John Healey’s Budget pledge to fast-track electricity connections for British data centres faces an immediate test, as new research shows only 13 per cent of planned capacity is under construction.

The Chancellor announced a new Data Centre Covenant on Wednesday, offering strategically important projects priority access to Britain’s electricity grid in exchange for commitments on local jobs, investment and environmental protections.

However, analysis published by Science Works on Thursday found that most of Britain’s proposed data centre capacity remains in the planning pipeline, while more than two-fifths has no announced tenants.

The findings raise questions over how far faster grid connections alone can accelerate the government’s AI infrastructure ambitions.

“We always knew planning and grid capacity were problems; this report shows that demand for UK compute might be low too”, said Will Stone, a contributing author at Science Works.

Grid access comes with conditions

Under the covenant, developers seeking enhanced government support must show their projects benefit local communities, create jobs, and meet standards for energy and water consumption.

In return, ministers will help qualifying projects secure grid connections and, in exceptional circumstances, allow temporary on-site electricity generation while permanent connections are arranged.

The measures follow Microsoft’s withdrawal from plans to develop a major AI data centre in Essex alongside British startup Nscale, after delays in securing power threatened the project’s timetable.

Peter Griffiths, founder and executive chairman of Argyll Data Development, welcomed the announcement.

“The government has finally recognised that Britain’s AI ambitions depend on electricity as much as investment”, he said. But he warned that the test would be “how quickly it turns proposed capacity into working infrastructure”.

The government has yet to define which developments will qualify as strategically important, leaving uncertainty over how widely the measures will apply.

Sanam Hussain, director at law firm Fieldfisher, described the agreement as a “quid pro quo” between ministers and developers.

“Faster access to power and government assistance in return for developers accepting a wider package of community, environmental, employment and security obligations”, she said.

Can the Budget deliver faster construction?

Science Works found that developers plan to quadruple Britain’s data centre capacity by 2030, requiring the annual rate of construction to increase sevenfold.

Yet only 13 per cent of planned capacity is currently under construction, while developers are promoting 42 per cent without announced tenants, compared with 33 per cent in the US and 16 per cent in the EU.

The research also questioned the effectiveness of the government’s existing AI Growth Zones, which account for just 13 per cent of proposed capacity, with little evidence that projects inside them are progressing faster.

However, according to Pitchbook, Nscale’s two fundraising rounds and Pure Data Centre’s €1.3bn financing were Europe’s three largest venture debt deals in the third quarter, all linked to British data centre capacity.

But researchers warned that the additional obligations could make some projects harder to deliver.

“If the new Data Centre Covenant piles more costs onto developers who haven’t yet found tenants, it could delay the build-out even more”, Stone said.