Data Centres on a Gridlock: What This Means for Investors, Developers & Job Seekers

Executive Summary

The UK’s race to build its next generation of digital infrastructure is entering a new phase, one where the old rules no longer apply.

For years, developing a data centre was largely a matter of securing the right plot of land and tapping into fast fibre. If you joined the queue early, you were connected to the electricity grid early. It was a straightforward, ‘first come, first served’ system.

That era is over.

Ofgem has introduced a new approach, known as ‘first ready and needed’. Being first in line is no longer enough. Developers must now prove they are genuinely prepared: land secured, planning underway, delivery plans credible. And they must show that their project serves essential demand, such as cloud platforms, AI workloads or other critical digital services. The driving force behind this shift is simple: electricity has become the defining constraint.

Data centres consume vast amounts of power, and the UK grid cannot bring every project online at once. National Grid estimates that data centres could account for nearly 10% of the country’s total electricity use by 2035, a level of demand that cannot be managed under the old system.

The result is a more selective, readiness driven environment where power access (not land) is the new competitive frontier.

The end of ‘first come, first served’ and why it matters

For years, the industry mantra was simple: land, latency, and labour. In other words, find a good plot, make sure it’s close to fast internet, and hire the right people. Those things still matter, but none of them will switch the lights on. Electricity is now the real bottleneck.

The UK’s grid rules have changed. The old system rewarded whoever applied first. Now, the priority goes to projects that are ready and needed. If your application is just a placeholder – with vague land rights, half baked designs, or missing documents – you will slide down the queue.

Meanwhile, projects that can show secured land, planning progress, and solid evidence they can deliver will move up. This isn’t just a technical tweak. For developers and investors, your position in the queue affects money. Every month gained (or lost) changes interest costs, contractor schedules, and confidence from customers.

In a world where borrowing money is expensive and equipment for high density sites is hard to get, time is money. Literally.

Bottom line: Treat your grid application like a pitch to investors. It must prove the project is real, ready to build, and backed by a team that can deliver.

Power, not land, is the new scarcity

Cheap land still matters. But land without power is utterly worthless. In some parts of the UK (especially West London, the traditional data centre hotspot), the grid is maxed out. There is no spare capacity.

That’s forcing an industry wide rethink of the process:

• Big cities still matter, but delivery now depends on grid upgrades, not just planning approvals.
• Satellite towns and secondary markets (inside and outside the M25) look more attractive if they can show faster grid connections or on-site power options.
• Multi-region strategies are gaining traction. Developers are adding Nordic or Iberian sites alongside London. This is not to replace it, but to spread risks and cut costs.

The question is shifting from “where can we buy land?” to “where can we get power first?”. Teams that start grid engagement early and plan capacity in realistic phases will win.

AI makes the grid challenge even harder

Artificial Intelligence has changed the game. AI servers use 10 to 20 times more power than traditional ones. That means more electricity and more heat. Cooling systems are evolving fast (liquid cooling, rear-door heat exchangers, even immersion tanks) and all of this drives up site demand.

At campus scale, this means:

• Start talking to grid operators earlier and in more detail about how much power you’ll need, when upgrades will happen, and whether alternatives (like batteries) can help.
• On-site energy is no longer optional. Battery storage (BESS) for peak shaving, large heat pumps linked to heat networks, and sometimes temporary generators are now part of the plan.
• Flexible demand and grid-friendly operations aren’t just nice for ESG reports, they’re becoming essential for financing and risk management.

This isn’t just about design; it’s about people. Do you have the right skills in-house to plan, buy, and run these systems safely and efficiently?

What does ‘readiness’ really mean under the new rules?

‘First ready and needed’ is a checklist. To move up the queue, you need hard evidence. The best operators now organise their board packs (and their hiring) around five proof points:

1. Land Certainty

• Signed freehold or long lease, or binding agreements with clear rights.
• Legal checks done: easements, rights of way, and access for grid corridors.

2. Planning Progress

• Early talks logged with councils; environmental screening agreed.
• Community consultations documented; clear path to approval or DCO.
• Mitigation plans for traffic, noise, and ecology included in budgets.

3. Engineering Maturity

• Detailed diagrams for power and cooling, including safety plans for liquid cooling.
• Utility corridor designs nearly ready for construction.
• Phased delivery strategy

4. Grid Engagement

• Meetings with NESO/DSO recorded; technical studies commissioned.
• Options analysis comparing different connection points and upgrade paths.
• Evidence of battery modelling and demand flexibility to reduce peak loads.

5. Commercial Credibility

• Signed letters of intent or pre-lease agreements showing real demand.
• Financing structure explained (equity, debt, EPC contracts).
• Risk register showing supply-chain realities for transformers, switchgear, and cooling gear.

The closer your evidence pack is to this standard, the stronger your case for priority, and the lower your cost of capital.

Timelines and budgets now depend on early grid planning

In the past, developers would think about electricity connections only after they had secured land and drawn up designs. That order has flipped. Today, if you don’t start planning your grid connections on day one, you risk falling behind.

