Increasing demand for data centres has brought the constraints of the country’s electricity grid and challenges in the planning system sharply into focus.

Connections reform is underway and a number of consultations have recently been launched by government and industry bodies, with a particular focus on data centre projects, that will shape the priority given to such projects. In this briefing, we take a look at these recent developments from a planning perspective and what they might mean for those promoting data centre projects and the available ways to respond.

Industrial Strategy and Delivering AI Growth Zones

This decade has seen a significant evolution in the policy landscape for data centres. Successive governments have alighted upon the importance of digital infrastructure to the UK’s economic growth, ranging from the National Data Strategy in December 2020 and the UK Digital Strategy in 2022 to the more recent designation of UK data infrastructure as critical national infrastructure in September 2024 and December 2024 commitments to make it easier to build data centres, as part of the drive for greater commercial development in the sectors that will be the “engine of the UK’s economy in the future.”

Notwithstanding this enthusiasm, the reality on the ground has been that, among other pressures, the electricity grid and the planning system have not been able to effectively keep pace with the increasing (in some cases speculative) demand for data centres. The introduction of a queue management process in 2023 and recent implementation of TMO4+ ‘first ready and needed, first connected’ reforms have started to sort out queue priority, but projects are still experiencing significant delays with connections to the grid and having to navigate with great cost and risk delays in planning for projects, often used to evidence readiness, or enabling infrastructure.

This been recognised by the Government, both in its recent Industrial Strategy, committing to fast-track more projects through the planning process and reduce grid connection waiting times for strategically important projects, and in the Department for Science, Innovation and Technology’s (DSIT) subsequent policy paper “Delivering AI Growth Zones” (November 2025 AIGZ Policy Paper). AI Growth Zones, derived from the Government’s AI Opportunities Action Plan, are proposed to be designated areas where streamlined delivery of AI infrastructure will be facilitated.

Billed as “a comprehensive package to deliver data capacity through AI Growth Zones”, two of the key focusses of the November 2025 AIGZ Policy Paper were (1) reducing planning barriers and (2) accelerating grid connections, supported by a number of actions proposed to be taken by the government.

In order to address the “single biggest blocker for establishing AI Growth Zones” and accelerate grid connection timelines, it was set out that government would among other things: remove speculative demand; create mechanisms to more dynamically manage and reserve released and future capacity; and explore options for developer-led grid infrastructure.

With respect to reducing planning barriers, the Government committed to: update national policy guidance; invest in additional planning capacity; intervene to protect land and unblock planning decisions for AI Growth Zones; and streamline consenting for Nationally Significant Infrastructure Projects (NSIPs).

Proposed reforms to the National Planning Policy Framework

In line with the above commitments, wider proposals published by the Government in December 2025 to revise the National Planning Policy Framework (NPPF), the key document setting out the Government’s planning policies, contained a significant thread dedicated to data centres (as well as to provide greater support for electricity network infrastructure).

In draft policy E1, there is a requirement for development plans to make provision for and allocate sites, where a need exists or is anticipated, for data centres (and associated generating capacity and grid connections) to support the growth of data-driven and high technology industries. Draft policy E1 also requires local plans to have regard to the Industrial Strategy and look at opportunities for growth and priority for investment in sectors identified in the Industrial Strategy and AI Growth Zones.

Relevant to decision-making, draft policy E2 requires decision-makers to give substantial weight to the economic benefits of development proposals that permit investment, especially where this would support the implementation of the Industrial Strategy and reflect proposals for AI Growth Zones. Draft policy CC1 also suggests substantial weight could potentially be given to the benefits of energy being drawn from low carbon sources (such as heat recovered from data centres).

The importance of data centres is further reflected in the draft NPPF in their categorization of as “essential infrastructure” in the flood risk vulnerability classification. This would mean that development could come forward in Flood Zones 3a and 3b, provided the ‘exception test’ and other applicable policy tests can be met.

The NPPF consultation also included a focus on co-location of data centres and onsite energy generation beyond changes to the policy wording.  Annex A of the explanatory document to the NPPF consultation set out a series of questions directed at understanding whether the ability to enter or leave the NSIP regime, so co-located development can progress under the same regime, would be sufficiently beneficial (more on NSIPs further below in this article).

This consultation closed on 10 March 2026 and it is expected to be some months before the new NPPF is published and the above policies will be in play.

Demand Connections Reform

In November 2025, again consistent with the messaging in the November 2025 AIGZ Policy Paper, the Government announced a commitment to address speculation in the demand queue. Ofgem provided new guidance on its approach to demand connections and the National Energy System Operator (NESO) issued a supporting call for input. These efforts have been furthered more recently in February 2026, where Ofgem launched a call for input on demand connections reform, sharing its proposals to ‘Curate, Plan, and Connect’ demand connections.

In its call for input, Ofgem set out that a two-phase approach will be taken to reforming demand conditions:

• phase 1 (focussing on the Curate pillar) will be immediate measures to address non-viable data centres in the demand queue and prioritise strategic projects; and
• phase 2 (focussing on the Plan pillar) will encompass further measures to implement a strategic plan for data centres alongside additional measures.

