National Grid Electricity Transmission has agreed to buy more than 70 acres at Dorman Point on Teesside to build what would be the UK's largest electricity substation. It would feed a neighbouring data centre site with up to 3.2GW of capacity, which sources say could be the biggest in Europe.
The land is owned by Teesworks, the public-private partnership redeveloping the former Redcar steelworks. National Grid signed the purchase last week, Sky News reported, and confirmed the agreement in a statement over the weekend. The price was not disclosed.
The substation would supply power to a large data centre planned on the adjoining estate. According to Sky News, the site has attracted strong interest in recent months from US frontier AI labs and hyperscale cloud providers. One industry source said competition for the location was likely to lead to an investment decision with a preferred partner in the coming months.
Balfour Beatty, the London-listed infrastructure group, is in line to build the substation, according to the report. Steel River Power, which owns and runs the private electricity network across the Teesworks estate, is also heavily involved.
Several parties sit behind the project. Steel River Power is a joint venture between Steel River Energy and North West Electricity Networks, part of Iberdrola, the owner of ScottishPower. Teesworks Ltd is 90% owned by four private joint-venture partners, according to local reporting by North East Bylines. The publicly owned South Tees Development Corporation holds the remaining 10%.
Grid access is now one of the biggest constraints on data centre investment in Britain. Long waits for connections have held back industrial projects across the country. Ben Houchen, the Tees Valley mayor, said up to 3.2GW of capacity would allow the region to compete with the US and the Gulf for large AI infrastructure projects.
National Grid said the agreement was an important step for the substation, which forms part of its Great Grid Upgrade programme. Matt Pearce, its head of lands, said the company would work with partners to move the development forward as quickly as possible.
The deal follows last week's Budget, which came with a national policy statement on data centres. In it, the government described data centres as essential national infrastructure and said they must strengthen sovereignty, protect billpayers and deliver benefits to host communities.
For the UK's AI start-ups, the main issue is access to compute on British soil. A site on this scale could support large training and inference clusters, but its first tenants are likely to be large US companies rather than domestic firms. The choice of preferred partner, expected within months, will show whether Teesside becomes a sovereign compute hub or another overseas-owned facility.
Original source: Sky News — https://news.sky.com/story/national-grid-sparks-deal-to-pave-way-for-giant-uk-data-centre-13606573
