Charge on data centre developers is ‘quite positive’ for Segro

By the Editorial Team · Friday, July 31, 2026

Segro CEO David Sleath said that Ofgem’s proposed upfront charging scheme for grid connection applications, while initially costly, could benefit his company by accelerating the approval of serious data centre projects. The new fees aim to reduce speculative entries clogging the queue, potentially allowing Segro to bring its 650MW pipeline to market faster once the consultation closes in September.

David Sleath, chief executive of Segro, one of Britain’s leading data centre and warehouse developers, has indicated that a proposed new charging scheme by the energy regulator Ofgem could ultimately benefit his company despite initial financial implications.

Ofgem is considering introducing a “commitment fee” for projects seeking to connect to the electricity grid, a move aimed at addressing a growing backlog of applications. Currently, developers face low costs to apply for grid connections, resulting in a queue of 315 data centre projects waiting for access. The regulator has expressed concern that many of these projects may be speculative and unlikely to proceed, which in turn is delaying more credible developments.

Under the proposed system, developers would be required to pay between £237,500 and £712,500 per megawatt (MW) to enter the connection queue. This fee would be refundable once the data centre becomes operational but forfeited if the project does not reach completion.

Segro, with a near-term data centre pipeline of approximately 650MW, could face connection fees totaling up to £463 million if the scheme is implemented. However, Sleath described this as primarily a cash flow timing issue rather than a definitive cost, since the funds would be returned upon energizing the data centres.

“The proposal is not designed to penalize serious developers like us,” Sleath said, adding that the fees could serve to filter out speculative projects that lack realistic prospects of delivery. He noted that many entries currently in the queue are from developers with land that may never secure planning permission or move forward.

“If some of that more speculative development can be removed, we could advance our projects much more quickly,” Sleath added.

Ofgem’s consultation on the proposal is open until September 16. The regulator’s goal is to ensure that projects progressing toward completion are prioritized for grid connections, thereby facilitating the development of new data centres ready to meet growing energy demands.

Following the initial announcement of the proposal, Segro’s shares experienced a slight decline but ended the trading day with a modest decrease of 0.4 percent, closing at 966½ pence per share.

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