What the Data Centre Covenant Asks of Operators in Return for Faster Power

Getting power to site is now the biggest barrier to building data centres in Britain. On 28th October, the government set out what it will ask in return for faster access.

The Data Centre Covenant, published by HM Treasury alongside the Autumn Budget, offers operators faster power in exchange for meeting a set of clear conditions. A new Ministerial Control Centre, chaired by the Minister for AI, will use state powers to speed up grid connections and planning for strategic data centres. To qualify, those sites must pass five tests on energy, communities, the environment, jobs and security.

For operators, this means access to power is becoming conditional. There is a faster route to the grid, but getting onto it means committing to clear energy obligations. Below we look at what's on offer, what it could cost you and five questions worth answering before the rules are finalised.

What's on offer

The government estimates the UK needs 6 GW of AI data centre capacity by 2030. To get there, it's opening four routes to faster power for strategic sites, using new powers in the Planning and Infrastructure Act:

• Reserve and reallocate. Future grid capacity can be held for strategic projects. Capacity released when other projects leave the queue can be redirected to them.
• Find hidden capacity. Government will work with NESO and the network companies to find locations with capacity available before 2030.
• Transfer contracts. Where needed, pre-2030 data centre connection contracts could be moved to strategic data centres.
• Bridge the gap. On-site generation until the grid connection arrives, under a tightly controlled framework. This is only for exceptionally strategic projects where the other three routes can't deliver in time.

There are also wider reforms that will affect every operator. These include post-2030 connections aligned to regional plans, more freedom to self-build connection infrastructure, flexible connections with backstop operational controls, support for Ofgem's data centre commitment fee, a draft National Policy Statement out for consultation and continued delivery of the five AI Growth Zones.

One important detail is still missing. The government hasn't yet said what counts as a strategic data centre.

What you give back

All data centres are encouraged to meet five tests. Strategic sites must meet them to qualify:

1. Lower electricity bills. Pay a fair share of the system costs you create, so households and other businesses don't have to cover them.
2. Invest in local communities. Agree a Local Benefit Plan, scaled to the development and shaped with the community.
3. The highest environmental standards. A PUE of 1.3 or better for new facilities, minimal public water use, heat reuse where there's a viable local user and annual reporting.
4. Jobs and reindustrialisation. Local jobs, paid apprenticeships, UK suppliers and support for British AI hardware.
5. Britain's security. Secure, resilient compute for the NHS and other critical services, working with the National Cyber Security Centre.

The energy test will have the biggest impact on your commercial model. Operators must make credible commitments for the capacity they request, support security of supply and clean power and help run an efficient, flexible system. Strategic sites must report every year on energy and water use, efficiency, emissions, heat reuse and flexibility participation.

Each of these comes with a cost, a contract or a data requirement, so it's worth budgeting for them now.

Five questions to answer now

1. Will you qualify as strategic?

The criteria will decide who gets the faster route. They're still to come, but operators shouldn't wait for them. Those who can already show credible demand, flexible operation and real local value will be first in line when the definition is published.

2. What does a 'fair share' actually cost?

The Covenant supports Ofgem's proposed data centre commitment fee. Under the proposal, operators would pay a refundable deposit of £237,500 to £712,500 for every MW of capacity they're offered. The deposit would be held from the day you accept your connection offer until your site is connected, then returned. On a 100 MW project, that's roughly £24m to £71m of capital tied up before you draw any power. Once you add network charges, your Local Benefit Plan and the efficiency and reporting spend, the connection becomes a much bigger part of what power really costs you.

3. Who's ahead of you in the queue and who's behind?

Reserving, reallocating and transferring capacity will benefit some projects at the expense of others. Strategic projects stand to gain. If you hold a pre-2030 connection contract for a project that may not qualify, you'll need to understand how transfers will work. That mechanism hasn't been set out yet. And if limited capacity is set aside for strategic demand, other projects could face longer waits.

