Drax announced plans on Tuesday 3 November 2026 to build a data centre of more than one gigawatt at Drax Power Station in North Yorkshire, with investment that could top £20 billion. It’s working with Brookfield and Radiant, Brookfield’s UK-based AI infrastructure business. Nothing is built or approved yet. But it raises questions every business that pays an electricity bill should be asking: how much power these projects need, who pays for the grid to carry it, and whether they’re being built in the right places.
What is Drax planning?
A data centre is a building full of powerful computer servers that run digital services, from banking and streaming to artificial intelligence (AI). Drax, Brookfield and Radiant want to build one in phases at the power station near Selby:
- Phase one: up to 100 MW of capacity from the first three months of 2028, backed by an initial £2.5 billion.
- Phase two: an ambition to grow to 500 MW between 2028 and 2031.
- In total: Drax hopes the site will pass one GW. One GW is 1,000 MW.
Brookfield estimates the total investment, including the computer chips, could exceed £20 billion. The first phase still needs planning permission, regulatory and network approvals from the government and the system operator, and a tenant to use it. A community consultation starts shortly.
Drax Power Station burns biomass, mainly wood pellets plus straw and sunflower pellets, and Drax says it will use the plant’s surplus capacity to power the data centre. The 1,000-acre site already has 4 GW of grid access and 2.6 GW of generation it can switch on when needed. Chief executive Will Gardiner said the project would “help secure the long-term future of the site and protect hundreds of jobs”. Drax shares rose 8.5% to 877p on the morning of the announcement.
How big is that next to the whole grid?
To put the numbers in context, the BBC reports that peak electricity demand across the whole country last year was 45 GW. On our own maths:
- Phase one (100 MW) is about 0.2% of that peak.
- Phase two (500 MW) is about 1.1%.
- The full site (1 GW) is about 2.2%, from a single site in North Yorkshire.
Drax is only one project. Ofgem says data centre developers are seeking grid connections totalling 72 GW. That’s 160% of last year’s peak demand on our own maths, more than the country used at its busiest moment. Some developers have been told they could wait up to 10 years for the grid to be upgraded to connect them. Last month, Microsoft pulled out of a tie-up with Nscale after its proposed data centre in Essex couldn’t get a grid connection until at least 2030.
A classic supply and demand problem?
Here’s the question we think needs asking. If demand for electricity grows faster than the supply and the network to carry it, the basic rule of any market is that prices go up. Nobody has published what data centres on this scale could do to wholesale unit prices or to network costs, and we’re not going to guess. But the question has to be part of the conversation, because businesses and households pay for the system through their bills.
The government says it’s on it. In his Budget on Wednesday 28 October, Chancellor John Healey announced a British Data Centre Covenant. Data centres must invest in local communities, create local jobs and protect local water supplies. In return, critical data centres get priority grid connections and, where necessary, can build their own power generation on site while they wait. The government says the Covenant sets clear expectations for developers to pay a fair share of the costs they impose on the energy system. How that fair share is worked out is the detail every bill payer should watch.
Is North Yorkshire the right place?
For Drax and its partners, the site makes sense. The grid connection is there, the generation is there, and the site is close to the UK fibre network. But what about the rest of the country?
Think of the grid as a motorway network. In Scotland, wind farms often produce more power than the local area needs. The obvious move is to send it south, but the roads out are too narrow. The Ferret’s investigation explains that two bottlenecks matter most: one inside Scotland, known as the B4 boundary, and one along the Scotland-England border, known as B6. When the wind blows hard, more power is generated north of them than the cables can carry.
When that happens, NESO, the National Energy System Operator, pays the wind farms to switch off, and pays other power stations, usually gas, to switch on further south. The Ferret reported in December 2025 that the UK was estimated to have spent over £1.3 billion turning wind farms off since the start of that year, the vast majority of them in Scotland. Researchers it spoke to put balancing costs, which include those payments, at around £50 a year on the typical annual electricity bill.
And it’s growing fast. Octopus Energy’s Wasted Wind tracker showed that by 5 October 2026, Britain had already spent more than £1.5 billion this year paying wind farms to switch off and gas plants to fire up instead, beating the whole of 2025’s £1.47 billion with three months still to go. September alone cost £404.3 million. NESO forecasts £3.2 billion in constraint costs in the year to July 2027, and the government has warned they could reach £10 billion by 2030.
So it’s fair to ask: would a better home for some of these data centres be where there’s surplus power the grid can’t move? The Ferret’s own reporting notes that energy-hungry industries such as data centres could mean more power is used in Scotland itself. Putting new demand next to power that’s currently being paid to switch off could, in principle, put that power and those wires to good use.
We’re not saying that’s the answer. Where a data centre goes involves planning, the environment, land, water, fibre links and wider politics, and none of those are simple. Drax’s plan to use its own plant’s surplus capacity is part of its case for this site, too. But location belongs in the discussion. The government is already spending heavily on new links south, such as Sea Link, the 2 GW undersea cable between Suffolk and Kent approved on 30 October to help move power to where it’s needed.
What does this mean for your business?
Data centres won’t change your electricity bill tomorrow. But they’re part of a bigger picture that does affect what businesses pay: how much demand the grid has to carry, how quickly it’s upgraded, and how much is spent paying generators to switch off. The cost of all three lands on electricity bills, and business bills are no exception.
That’s why we keep a close eye on stories like this, and why timing your contract matters. We always advise arranging your next contract as early as possible, normally 12 months before your renewal date. That way you can take advantage of forward pricing rather than the short-notice prices on offer when a renewal is left to the last month or two. We compare prices from suitable suppliers and present the options that best suit your business.
We’ll update this article as Drax’s plans go through consultation and planning.
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