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

Author

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  • Newbery, D. M.

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.

Suggested Citation

  • Newbery, D. M., 2026. "Locating Data Centres Efficiently in Britain – Reformed Transmission Charging, Energy Subsidies or Zonal Pricing?," Cambridge Working Papers in Economics 2681, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2681
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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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