Overview
- The covenant, announced on Wednesday in the 2026 Budget, offers data‑centre developers priority electricity connections and temporary permission for on‑site power if they sign legally binding local investment and environmental commitments.
- Developers who qualify will be required to deliver jobs, invest in local communities, and protect water supplies while meeting data‑sovereignty conditions focused on keeping sensitive AI and public‑sector data in Britain.
- The Budget also provides new sovereign‑AI funding, including £140m for a Sovereign AI Unit and £500m for AI safety and security to support the government’s push for domestic control of critical systems.
- Key implementation details remain unspecified because the government has not published eligibility rules, enforcement mechanisms or the delayed National Policy Statement, leaving investors and grid operators uncertain.
- The covenant responds to a sharp surge in grid connection requests and strong local opposition that have stalled projects, with Ofgem data showing the queue rose steeply and major projects such as Microsoft’s Essex plan withdrawing over power delays.