# Britain’s data centre covenant offers grid priority to reach 6 GW by 2030. Planning rules close 8 January

> The UK Budget set five tests data centres must pass for grid priority, aiming for 6 GW of AI capacity by 2030. The planning consultation closes 8 January 2027.

Publisher: DC Market Insights  
Published: 2026-11-03  
Last updated: 2026-11-03  
Page: https://www.dcmarketinsights.com/news/britains-data-centre-covenant-offers-grid-priority-to-reach-6-gw-by-2030-planning-rules-close-8-january

## Key takeaways

- The UK Budget on 28 October introduced a Data Centre Covenant: five tests that "strategic" data centres must pass to get government help with grid connections (HM Treasury).
- The government says the UK will need 6 GW of AI data centre capacity by 2030, about three times the roughly 2 GW operating now (HM Treasury; Capacity).
- Help on offer: reserved or reallocated grid capacity, transfer of pre-2030 connection contracts, a Ministerial Control Centre, and temporary on-site power for "exceptionally strategic" projects (HM Treasury).
- AI Growth Zone power discounts of up to £24/MWh from April 2027 are worth up to £16.8 million a year to a 100 MW site at 80% load in Scotland (gov.uk; our calculation).
- The draft National Policy Statement for Data Centres is open for comment until 8 January 2027 (gov.uk).

Britain has put a price on the front of its grid queue. Data centres that pay their share of system costs, fund a local benefit plan, design for a PUE of 1.3 or better and serve UK security needs can now ask ministers for capacity that others are waiting years to get.

The timing matters for money already circling the market. In the week of the Budget, TPG was reported to be in talks to buy Ark Data Centres at about £3.8 billion, and Northumberland has approved a £10 billion QTS campus at Cambois. The covenant tells those investors which UK projects the state will help connect before 2030, and which ones will join the back of a queue of at least 73 GW.

**6 GW** AI data centre capacity the UK will need by 2030 (HM Treasury)

**5 tests** Energy costs, community, environment, jobs, security (Data Centre Covenant)

**8 Jan 2027** Draft data centre planning statement consultation closes (gov.uk)

## How Britain got here: a queue far bigger than the need

The UK's problem has never been a lack of applicants. Ofgem has said total demand connection applications rose from 41 GW to 125 GW between November 2024 and June 2025, with data centres accounting for at least 73 GW, as we reported on [19 October](https://www.dcmarketinsights.com/news/data-centres-want-73-gw-of-britains-grid-1-6-times-peak-demand-germanys-november-grid-vote-is-next). That is about 12 times the 6 GW the government now says the country needs for AI by 2030 (our calculation).

The queue has already cost the UK projects. Microsoft walked away from Nscale's planned site at Loughton in Essex after being told grid power might not arrive until the early-to-mid 2030s, Capacity and Techerati reported. Techerati put that project at £2 billion. At a Capacity roundtable, 70% of infrastructure leaders said they expected grid connections to take more than 18 months.

The government's earlier answer was the AI Growth Zone programme. Its policy paper promised a reservation mechanism that holds capacity at a specific connection point, a reallocation mechanism for capacity freed when projects leave the queue, up to 5 years off the time to power, and up to £100 billion of extra investment. Five zones now exist across England, Scotland and Wales. The covenant extends the same idea to any data centre the government judges "strategic", wherever it is.

*Figure 1. UK data centre capacity: what is live, what the government says is needed by 2030, and what has asked for grid (log scale). Source: [HM Treasury](https://www.gov.uk/government/publications/data-centre-covenant/the-data-centre-covenant); [Capacity](https://capacityglobal.com/news/budget-sets-five-tests-for-data-centre-grid-priority/); [DC Market Insights data, 21 Oct 2026](https://www.dcmarketinsights.com/data/power-policy/united-kingdom).*

## What changed on 28 October: five tests and a fast lane

HM Treasury published the Data Centre Covenant alongside the Budget delivered by Chancellor John Healey on 28 October. All data centres are encouraged to meet it. Developments that want enhanced government support must meet it. The government has not yet defined a strategic data centre; it says it will set that out "in due course".

