National Grid Deal Advances UK’s Largest AI Datacentre Plan

• National Grid has agreed to purchase 29.5 hectares of land at Dorman Point, Teesside, for a major new electricity substation.
• The infrastructure could supply power to a neighbouring datacentre spanning nearly 500,000 square metres.
• The proposed development has attracted interest from US technology companies as Britain seeks to strengthen its domestic AI computing capacity.

National Grid has taken a significant step towards building what is expected to be Britain’s largest electricity substation, potentially unlocking one of the country’s biggest artificial intelligence infrastructure projects on Teesside.

The electricity transmission company has agreed to purchase 29.5 hectares (73 acres) of land at Dorman Point, within the Teesworks industrial site, following negotiations with the site’s owners.

The agreement could pave the way for a major substation designed to supply electricity to a neighbouring datacentre development, which has been described as potentially the largest of its kind in Europe.

The proposed facility would cover nearly 500,000 square metres and could attract substantial investment from international technology companies. The site has reportedly drawn interest from US-based artificial intelligence laboratories and large technology infrastructure providers.

National Grid said the land agreement was an important step towards developing the infrastructure needed to support the region’s industrial and digital ambitions.

Matt Pearce, the company’s head of land, said the deal reflected constructive work between the parties involved and would support the growth of AI and digital technologies.

“We are committed to working closely with our partners to progress the development as quickly as possible,” he added.

Why is Teesside attracting AI infrastructure investment?

The proposed development comes as Britain faces growing pressure to expand its domestic computing capacity and compete with the US, Gulf countries and other European markets for investment in artificial intelligence.

Access to electricity has become one of the biggest obstacles to building large datacentres in the UK. Projects require substantial and reliable power supplies to operate servers, advanced computing equipment and cooling systems.

Ben Houchen, mayor of the Tees Valley Combined Authority, said securing power capacity was essential if Britain wanted to compete for major technology investments.

“Everyone who has tried to build a datacentre in this country knows the biggest problem is getting enough power to the site quickly,” he told Sky News.

He said having up to 3.2 gigawatts of capacity in the area could help Teesside attract projects that might otherwise go to the US, the Gulf or elsewhere in Europe.

“If Britain is serious about having its own AI capability, with sensitive data stored safely on British soil, it needs somewhere to physically put it, and I’d much rather that was Teesside than Texas or Abu Dhabi,” he added.

However, the 3.2GW figure is the mayor’s stated potential capacity for the site. National Grid’s own project information describes the new substation as contracted to provide more than 1GW of import and export capacity.

The development is expected to involve several infrastructure partners. Balfour Beatty has been reported to be in line to deliver the substation, while Steel River Power, which operates the private electricity network across the Teesworks estate, is also heavily involved.

Steel River Power is a joint venture between Steel River Energy and North West Electricity Networks, part of Iberdrola, the Spanish energy group that owns ScottishPower.

What does the project mean for Britain’s AI ambitions?

The proposed Teesside development comes as the government seeks to establish stronger domestic control over the infrastructure supporting artificial intelligence and sensitive data.

Last week, ministers published a draft national policy statement on datacentres, describing them as fundamental to the economy, alongside railways and electricity networks.

The government said Britain needed to take greater control over datacentre development and ensure that host communities benefited from the investment.

The policy comes amid concerns about the country’s reliance on overseas technology infrastructure, particularly for sensitive public services and national security operations.

However, the rapid expansion of datacentres has also triggered opposition in several parts of the UK. Campaign groups and local residents have raised concerns about the pressure large facilities could place on electricity and water supplies, as well as their environmental impact.

Teesworks itself is Europe’s largest brownfield development site, covering around 2,500 acres. The land was previously associated with the former steel industry and is now being redeveloped for industrial and infrastructure projects.

The site operates through a public-private partnership, with the public sector’s South Tees Development Corporation holding a 10 per cent stake in Teesworks.

Chris Musgrave, chairman of Teesworks, said making the land available for the proposed substation was an important step towards supporting future industrial development.

The next stages will involve preparing the site and progressing the infrastructure plans. While the land agreement brings the project closer, the final investment decision on the neighbouring datacentre and the identity of its operator remain unconfirmed.

For Teesside, the development represents an opportunity to attract major technology investment and create employment. For Britain, it highlights how access to large-scale electricity supplies is becoming central to the race to build domestic AI infrastructure.