The key options being considered for Phase 1 relate to exploring financial mechanisms to apply to data centre connections (paragraphs 5.14-5.22) and strengthening readiness requirements for data centres (paragraphs 5.26-5.29).

Ofgem put forward three potential data-centre specific options being developed to inform its ‘minded-to’ position: (1) a refundable deposit to be refunded in one sum or incrementally; (2) a progression commitment fee (essentially, a refundable deposit that increases over time and can be drawn on when projects do not progress); or (3) an upfront non-refundable fee.

To address readiness requirements for Gate 2 connection offers and retaining existing queue positions, Ofgem has set out that it is considering evidence of financial backing and evidence of planning applications either as gating criteria or milestones.

While the call for input closed on 13 March 2026, Ofgem does appear to have recognised the importance of ongoing engagement in this area and has highlighted that it welcomes stakeholder views at any point.

Accelerating Electricity Network Connections for Strategic Demand

Momentarily overlapping with the above call for input from Ofgem, the Department for Energy Security & Net Zero (DESNZ) has recently published a linked consultation: Accelerating Electricity Network Connections for Strategic Demand.

This consultation focusses on how new powers granted by the Planning and Infrastructure Act 2025 (royal assent was received on 18 December 2025) will be used to give effect to the potential reforms to the existing framework and arrangements governing demand connections.

DESNZ seeks views on its proposals for:

• queue management for data centre connections (with particular reference to Ofgem’s above call for input);
• prioritisation mechanisms for government‑identified strategic demand projects (included draft changes to methodologies, codes and licences in Annex C, where the Government will be responsible for designating strategic demand); and
• strategic alignment of data centre connections and regional infrastructure targets (to be set out in a forthcoming data centre strategy).

It is noteworthy that Annex B to the consultation contains the working definition of “strategic demand” used for the Connection Accelerator Service project selection process, which sets out a three-stage process: (1) submission by government departments or nominations from mayoral strategy authorities or devolved governments; (2) assessment against economic and social criteria (subject to a boost metric); and (3) regional shortlisting aligning with network boundaries.

The DESNZ consultation is open until 15 April 2026.

National Infrastructure Planning and National Policy Statement

As of 8 January 2026, developers can now request that proposed data centre projects are considered “of national significance” and determined under the NSIP process under the Planning Act 2008. Indeed, such requests are already being made and on 16 March 2026 the Secretary of State issued its first section 35 direction directing a data centre and co-located gas generation energy centre in Buckinghamshire to follow this route. Clearly the issues of connection to the grid will result in projects looking to co-located power, and in relation to gas-fired connections appropriately addressing climate commitments.

An October 2025 written ministerial statement previewing the changes to the NSIP process also set out that DSIT is due to prepare a new national policy statement (NPS) for data centres. This will be a key document as NPSs are not only one of the key considerations in determining applications under the NSIP process, but local authorities will also be required to have regard to the NPS in the preparation of development plan documents and other local development documents.

The ministerial statement indicated that we should expect this NPS to set out the national policy for this sector and the policy framework for decision-making for data centres, including the parameters, thresholds and other relevant factors which may indicate whether such a data centre project is national significance.

The November 2025 AIGZ Policy Paper indicated that consultation on a draft NPS would take place “in the next 3 months”, however a draft NPS has not been published for consultation at the time of writing. Annex A of the explanatory document for the December 2025 NPPF consultation again indicated that the government will consult on a new draft NPS for data centres “shortly”. Given the focus of the Annex A questions, it seems plausible that the draft NPS will not be available until the responses to that consultation have been considered.

Concluding remarks

It is a period of flux for promoters of, and investors in, data centres: on the basis of the above alone, data centre stakeholders will now be waiting for publication of at least the following items to understand the future landscape for connecting to the grid and how to best approach obtaining planning consent:

• The Government response to NPPF consultation and new NPPF currently expected to be published in Summer 2026;
• The proposed package of Phase 1 connection reforms from Ofgem anticipated to be consulted on in Spring 2026;
• The summary of responses to DESNZ’s consultation expected in July 2026;
• The regional infrastructure targets in a forthcoming data centre strategy; and
• The National Policy Statement for data centres.

Those involved in data centre projects will understandably be concerned at how long any next steps uncertainty will last for a sector which requires rapid delivery in the face of rapid technological evolution, and that the maelstrom of changes may yet undermine projects where significant investment and progress has already been made.

Concerned stakeholders should continue to engage proactively with decision-makers, including DSIT, DESNZ, Ofgem (and its boards and groups) and other potentially sponsoring departments, strategic authorities or devolved governments, to ensure their voices are heard and the importance of projects are clearly known.

If you have a proposal which may be impacted by the proposed updates and would like more information on them and their impact, including how to plan for your project to benefit from the policy and process changes in due course, please do get in touch.