> When the NHS uses AI to treat patients, we want that data here.

***John Healey** , Chancellor of the Exchequer — [Budget speech, 28 Oct 2026, via Silicon UK](https://www.silicon.co.uk/cloud/datacenter/government-data-centre-632086)*

| Test | What the covenant asks | Who it binds |
| --- | --- | --- |
| 1. Lower electricity bills | Pay a fair share of energy costs, including costs the site creates; make credible commitments for the grid capacity requested; support flexibility and resilience | All; required for strategic sites |
| 2. Community investment | A Local Benefit Plan with "substantial investment", scaled to the development, with a meaningful community say; sits alongside Section 106 and the Community Infrastructure Levy | Strategic sites |
| 3. Environment | Design for PUE 1.3 or better; cut use of public water, with closed-loop systems where possible; reuse waste heat where a viable user exists; annual reporting on energy, water, emissions, heat reuse and flexibility | All; reporting for strategic sites |
| 4. Jobs and skills | Local jobs, paid apprenticeships and training; priority for UK suppliers; the most strategic sites contribute to British AI hardware | All; hardware for the most strategic |
| 5. Security | Secure access to compute for the NHS and public services; National Cyber Security Centre standards; information sharing and government exercises | All; required for strategic sites |

Source: [HM Treasury, The Data Centre Covenant, 28 Oct 2026](https://www.gov.uk/government/publications/data-centre-covenant/the-data-centre-covenant); [London Construction Magazine](https://www.constructionmagazine.uk/2026/10/budget-data-centre-covenant-grid-connections.html).

In return, a new Ministerial Control Centre, chaired by the Minister for AI and supported by the Exchequer Secretary to the Treasury, will decide which sites get help. Using powers in the Planning and Infrastructure Act, the government says it will reserve future capacity, reallocate capacity released from the queue, work with the National Energy System Operator (NESO) and network companies to find capacity available before 2030, and, where that is not enough, transfer pre-2030 connection contracts to strategic data centres. For "exceptionally strategic" projects, a "tightly controlled framework" will allow temporary on-site generation until the grid connection arrives.

The covenant also backs Ofgem's proposed data centre commitment fee and queue management measures to clear speculative demand, and says future connections will follow regional plans beyond 2030 using the ALIGN spatial planning tool. On the same day, the government opened consultation on a draft National Policy Statement for Data Centres, which will guide decisions on projects that enter the Nationally Significant Infrastructure Project regime. Comments close at 11:59pm on 8 January 2027.

## Who gains, and how much

**Projects with a public-sector or sovereign story.**  Sites serving the NHS, defence or government compute have the clearest route to the "strategic" label. Ark Data Centres runs Crown Hosting Data Centres, a joint venture with the Cabinet Office. TPG was reported on 28 October to be in talks to buy Ark from Elliott, its owner since 2012, at about £3.8 billion (US$5 billion), citing the Financial Times. No deal had been agreed. The covenant arrived the same day and makes a government-facing platform easier to argue for.

**Large regional campuses.**  Northumberland County Council has approved a £10 billion QTS facility at Cambois and has two more applications in hand, Resultsense reported. North East sites sit inside an AI Growth Zone region with a power discount from April 2027. Local leaders want more detail: Ian Lavery, Labour MP for Blyth and Ashington, said the pledge broadly addresses residents' concerns but that the "devil is in the detail".

**Operators that already run efficient, closed-loop sites.**  A PUE target of 1.3 and closed-loop cooling are already standard for new hyperscale designs. For them the covenant is mostly paperwork; for older designs with evaporative cooling it is a capital decision.

> Responsible developers are already investing in creating jobs, protecting water supplies, and supporting local communities.

