The United Kingdom is facing the challenge of efficiently utilizing surplus electricity, despite its significant potential in wind and solar generation. The country has an excess of electricity, with 10 TWh of curtailed renewable energy in 2023—enough to power every home in London. Nevertheless, the UK continues to have some of the highest electricity prices in Europe.

Opportunities for Data Centers

Data centers, which consume large amounts of electricity, are seen as a potential solution for using surplus clean energy and as a driver for further development of renewable sources. However, to realize this potential, it is necessary to accelerate the connection of data centers to the grid and create favorable conditions for large energy consumers in specific regions.

Institutional Advantages and Challenges

The UK possesses several institutional tools, such as the National Grid, AI growth zones, and a well-developed contracts-for-difference scheme, which have helped the country become a global leader in offshore wind energy. However, there is a risk of missing the opportunity to quickly connect new data centers to the power supply.

Global demand for electricity from data centers is rising rapidly, and countries are competing for the economic benefits associated with hosting large facilities, including those supporting artificial intelligence development.

Key Steps for Development

To address bottlenecks in the development of clean energy and the effective use of surplus power, two main directions are proposed:

1. Accelerating Decision-Making
   It is essential to prioritize the swift approval and implementation of infrastructure projects, focusing on speed rather than perfection. It is also important to consider the potential impact of data centers on local electricity prices and water resource usage.

2. Developing Energy Storage Systems and Sustainable Technologies
   The adoption of technologies capable of balancing an energy system with a high share of variable sources—such as wind and solar—should be encouraged. Examples include virtual power plants (VPPs) and projects that use domestic boilers for energy storage.

Government Initiatives

The new government is working on planning system reforms to speed up the approval of critical infrastructure projects, including clean energy facilities. The energy regulator Ofgem has introduced a new system that prioritizes projects ready to connect to the grid, aiming to reduce queues and eliminate so-called “zombie projects.”

A support scheme for long-duration energy storage systems (LDES) has been launched, enabling energy to be stored for eight hours or more. In June, 16 such projects received preliminary approval, which should help balance the future energy system based on renewables and reduce generation curtailment.

Outlook

Despite high electricity prices, the UK is well positioned to implement new technologies in both energy demand and storage, which will make the energy system more efficient. To achieve this, it is necessary to use existing institutional tools more flexibly and provide regulatory certainty on revenues for project developers.