As data center developers compete for a cut of the hundreds of billions of dollars flowing into the artificial intelligence industry, the queue to join the UK’s power grid has become jammed with projects that will likely never get built. The snarl is exacerbating already years-long wait times for viable projects, and it's messing with attempts to forecast energy demand and plan grid expansions.

In July, the UK’s energy regulator, Ofgem, laid out a proposal meant to force phantom data centers out of the swollen queue. Under the plans, set to be finalized after an industry feedback process that ends in September, developers would be required to put down a steep, nonrefundable deposit that could balloon to hundreds of millions of dollars for the very largest data centers. Developers would also be required to line up customers in advance and prove they have the funding to complete their builds.

However, Ofgem faces a Goldilocks conundrum: The reforms must be burdensome enough to deter speculators but not so much that they drive legitimate data center projects to other shores, undermining the UK’s ambitions to meet the voracious demand for the compute required to run sophisticated AI models.

Data center developers face delays almost everywhere; similar grid congestion issues afflict the US and countries across Europe . But whereas the US is a highly desirable market , Ofgem’s reforms risk making the UK—already unattractive for the high cost of energy and dearth of land—one of the world’s most expensive places to build a data center, industry experts believe.

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