***Gary Wojtaszek** , Executive Chairman and Interim CEO, Pure Data Centres Group — [Techerati, 28 Oct 2026](https://www.techerati.com/news-hub/uk-budget-2026-puts-ai-infrastructure-at-the-centre-of-growth-plans/)*

**The scale of the opening.**  DC Market Insights data shows 184 UK facilities with 759.6 MW live, 286 MW under construction and 6,935.4 MW planned where MW is disclosed. Live plus under construction is 1.05 GW. Reaching 6 GW of AI capacity by 2030 needs about 4.95 GW more than that, or roughly 1.2 GW a year over the four years to 2030 (our calculation). The planned pipeline we track, 6.9 GW, would cover the gap only if most of it connects in time; the covenant is the government's bet that it can pick which projects do.

**Who does not gain.**  Speculative applicants. The covenant backs Ofgem's commitment fee, which Ofgem proposed at £237,500 to £712,500 per MW for demand connections of 40 MW or more, held as security until energisation. For a 100 MW request that is £23.75 million to £71.25 million (our calculation). Capacity transferred to strategic sites may also come out of pre-2030 contracts that other developers already hold.

## The economics: what a strategic label is worth

The clearest price signal is the AI Growth Zone energy discount. The government's policy paper sets discounts for data centres in the zones of up to £24/MWh in Scotland, £16/MWh in Cumbria and £14/MWh in the North East, starting in April 2027 "subject to legislative timetables" and reviewed in 2030. It estimates a 500 MW data centre could save up to £80 million a year. At £24/MWh, that £80 million implies about 3.33 TWh of use, or a 76% load factor (our calculation).

| 100 MW data centre at 80% load (700.8 GWh a year) | Discount (£/MWh) | Saving per year | Years to cover top Ofgem fee (£71.25m) |
| --- | --- | --- | --- |
| Scotland AI Growth Zone | up to 24 | £16.8 million | 4.2 |
| Cumbria AI Growth Zone | up to 16 | £11.2 million | 6.4 |
| North East AI Growth Zone | up to 14 | £9.8 million | 7.3 |
| Outside a zone | none announced | – | – |

Our calculation from [gov.uk, Delivering AI Growth Zones](https://www.gov.uk/government/publications/delivering-ai-growth-zones/delivering-ai-growth-zones) (discount rates, April 2027 start) and Ofgem's proposed commitment fee as reported in our [19 October analysis](https://www.dcmarketinsights.com/news/data-centres-want-73-gw-of-britains-grid-1-6-times-peak-demand-germanys-november-grid-vote-is-next). The fee is security returned at energisation, not a cost; the comparison shows scale only. Discounts are maximums and subject to legislation.

*Figure 2. Annual value of the AI Growth Zone power discount for a 100 MW site at 80% load. Source: our calculation from [gov.uk, Delivering AI Growth Zones](https://www.gov.uk/government/publications/delivering-ai-growth-zones/delivering-ai-growth-zones).*

Time is worth more than the discount. The government says the zone measures can cut time to power by up to five years. A site that is told "early-to-mid 2030s" by its network operator, as at Loughton, and can instead connect before 2030 gains revenue years that no tariff discount can match. Other zone benefits include 100% business rate retention for local councils for 25 years from April 2027, which the paper estimates at about £5 million to £10 million of extra local revenue per site a year.

The Budget added a wider package of more than £700 million for AI and cyber security, including £140 million more for the Sovereign AI Unit, and raised the first-year capital allowance from 40% to 50%, Capacity reported. DC Market Insights estimates the UK AI data center market at US$3.16 billion in 2026, rising to US$16.02 billion by 2035, a 24.16% annual growth rate from 2025.

| Measure | Figure | Source |
| --- | --- | --- |
| AI data centre capacity needed by 2030 | 6 GW | HM Treasury, 28 Oct 2026 |
| Current UK operational capacity | ~2 GW | Capacity, 29 Oct 2026 |
| Data centre grid requests in the queue | at least 73 GW | Ofgem, via Capacity |
| DC Market Insights tracked: live / under construction / planned | 759.6 / 286 / 6,935.4 MW | DC Market Insights data, 21 Oct 2026 |
| Reported Ark valuation (TPG talks) | ~£3.8bn (US$5bn) | Resultsense citing FT/Reuters, 28 Oct 2026 |
| Approved QTS Cambois campus | £10bn | Resultsense, 29 Oct 2026 |

Sources as listed. Ofgem's press material has referred to "at least 80GW" of data centre applications, while its consultation used about 73 GW; the bases differ, and we use 73 GW. The ~2 GW operational figure is Capacity's reading of the covenant estimate; DC Market Insights counts only sites with disclosed MW, so our tracked figures are lower.

