)

 

Future Energy Scenarios 2025: Pathways to Net Zero

Our latest published analysis on data centre demand is in our Future Energy Scenarios 2025 (FES 2025): Pathways to Net Zero1 which explores a range of routes to net zero in 2050 for energy demand and supply.

Our FES 2025 analysis explored a range of potential data centre capacities between

3.7 and 6.3 Gigawatts in 2030, with our ten-year forecast sitting at 5.2 Gigawatts, which led to an annual electricity consumption in 2030 of just over 20 Terawatt hours. Our next ten-year forecast will be published in Summer 2026 and while the capacity of data centres connected could increase, updated information on utilisation rates could result in lower annual energy demand. This is based on stakeholder engagement which suggests that there is potential for data centres to use energy more flexibly.

The range of plausible future scenarios for data centre connections and energy consumption is broad, due to uncertainty around project attrition, utilisation rates, and ramp-up rates, i.e. how quickly demand increases over time once a data centre is connected.

Latest view of future demand

A change seen since our 2025 analysis is the growth in transmission-connected data centre capacity. In 2025, the average data centre size in Great Britain was 12 MW and almost all of this was on the local level distribution network. The connections queue at a transmission level indicates a shift in both data centre sizes and end-uses. Nearly 59 GW of data centres are awaiting connection at transmission level, with 57.8 GW of this comprised of projects of 100+ MW. Notably, 40 of the 173 projects in the queue are between 500-1500 MW. We do not expect all of this demand to connect to the transmission system as it contains a number of projects likely to be non-viable.2

This could demonstrate evidence of a shift to large-scale co-location and hyperscale facilities. While the scale of demand for data centres used for AI training in GB remains unclear, the shift towards large facilities does imply a growing role for AI and cloud service provision from GB data centres.

 


1 Future Energy Scenarios 2025: Pathways to Net Zero

2 Demand connections reform | Ofgem


Written submission from NESO (DCU0081)

 

1.     Demand uncertainty

Uncertainty around future data centre demand is driven by the uncertainty around both project attrition (the proportion of data centre projects in the connections pipeline that drop out and are never built or never reach operation) and data centre utilisation rates (the proportion of a data centre’s built and connected electrical capacity that is actually being used over time).

2.     Ramp rates

Stakeholder feedback from across the data centre industry suggests an average ramp rate (how quickly demand increases over time once a data centre is connected) of seven years. Smaller data centres may be constructed at a faster rate, while larger facilities may never reach full connection capacity. If demand for data centres grows at a slower rate than expected, ramp rates may be extended and vice-versa.

3.     Location

By locating data centres behind constrained points on the electricity network, renewable generation can be used locally before it reaches congested points. This avoids having to curtail wind output and subsequently increase gas-fired generation elsewhere due to constraints on the network, which is more expensive and results in higher emissions.

Locating strategic demand in parts of Scotland for example, near low-carbon resources and spare network capacity, will deliver the maximum system benefit, subject to ability to connect and consideration of system security on low-wind days. Some data centres are not restricted by location; however, this will not be the case for all data centres and combined infrastructure conditions, not only restricted to energy, will impact siting decisions (e.g. telecoms and water).

With sufficiently strong locational signals, we anticipate a maximum of 20% of future data centre demand could be located in Scotland, helping reduce network constraints. Cold thermal storage can allow shifting of cooling demand away from peak times and there may be ways for data centres to be more flexible for operations which are not time-critical.

Enabling accelerated approvals and incentives to locate data centres in strategically beneficial areas of the electricity network could help keep energy system costs and emissions down. Such an approach could also enable a more


Written submission from NESO (DCU0081)

 

efficient development pathway, allowing data centres to be built and connected in certain locations in timeframes which would not be possible in other locations.

4.     Connections and AI Growth Zones

Changes to the connections process and spatial planning are beginning to influence where new electricity demand emerges. Connection Reform and AI Growth Zones could accelerate build-out, improve success rates and shift locations of data centres. Broader developments in the data centre and AI markets also have the potential to impact construction and use of data centres in GB.

5.     Flexibility and non-firm connections

A non-firm connection allows for users to connect to the grid faster but comes with the caveat that their access may be curtailed when the system is under certain conditions until transmission owners build out the transmission network. Stakeholder feedback has suggested that non-firm connections could be acceptable if it allows data centres to connect and become operational sooner. There is also scope for data centres to provide flexibility, but there needs to be an economic case and stakeholder feedback has suggested providing flexibility is not currently a priority for all data centres.

Flexibility projects have been piloted by Google, for example in Europe where they shifted non-urgent workloads, to a combination of different regions and times, in response to high gas and power prices during peak periods during the 2022-2023 winter.