4. How flexible can your load be?

Government wants more data centres on flexible connections, with backstop controls to keep the system secure. In practice, you could get more capacity, but on terms that allow the system to reduce your demand when it needs to. As we covered in our blog on AI load and new grid rules, you're accountable for load your tenants control. Your leases will need to set out who reduces load, when and who covers the cost.

5. Is bridging power worth pursuing?

Temporary on-site generation is a welcome option, but it's reserved for exceptional projects, depends on energy security and still needs permits. Generators running for months lose the lighter regulatory treatment that backup plant usually gets, so expect emission limits and monitoring to match. We'd plan it as a contingency with a clear route to the grid.

Britain isn't alone

The Covenant is part of a wider European trend. Governments and regulators across Europe are attaching obligations to access to power. Each market is setting its own terms:

• Ireland expects new data centres to bring dispatchable generation or storage to match their grid import. Its new fault ride-through rules cap usable capacity for sites that can't yet comply.
• Germany plans to legally secure transmission grid access for data centres and industry. It also intends to move from 'first come, first served' to 'first ready, first served'.
• Poland has tightened requirements for demand connections, with higher advances, securities and project milestones.
• The EU has proposed an efficiency rating for data centres above 500 kW, with the first labels expected in 2027.

Wherever you're building, getting connected now involves agreeing terms. If you operate across several markets, you'll be working with different rules in each. Understanding the detail in every market is becoming more valuable each year.

What to do now

1. Map your portfolio against the five tests. Know which sites could qualify as strategic and which are exposed if capacity is reallocated.
2. Build your energy evidence pack. Capacity you can justify, flexibility you can prove, clean power you've contracted and reporting data you can stand behind.
3. Cost the whole connection. Securities, network charges, local benefit commitments and efficiency investment all belong in your numbers alongside the price per MWh.
4. Get your contracts ready for flexibility. Agree with tenants how load is limited when the system calls for it and who carries the cost.
5. Treat bridging power as a contingency. If on-site generation is an option, start on permitting and fuel strategy early, with a clear route to the grid.
   
   

The bigger picture

In our white paper, Powering the Next Generation of Data Centres, we argued that energy strategy is becoming infrastructure strategy. The Covenant turns that into government policy. Operators now have to qualify for power, commit to how they'll use it and report on it every year.

It's a significant change, but it also gives the projects that matter most a clear route to faster power for the first time. Operators who get their evidence, costings and contracts in place early will be best placed to use it.

At True Group, we help data centre operators across Europe secure and manage power, from grid connection strategy, procurement and risk to battery business cases and the regulatory detail in every market they build in. When energy crosses borders, so do we.

If you're working out what the Covenant means for your portfolio, we'd be glad to compare notes.

FAQ

What is the Data Centre Covenant?

A UK government policy paper published by HM Treasury on 28th October 2026, alongside the Autumn Budget. It sets five tests for data centres covering energy, communities, the environment, jobs and security. Strategic data centres that meet them get faster grid connections and planning support through a new Ministerial Control Centre.

What counts as a strategic data centre?

The government hasn't published the definition yet. It has said the definition and any extra qualifying criteria will follow. Until then, it's worth preparing the evidence the five tests ask for, especially on grid capacity, flexibility and local benefit.

Does the Covenant apply to existing data centres?

All data centres are encouraged to meet the tests, but only strategic sites must meet them to qualify for extra support. Government will also strongly encourage existing operators to publish annual energy and water data. Wider reforms such as Ofgem's commitment fee and flexible connections will affect projects across the queue too.

Sources

• The Data Centre Covenant, HM Treasury, 28th October 2026
• Ofgem proposals for a new data centre commitment fee, Herbert Smith Freehills Kramer, August 2026
• Large Energy Users Connection Policy Decision, Matheson, 2026
• Germany to secure transmission grid connections for data centres and industry, Clean Energy Wire, October 2026
• New EU rating system for data centres, European Commission, 21st September 2026