Chancellor John Healey said the UK will not allow the sort of “free-for-all” on data centre development that has sparked a public and political backlash in the US, Bloomberg reported on 11 November. Healey was speaking to the Treasury Select Committee.
The government says the UK will need 6 GW of AI data centre capacity by 2030. By our arithmetic on a study for London, a grid connection asked for there today would arrive in 2033 to 2039, three to nine years after that date.
Business Pill · Grid Cost Allocation Explained
A short explainer on who pays when the grid has to be extended for a new user. It teaches the general idea only and does not discuss the covenant.
The key insight: Chancellor John Healey told the Treasury Select Committee the UK will not allow a US-style data centre free-for-all, Bloomberg reported, pointing to the Data Centre Covenant: five tests in return for grid priority. The covenant puts the need at 6 GW of AI data centre capacity by 2030; by our arithmetic, a London connection asked for in 2026 would arrive in 2033 to 2039 on the GLA study’s wait range.
Healey told the committee he launched a data centre covenant alongside the budget last month “because I do not want to see the US data center debate rerun in the UK”, according to Bloomberg. Bloomberg said the US backlash threatens to stall investment in artificial intelligence.
In his Budget speech on 28 October, Healey said: “I am today launching a new British Data Centre Covenant with strict tests that data centres must meet”. In return, he said, “critical data centres will get the grid connections they need”.
The year a grid connection requested in 2026 would arrive, on the wait ranges in the GLA-commissioned study (London 7 to 13 years, other European markets 3 to 7), against the Data Centre Covenant’s 6 GW-by-2030 estimate. The years are our arithmetic.
The Five Tests in the Covenant
The Data Centre Covenant sets out tests that all data centres are encouraged to meet and that strategic data centres must meet to qualify for additional government action. There are five: lower electricity bills, investment in local communities, the highest environmental standards, jobs and apprenticeships, and Britain’s security.
Strategic data centres should agree a Local Benefit Plan with the local community, linked to the development’s size. New facilities should be designed for a Power Usage Effectiveness of 1.3 or better, and strategic sites should report their energy and water use every year.
In return, the covenant says, a new Ministerial Control Centre chaired by the Minister for AI will consider support. The government says it may reserve and reallocate grid connections using powers in the Planning and Infrastructure Act, and allow on-site generation until a grid connection is secured for exceptionally strategic projects.
The 2030 Target and the Grid Wait
The covenant says the government estimates the UK will require 6 GW of AI data centre capacity by 2030. It also says the government will continue to deliver the five AI Growth Zones across England, Scotland and Wales.
A study commissioned by the Greater London Authority found that new data centres in London may wait 7 to 13 years for a grid connection, against 3 to 7 years in other European markets, as covered in our piece on London’s grid wait. By our arithmetic, a request made in 2026 would be connected in 2033 to 2039 in London and in 2029 to 2033 elsewhere in Europe.
UK data centres queueing to connect to the grid total 73GW, the Guardian reported on 5 November, as covered in our piece on the queue.
The Structural Read
As we read it, the covenant is an exchange: strategic data centres take on a Local Benefit Plan, efficiency and reporting duties, and in return the government says it may reserve and reallocate grid capacity for them.
As we read the numbers, time to power is the binding constraint: the covenant’s 2030 date sits before the 7-to-13-year London wait in the GLA study would end for a request made now, which is why the covenant’s connection measures matter more than its standards.
John Healey, Chancellor of the Exchequer, to the Treasury Select Committee, 11 November 2026, as reported by Bloomberg
“I do not want to see the US data center debate rerun in the UK”
Three Implications
FOR DEVELOPERS Strategic data centres must meet the five tests to qualify for additional government action, the covenant says; it adds that the definition of strategic data centres will follow in due course.
FOR COMMUNITIES Strategic sites should agree a Local Benefit Plan with the local community, linked to the development’s size, and report energy and water use every year, the covenant says.
FOR THE GRID The covenant says the government may reserve future capacity and reallocate capacity released when other projects leave the connections queue, using Planning and Infrastructure Act powers.
The framework puts it plainly: “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, the covenant applies that idea as policy: the government offers grid connections, not money, as the reward for meeting its tests. The framework predates the covenant and does not discuss the UK.
What Is Not Established
We read the first two paragraphs of Bloomberg’s article, not the full text, and could not view the committee session. The covenant says the government will set out further details in due course on the definition of strategic data centres. Which projects will qualify for faster connections is not yet stated.
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Healey told MPs the UK will not have a US-style data centre free-for-all, and pointed to a covenant that trades grid priority for local investment, water and energy standards. The covenant’s own target is 6 GW of AI capacity by 2030; a London connection asked for now would arrive in 2033 to 2039 on the GLA study’s range, by our arithmetic.
A note on sourcing. Healey’s remarks to the Treasury Select Committee are as reported by Bloomberg on 11 November 2026; we read the opening of that article and did not view the session. The covenant’s tests, target and measures are from the Data Centre Covenant on GOV.UK, read in full, and the speech quotes from the published Budget 2026 speech. The London and European wait ranges come from the GLA-commissioned study as covered in our earlier piece. The connection years are our arithmetic. HM Treasury was not contacted for this piece.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