## The wider pattern: Europe ranks grid users, capital looks for a fast lane

Britain is moving in the opposite direction to some neighbours on the same problem. Denmark's grid priority order, in force since 19 October, puts most data centres last of four categories, as we reported on [2 November](https://www.dcmarketinsights.com/news/denmark-put-data-centres-last-in-its-grid-queue-16-gw-of-requests-get-answers-in-late-november). Finland's draft law puts data centres above 10 MW in a lower priority group from 1 January 2027 unless they offer flexibility. The UK instead ranks data centres by what they give back, and moves the ones it likes to the front.

Large pools of capital are looking for exactly that kind of certainty. EQT, which manages more than US$100 billion of digital and energy assets and owns EdgeConneX, told The National on 3 November that it is in talks with UAE and Saudi sovereign investors about joint AI and data infrastructure deals. The UAE, Saudi Arabia and Qatar have announced about US$120 billion of AI investment plans since last year, according to IMF estimates cited by The National. Gulf and private equity money can choose between markets; a clear route to power is one of the few things that separates them.

> the test will be how quickly it turns proposed capacity into working infrastructure

***Peter Griffiths** , Founder and Executive Chairman, Argyll Data Development — [Capacity, 29 Oct 2026](https://capacityglobal.com/news/budget-sets-five-tests-for-data-centre-grid-priority/)*

### What it means for operators, investors and vendors

Our view, based on the rules and figures above:

- **Operators: write the covenant file now.**  PUE 1.3 design, closed-loop cooling, a costed Local Benefit Plan and an NCSC-aligned security plan are the entry ticket to a fast lane worth up to 5 years of time to power.
- **Site in a zone if you can.**  A 100 MW site in a Scottish AI Growth Zone saves up to £16.8 million a year from April 2027; that covers even the top Ofgem fee in about 4.2 years.
- **Investors: price the public-sector link.**  Platforms with government hosting, such as Ark's Crown Hosting joint venture (reported £3.8 billion valuation in TPG talks), are the most likely "strategic" candidates.
- **Watch your own pre-2030 contract.**  The government can transfer pre-2030 connection contracts to strategic sites. A non-strategic queue position is now worth less until the definition is published.
- **Vendors: temporary power is a new market.**  The on-site generation framework, limited to exceptionally strategic projects, plus a 1.2 GW-a-year build need, favours gas engines, turbines and batteries that can be installed fast and moved later.
- **Respond by 8 January 2027.**  The planning statement will set how 100 MW-class projects are judged under the NSIP regime.

For the size of the UK opportunity, see our [UK AI Data Center Market](https://www.dcmarketinsights.com/report/uk-ai-data-center-market) report and the wider [AI Data Center Market](https://www.dcmarketinsights.com/report/ai-data-center-market) report. For the temporary on-site power the covenant allows, see the [Data Center Generator Market](https://www.dcmarketinsights.com/report/data-center-generator-market) report. UK rules, incentives and power prices are tracked on our [United Kingdom power and policy page](https://www.dcmarketinsights.com/data/power-policy/united-kingdom), part of the [Data Center Power & Policy Tracker](https://www.dcmarketinsights.com/data/power-policy).

## What to watch next

- **November-December 2026:**  TPG and Elliott talks on Ark; no deal is certain.
- **Later in 2026:**  Ofgem's decision on the data centre commitment fee, which the covenant backs.
- **"In due course":**  the government's definition of a strategic data centre and the criteria for reserved or transferred capacity and temporary power.
- **8 January 2027:**  consultation on the draft National Policy Statement for Data Centres closes.
- **April 2027:**  AI Growth Zone power discounts and business rate retention are due to start, subject to legislation.
- **2030:**  the 6 GW AI capacity need and the review point for the zone discounts.

