National Grid has taken a step towards building Britain’s largest electricity substation on Teesside, agreeing to purchase 29.5 hectares of land at Dorman Point on the Teesworks site. The substation could supply power to a nearby AI datacentre as the UK races to expand AI infrastructure. Last week, the government described datacentres as fundamental to the economy in a draft national policy statement.
The deal follows reports that the government picked Teesworks as the site for a new AI datacentre last year, with planning applications submitted for a project spanning nearly 500,000 square metres. Ben Houchen, mayor of the Tees Valley combined authority, said the biggest problem for those trying to build a datacentre in the UK was getting enough power to a site quickly. He said that while Britain had been stuck in the queue, the US, the Gulf and parts of Europe had been getting on with it and attracting investment. Having up to 3.2GW of capacity here, he said, meant the region could finally compete for those projects. Houchen added that if Britain was serious about its own AI capability, with sensitive data stored safely on British soil, it needed somewhere to physically put it, and he would much rather that was Teesside than Texas or Abu Dhabi.
Matt Pearce, head of land at National Grid, said the deal “reflects the constructive work between all those involved to enable this vital infrastructure … and will support the growth of AI and digital technologies, and enable the region’s next phase of industrial and economic development”. He said the company is committed to working with partners to progress the development as quickly as possible.
The government’s draft policy statement on datacentres, published last week, called them “as fundamental to our economy as the railways and electricity networks on which we have long depended” and said the country must take control over their development to ensure host communities benefit.
However, the rapid construction of datacentres in the UK has faced strong opposition, with campaign groups protesting planned developments from Auchtertool in Scotland to Brick Lane in east London. In October, AI companies told ministers they had 12 months to head off public opposition or risk US-style protests that could threaten construction. The infrastructure group Balfour Beatty is reported to be in line to deliver the substation for National Grid, with utilities firm Steel River Power also heavily involved.
Analysis
Why This Matters
- The substation is a key step in enabling large-scale AI computing in the UK, addressing the power constraint that has held back investment.
- It could bring significant economic development and jobs to the Teesside region as part of a broader push to reindustrialise the area.
- The government’s formal recognition of datacentres as fundamental infrastructure signals a potential acceleration in planning and grid connections for similar projects.
Background
The UK government designated Teesworks as the site for a new AI datacentre last year, with plans for a nearly 500,000 square metre facility. National Grid’s land purchase at Dorman Point is a direct step to provide the necessary power. The government recently published a draft national policy statement on datacentres, describing them as critical to the economy.
Key Perspectives
National Grid: says the deal reflects constructive partnership to enable infrastructure supporting AI and digital growth, and is committed to rapid development.
Tees Valley mayor Ben Houchen: argues the substation will allow the UK to compete globally for AI investment and keep data on British soil.
Government (draft policy statement): describes datacentres as fundamental to the economy and says the country must take control of their development to benefit communities.
Campaign groups: have protested planned datacentre projects across the UK, opposing the rapid pace of construction.
What to Watch
- The outcome of the planning process for the substation and datacentre, and any public opposition that may emerge.
- The government’s next steps on the datacentre policy statement, which could become a formal national policy.
- Whether Balfour Beatty and Steel River Power are confirmed as contractors and the timeline for construction.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedNational Grid has taken a step towards building Britain’s biggest electricity substation on Teesside.World news | The Guardian: “National Grid has taken a step towards building Britain’s biggest electricity substation on Teesside”
- SupportedNational Grid agreed to purchase 29.5 hectares of land at Dorman Point on the Teesworks site.World news | The Guardian: “Last week the company agreed to purchase 29.5 hectares (73 acres) of land at Dorman Point on a site owned by Teesworks”
- SupportedThe planned substation could supply power to a nearby AI datacentre.World news | The Guardian: “which could supply power to a vast neighbouring datacentre as the UK races to expand its AI infrastructure.”
- SupportedThe deal followed reports last year that the government had picked Teesworks for a new AI datacentre.World news | The Guardian: “The deal followed reports last year that the UK government had picked Teesworks as the site for a new artificial intelligence datacentre”
- SupportedPlanning applications had been submitted for a project spanning nearly 500,000 square metres.World news | The Guardian: “planning applications had been submitted for a project that would span nearly 500,000 sq metres.”
- SupportedBen Houchen said that getting enough power to a datacentre site quickly was the biggest problem for builders in the UK.World news | The Guardian: “Everyone who has tried to build a datacentre in this country knows the biggest problem is getting enough power to the site quickly.”
- SupportedHouchen said having up to 3.2GW of capacity in the region meant it could compete for datacentre projects.World news | The Guardian: “Having up to 3.2GW of capacity here means we can finally compete for those projects.”
- SupportedMatt Pearce said the deal “reflects the constructive work between all those involved to enable this vital infrastructure … and will support the growth of AI and digital technologies, and enable the region’s next phase of industrial and economic development”.World news | The Guardian: “The deal “reflects the constructive work between all those involved to enable this vital infrastructure … and will support the growth of AI and digital technologies, and enable the region’s next phase of industrial and economic development”, Matt Pearce, the head of land at National Grid, said.”
- SupportedThe government’s draft policy statement described datacentres as “as fundamental to our economy as the railways and electricity networks on which we have long depended”.World news | The Guardian: “Last week, the government published a draft national policy statement on datacentres, describing them as “as fundamental to our economy as the railways and electricity networks on which we have long depended”.”
- SupportedCampaign groups have protested planned datacentre developments from Auchtertool to Brick Lane.World news | The Guardian: “campaign groups protesting against planned developments in places ranging from Auchterfool , a village north of Edinburgh, to Brick Lane in east London.”
- SupportedIn October, AI companies told ministers they had 12 months to head off public opposition or risk US-style protests that could threaten construction.World news | The Guardian: “In October, the Guardian reported that AI companies told ministers they had 12 months to head off public opposition to datacentres in the UK or risk US-style protests that could threaten their construction.”
- SupportedBalfour Beatty was reported to be in line to deliver the substation, with Steel River Power also heavily involved.World news | The Guardian: “The London-listed infrastructure services group Balfour Beatty was reported to be in line to deliver the Teesworks substation for National Grid, with the utilities firm Steel River Power (SRP) also heavily involved in the project.”