Locating Data Centres Efficiently in Britain – Reformed Transmission Charging, Energy Subsidies or Zonal Pricing?

David M. Newbery

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Data Centres make huge demands on uninterruptible power. Large increases in Variable Renewable Electricity (VRE), often located distant from demand and congesting existing transmission, signal the benefits of locating data centres behind the congested export lines but may suffer from increased isolation from customers. Without efficient signals (or central location planning) the mismatch between locating VRE and data centres is exacerbated. The article examines various solutions to this potential market failure, from transmission pricing reform, zonal pricing and energy price discounts in export -constrained zones.

Keywords: Data Centres; Variable Renewable Electricity; Congestion; Locational Pricing; Transmission Charges; Locational Energy Discounts (search for similar items in EconPapers)
JEL-codes: H23 L94 Q28 Q42 Q48 (search for similar items in EconPapers)
Date: 2026-10-12
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2681

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