Why? Because getting power is now the hardest part of developing a data centre. The electricity grid is crowded, and the rules have changed. Ofgem’s new system prioritises projects that are ready and needed, not just front in line. So developers who start early are effectively buying themselves time

This is what that looks like in practice:

• Explore all connection options: Check different substations and routes. Compare how much spare capacity they have, what upgrades are needed, how long outages might last, and whether you’ll need extra land for substations.
• Plan backup power on-site: Model battery systems (known as BESS) to store energy and smooth out peaks. Consider temporary generators for early phases so critical customers aren’t left waiting.
• Integrate grid milestones into your schedule: Lock in key dates for grid work. Order big ticket items like transformers and switchgear early; these have long lead times. Secure your place in factory production queues.

You’ll receive two rewards for this; a realistic date for when your site will actually have power (which helps you win customers), and a spending plan that matches real world delivery instead of optimistic charts

The hiring plan that matches the new rules

Money alone won’t get you connected. People will. Companies need to stop treating grid expertise as an afterthought and make it a core part of their team. Here are the roles that matter most:

1. Grid Connections Lead This person understands both engineering and regulation. They handle feasibility studies, talk to system operators, and negotiate the connection agreement. Their job: secure capacity sooner and phase it smarter.
2. NESO/DSO Liaison Think of this as part engineer, part diplomat. They track changes in the queue system, manage data submissions, and make sure there are no surprises with permissions or land rights for grid corridors.
3. On-site Energy / Battery Manager Designs battery systems, integrates heat pumps or other thermal solutions, and ensures everything meets grid codes. In some cases, they plan temporary generation to keep early phases running without damaging your reputation.
4. Permitting / Planning Manager Handles planning strategy, environmental assessments, and community engagement. Aligns heat reuse, biodiversity, and water plans with local policy to smooth approvals and build trust.

Important: Don’t treat these roles as optional consultants. Bring them in-house and give them authority early. Doing so shortens timelines and reduces risk.

What this means for choosing sites

The market is beginning to value proximity to power as much as the price of land. Cheap plots are no longer the trump card; what matters now is how quickly you can get connected.

Sites located near substations scheduled for upgrades, or close to transmission nodes with shorter reinforcement paths, will command a premium. They may cost more upfront, but they will connect faster. In this new reality, time to power outweighs the lure of bargain land.

Developers are also spreading their bets. Instead of building one enormous campus, many are opting for two smaller sites. This approach allows for earlier, parallel connections, reducing risk and appealing to tenants who prefer certainty over waiting for a single big launch. It’s a strategy that prioritises flexibility and resilience in a market where delays can be costly.

Councils, meanwhile, are rewarding projects that think beyond their own footprint. Sites that can demonstrate plans to reuse waste heat (for homes, leisure centres, or district energy schemes) and manage water responsibly through non-potable sources or closed loop cooling systems are moving faster through planning.

These benefits are becoming part of the currency of approval, and developers who can prove them gain a clear advantage.

Risks investors should expect

Investors should prepare for turbulence. As speculative projects are cleared from the queue, expect revised offers and shifting energisation dates. Contracts and schedules need buffers to absorb these shocks.

Supply chain delays are another reality: transformers and advanced cooling equipment can take months to arrive, so early orders and rigorous checks on contractor promises are essential.

Policy creep is a quieter but equally potent risk. New rules on sustainability reporting or heat reuse can expand project scope mid build, so budgets must include contingency and accountability must be clear.

Then there’s density drift: AI workloads can push power needs from 30–40 kilowatts per rack to 80–120 mid-cycle, straining cooling and distribution systems. Designing upgrade paths from the outset is for survival now.

What should professionals who want to work in data centres do?

This shift is creating a new type of professional who understands energy, regulation, and digital infrastructure.

To stand out:

• Get the right skills: Grid codes, energy management standards, sustainability reporting, heat network basics, battery safety.
• Show real examples: Bring anonymised work like a grid connection study, a battery value model, or a sustainability data plan.
• Look beyond London: The capital is still key, but regional hubs with faster power access will hire first.

A final word

It’s tempting to dismiss these changes as bureaucratic noise. They’re not. They are a filter for capital and capability. In a UK market balancing clean energy targets with the surge in AI-driven demand, grid capacity will flow to the best-prepared projects.

The cultural shift is easy to state but hard to execute. Start grid planning early, empower specialists, and measure success not by acres acquired but by megawatts delivered - on time, on budget, and with community support.

Do that, and ‘first ready and needed’ becomes your advantage, not your obstacle.

Get in touch

Whether you’re an employer looking to secure the right talent for your next data centre or sustainability project, or a candidate aiming to build a career in this fast growing sector, we can help.

Get in touch with Macdonald & Company today to discuss your hiring needs or explore opportunities in grid strategy, energy management, and sustainable infrastructure.

Contact Luke Mariosa , Head of Data Centres UK & Europe, for more information.

Free resources

Sources Used

• TMO4+ Impact Assessment – Ofgem
• Ofgem approves TMO4+ connection reform package – Gowling WLG
• Future Energy Scenarios 2025 – NESO
• CBRE Global Data Centre Trends Report 2025
• DataX Connect summary of CBRE report
• EMEA Data Centre Report Q2 2025 – JLL
• H1 2025 EMEA Data Centre Market Update
• Understanding Data Centre Water Use in England – techUK
• EU-wide sustainability rating scheme for data centres
• The EU’s Energy Efficiency Directive and Its Impact on Datacenters – Covington
• DataX Connect Recruitment Insights
• Energy Transition Infrastructure & Investment – WEF
• Planning revolution to fuel growth and make Britain energy secure - GOV.UK