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(Bloomberg) — Large-scale data centers located in the wrong place or without flexible demand options could hike energy costs, the head of the UK’s grid operator said on Tuesday.
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Fintan Slye, chief executive officer of NESO, said data centers with power needs above 1 gigawatt — equivalent to the size of a small city — should be located in Scotland or other places where wind farms are frequently paid to curtail output.
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“If you put them in the wrong places, if you don’t have that flexibility, you’ll probably end up driving the prices and creating issues around security,” he said at IE Week 2026 in London.
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Prime Minister Keir Starmer’s government has made attracting data center operators a priority to boost economic growth and capitalize on the rise of artificial intelligence. However, that ambition could complicate his pledge to cut consumer energy bills if data center demand outpaces the power system’s capacity.
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National Grid Plc said last year it aims to connect as much as 19 gigawatts of new data centers in five years, equal to about a third of current peak demand. While situating data centers closer to generation sources — such as Scotland, which often has excess wind power — makes sense, technology firms still prefer locations in and around London, where the grid is already saturated, because of latency concerns.
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Speaking to reporters after the panel, Slye said the UK government needs to ensure large data centers only come online once there is enough grid capacity. He pointed to Texas as an example, where a new law requires data center operators to reduce their grid consumption in emergency circumstances and switch to on-site backup generators when necessary.
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—With assistance from Eamon Akil Farhat.
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