## Frequently asked questions

### What is the UK Data Centre Covenant?

A set of five tests published by HM Treasury on 28 October 2026, covering energy costs, community investment, environment, jobs and security. Data centres the government judges strategic must meet them to get help such as reserved grid capacity or temporary on-site power.

### How much data centre capacity does the UK need by 2030?

6 GW of AI data centre capacity by 2030, according to the government. That is about three times the roughly 2 GW operating today. DC Market Insights tracks 1.05 GW live or under construction with disclosed MW.

### What are the AI Growth Zone power discounts?

Up to £24/MWh in Scotland, £16/MWh in Cumbria and £14/MWh in the North East, from April 2027 subject to legislation. For a 100 MW site at 80% load that is up to £16.8 million a year in Scotland (our calculation).

### When does the data centre planning consultation close?

At 11:59pm on 8 January 2027. The draft National Policy Statement for Data Centres will guide decisions on projects consented through the Nationally Significant Infrastructure Project regime.

## Sources

1. HM Treasury, "The Data Centre Covenant", 28 Oct 2026. [Link](https://www.gov.uk/government/publications/data-centre-covenant/the-data-centre-covenant)
2. UK Government, "Draft National Policy Statement for Data Centres" (consultation), 28 Oct 2026. [Link](https://www.gov.uk/government/consultations/draft-national-policy-statement-for-data-centres)
3. UK Government, "Delivering AI Growth Zones" (policy paper). [Link](https://www.gov.uk/government/publications/delivering-ai-growth-zones/delivering-ai-growth-zones)
4. Capacity, "Budget sets five tests for data centre grid priority as UK chases 6GW by 2030", 29 Oct 2026. [Link](https://capacityglobal.com/news/budget-sets-five-tests-for-data-centre-grid-priority/)
5. Silicon UK, "UK Government 'Data Centre Covenant' To Prioritise Critical Sites", 29 Oct 2026. [Link](https://www.silicon.co.uk/cloud/datacenter/government-data-centre-632086)
6. London Construction Magazine, "Budget 2026 Data Centre Covenant Offers Faster Grid Connections and Temporary Power", 28 Oct 2026. [Link](https://www.constructionmagazine.uk/2026/10/budget-data-centre-covenant-grid-connections.html)
7. Techerati, "UK Budget 2026 puts AI infrastructure at the centre of growth plans", 28 Oct 2026. [Link](https://www.techerati.com/news-hub/uk-budget-2026-puts-ai-infrastructure-at-the-centre-of-growth-plans/)
8. Resultsense, "Budget confirms data centre covenant; Northumberland reacts", 29 Oct 2026. [Link](https://www.resultsense.com/news/2026-10-29-data-centre-covenant-budget-northumberland/)
9. Resultsense, "TPG in talks for Ark Data Centres", 28 Oct 2026. [Link](https://www.resultsense.com/news/2026-10-28-tpg-ark-data-centres-talks/)
10. The National, "EQT seeks joint AI and data centre deal with Saudi and UAE sovereign investors", 3 Nov 2026. [Link](https://www.thenationalnews.com/business/markets/2026/11/03/eqt-seeks-joint-ai-and-data-centre-deal-with-saudi-and-uae-sovereign-investors/)
11. DC Market Insights, "Data centres want 73 GW of Britain's grid, 1.6 times peak demand", 19 Oct 2026. [Link](https://www.dcmarketinsights.com/news/data-centres-want-73-gw-of-britains-grid-1-6-times-peak-demand-germanys-november-grid-vote-is-next)
12. DC Market Insights, "Denmark put data centres last in its grid queue", 2 Nov 2026. [Link](https://www.dcmarketinsights.com/news/denmark-put-data-centres-last-in-its-grid-queue-16-gw-of-requests-get-answers-in-late-november)
13. DC Market Insights, United Kingdom data center power and policy data, accessed 3 Nov 2026. [Link](https://www.dcmarketinsights.com/data/power-policy/united-kingdom)
14. DC Market Insights, UK AI Data Center Market report. [Link](https://www.dcmarketinsights.com/report/uk-ai-data-center-market)