The Constraint Is Electricity: Where Your Computing Actually Happens

Ofgem opened a consultation on demand connection reform yesterday. It is not a technology story. It will shape what computing costs over the next decade more than anything announced at a conference this year.

For twenty years compute behaved like something you order. It is now limited by a physical input with a lead time measured in years.

1. Buying Capacity by the Hour Was a Real Advance

The point of consumption pricing was that quantity stopped being a planning question. Need more, ask for more. Stop forecasting hardware three years ahead.

That was not a trick, and organisations were right to take it. Planning cycles shortened. Capital moved to revenue, and a great deal of expensive guesswork disappeared for good.

The model rested on one assumption, and nobody had reason to examine it — the capacity would exist when it was asked for.

2. The Constraint Moved Underneath

That assumption no longer holds. Contracted offers in the transmission demand queue rose from 41GW in late 2024 to 125GW by the middle of 2025.

Peak electricity demand across Great Britain on a cold day this month was 45GW — the queue is approaching three times the whole country’s peak.

Very little of it will be built. But the number describes the problem — what is scarce is not chips, or land, or floor space. It is a connection.

3. The Queue Is Not Really a Queue

A queue implies people waiting their turn for something genuinely short. This one behaves rather differently.

Ofgem has put the proportion of speculative or non-viable applications around London at between sixty and seventy per cent. They are options on capacity — held because holding one costs very little.

Which is why credible projects have been quoted waits running into a decade or more. They are not waiting for electricity. They are waiting behind people who may never want it.

4. You Are Not in the Queue. Your Supplier Is.

Most organisations read all this as somebody else’s problem, on the reasonable grounds that they are not the ones building a data centre.

They are, however, buying from people who are. Where capacity gets built, when it arrives and what it costs are now inputs to the price of everything bought on top of it.

The organisation is not in the connection queue. Its supplier is — and that supplier’s roadmap now depends on infrastructure neither of you controls.

5. Location Is a Commercial Variable Again

For most of the cloud era it did not much matter where computing physically happened. Latency aside, a region was an entry in a dropdown.

That is reversing. Regions now differ on what power is available, what it costs, how clean it is and how long a connection takes — differences wide enough to appear in a contract.

The organisations noticing first are those with data residency obligations, who were already required to care where things sat.

6. The Competition Is Not Other Technology Firms

This is the part that sits uncomfortably, and anybody who has worked in utilities will have seen it coming.

A data centre and a housing development want the same substation. So does the electrification of heat, and the charging network for transport. New housing in west London has already been held up because the spare capacity had gone.

Nobody is behaving badly here. There is one network, several national priorities and a finite amount of headroom — and technology has not previously had to think of itself as competing for it.

7. What Changes for an Ordinary Buyer

None of this requires an organisation to become an energy business. Four questions cover most of it:

• where the capacity behind your main platforms is being built, and when it lands
• what the contract says if the capacity your supplier assumed does not arrive
• which workloads genuinely need to run in one particular place
• how much of your cost is exposed to industrial electricity prices you never see

The last is invisible in almost every technology budget, and it is becoming one of the larger variables inside it.

8. Secure It Ahead, or Take Somebody Else’s Timetable

Capacity has gone back to being something secured in advance rather than drawn down on request, which is a genuine reversal.

That is an unwelcome return to a way of working the industry spent twenty years escaping — and wishing otherwise has never shortened a connection date.

The organisations that fare best will be those noticing early enough to ask suppliers a harder question than price.

Final Thought

It is an odd result. After decades in which technology was limited mainly by ingenuity, the binding constraint has turned out to be a substation and the time it takes to build one.

Which makes the next few years less a question of what can be built than of where, in what order, and who decides. Those are questions the energy industry has been answering for a century, and the technology industry has barely begun.