National Grid (LON: NG), the FTSE 100 energy infrastructure group, has struck a deal paving the way for Britain’s biggest electricity substation on Teesside, Sky News reported on Sunday.
Mark Kleinman, Sky’s City editor, wrote that National Grid Electricity Transmission signed last week to buy more than 70 acres at Dorman Point, on a site owned by Teesworks, a local private-public partnership. No price or financial terms were disclosed.
Sources told Sky the group has drawn up plans for a large substation to power a neighbouring data centre, which they said was likely to be the largest in Europe.
The site is understood to have drawn significant interest in recent months from US-based frontier labs and technology hyperscalers. One tech industry source told Sky that competition for the location was likely to lead to an investment decision with a preferred partner in the coming months.
Sky said the deal underlines the importance of resolving power supply bottlenecks. Grid connection delays have become one of the single-biggest blockages to industrial development in Britain in recent years, it noted.
The government, in documents published alongside last week’s Budget, set out a national policy statement on data centres, describing them as “as fundamental to our economy as the railways and electricity networks on which we have long depended”.
Ben Houchen, the Tees Valley Combined Authority mayor, told Sky News:
Everyone who has tried to build a data centre in this country knows the biggest problem is getting enough power to the site quickly. … Having up to 3.2GW of capacity here means we can finally compete for those projects.
Ben Houchen, Tees Valley Combined Authority mayor
Matt Pearce, National Grid head of lands, said in a statement this weekend that the agreement was an important step for the substation, part of The Great Grid Upgrade, which he called the largest upgrade of the electricity grid in generations. Chris Musgrave, Teesworks chairman, said the focus now was on remediation works and preparing the land for handover.
Sources said Balfour Beatty, the London-listed infrastructure services group, was in line to deliver the substation for National Grid, with Steel River Power, which owns and operates the private electricity network across the estate, also heavily involved. Steel River Power is a joint venture between Steel River Energy Limited and North West Electricity Networks, part of Iberdrola, owner of ScottishPower.
Teesworks covers 2,500 acres, Europe’s biggest brownfield site, and is 10% owned by the public sector South Tees Development Corporation.
For UK traders, the takeaway is that grid connection is the bottleneck, and this substation sits within National Grid’s Great Grid Upgrade. With no price or terms disclosed, the deal cannot be sized.