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UK Data Centre Covenant Ties Faster Grid Access for Strategic Data Centres to Five Tests, HM Treasury Document Says

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Summary

HM Treasury published the Data Centre Covenant on October 28, 2026. It sets five tests for data centres and offers faster grid access to strategic sites that meet them, but does not yet define which sites are strategic.

HM Treasury published the Data Centre Covenant on GOV.UK on October 28, 2026. The document sets five tests for data centres in the United Kingdom and says the government will offer faster grid connections and planning support to "strategic" data centres that meet them. This post relies on the covenant text alone and says where that text stops.

What the covenant says it is for

The text says that as AI and data become integral to the NHS, defence and other critical services, "the UK cannot rely entirely on infrastructure located overseas." It says the government estimates the country will need "6 GW of AI data centre capacity by 2030." The covenant sets out "new tests all data centres are encouraged to meet, and which strategic data centres must meet to qualify for additional government action."

The five tests

  1. Lower electricity bills. Data centres should pay their fair share of energy costs, "covering any energy costs they create," so households and other businesses do not pick up the bill. They are expected to make "credible commitments for the grid capacity they request" and to support security of supply and investment in clean power.
  2. Invest in local communities. Strategic data centres should agree a Local Benefit Plan that commits to "substantial investment," developed with the local community and linked to the size of the development. The text notes that developers already have to meet planning requirements such as Section 106 and the Community Infrastructure Levy.
  3. Environmental standards. New facilities should be designed to achieve a Power Usage Effectiveness of 1.3 or better, minimise demand on public water supplies with technologies such as closed loop water systems, and reuse waste heat where there is a viable local user. Strategic data centres should report annually on energy and water use, efficiency, emissions, heat reuse and participation in flexibility services. The government says it will "strongly encourage" existing operators to do the same.
  4. Jobs and supply chains. Data centres should create local jobs, invest in paid apprenticeships and training, and prioritise UK suppliers and technologies. The most strategically important sites are expected to make "a meaningful contribution to the development and deployment of British AI hardware."
  5. Security. Data centres should provide secure and reliable access to compute for the NHS and other public services, work with national technical authorities including the National Cyber Security Centre, share relevant information with government, and take part in government exercises on prioritising essential services.

What the government offers in return

The covenant says the government will set up a Ministerial Control Centre, chaired by the Minister for AI and supported by the Exchequer Secretary to the Treasury and ministers from the Department for Energy Security and Net Zero. For sites that show "sufficient strategic value," the text lists four measures:

  • Reserve and reallocate grid connections, using powers in the Planning and Infrastructure Act, including capacity released when other projects leave the connections queue.
  • Work with NESO and the network companies to identify locations where capacity may be available before 2030.
  • Facilitate the transfer of pre-2030 data centre connection contracts to strategically important data centres.
  • Develop a "tightly controlled framework" for temporary on-site power generation until a grid connection is secured. The text says this will be available only for "exceptionally strategic projects," only where the other measures cannot secure capacity in time, and subject to conditions such as energy security.

The covenant also lists wider reforms, including a draft Data Centre National Policy Statement for consultation, support for Ofgem's data-centre commitment fee and queue management measures, and continued delivery of five AI Growth Zones across England, Scotland and Wales.

What the text leaves open

  • No definition of "strategic." The government says it "will set out further details in due course on the definition of strategic data centres and the additional criteria such projects will be expected to meet." Until then the text does not say which sites qualify.
  • No stated penalty. The tests are described as ones all data centres are "encouraged" to meet. The text ties the government's support to meeting them, and we did not find a penalty or enforcement mechanism for missing a test.
  • No amounts. The Local Benefit Plan is linked to "the development's size," and the text gives no figures.
  • Government projections. The covenant says new AI demand "may help spread the energy system's fixed costs across more users." That is the government's expectation, and we did not check it.
  • No application tested. We did not compare any specific data centre project with these tests.

Sources