National Grid Buys Teesside Land for UK's Largest Substation to Power a Planned AI Data Centre

National Grid has agreed to buy 73.3 acres of land at Dorman Point on the Teesworks site in north-east England for what is expected to be the UK's largest electricity substation, built to power a planned AI data centre next door. The deal was signed on October 28 and announced by Teesworks on November 2; the substation's first 1.44 gigawatts of capacity is due online by the end of 2029.

The project matters because power, not land or chips, has become the main constraint on where AI data centres get built. Tees Valley Mayor Ben Houchen said the site could grow to 3.2GW, enough to make Teesside one of the few UK locations able to compete for the very large AI campuses now being planned in the US and the Gulf.

Key facts at a glance

• The site: 73.3 acres (29.5 hectares) at Dorman Point, Teesworks, on the south bank of the River Tees east of Middlesbrough.
• The substation: a new 400 kV substation called Teesside Node A, to be delivered by National Grid's contractor, Balfour Beatty.
• Capacity: an initial 1,440 MVA (about 1.44GW) contracted to Steel River Power, with Houchen citing future expansion to 3.2GW.
• Timeline: six months of land remediation by Teesworks now, outline planning application under review, initial capacity targeted for the end of 2029.
• Status: nothing is built yet, and the planning application has not been decided.

How the Teesside power deal works

The power will not go straight from National Grid to the data centre. The new substation will feed Steel River Power (SRP), which owns and runs the private electricity network across the Teesworks estate. SRP is a joint venture between Steel River Energy Limited and North West Electricity Networks, part of the ScottishPower/Iberdrola group.

SRP's existing network has a capacity of 360 MVA, with 200 MVA currently available for businesses on the site. It has been contracted with National Grid since 2024 for an additional 1,440 MVA to meet expected demand, which Teesworks describes as roughly the same amount of power as Greater Manchester and Glasgow combined. The land sits directly under both 275 kV and 400 kV overhead transmission lines, which is why it was chosen.

National Grid's project page says the substation will provide the capacity for "a proposed private-wire network serving a new data centre, alongside a proposed battery energy storage system". A battery site stores power when demand is low and releases it when demand is higher, which helps keep a large, steady load like a data centre from straining the local grid.

"Everyone who's tried to build a data centre or large-scale advanced manufacturing, technological or energy-intensive industrial developments in this country knows the biggest problem is getting enough power to the site quickly."

— Ben Houchen, Tees Valley Mayor

Planning steps and the road to 2029

The land deal is an early milestone, not a green light. National Grid submitted an outline planning application for the 400 kV substation to Redcar and Cleveland Borough Council in September 2026, under reference R/2026/0711/OOM. Earlier, in July, the council and the Department for Energy Security and Net Zero confirmed that a full environmental impact assessment is not required.

National Grid's indicative timeline, which it says may change, looks like this:

If planning consent is granted, National Grid says a £530,000 community fund will be unlocked when construction starts. The project also forms part of its "Great Grid Upgrade", which the company calls the largest upgrade of the electricity grid in generations.

The data centre itself is a separate development. Planning applications have been submitted for a project spanning nearly 500,000 square metres, following reports last year that the government had picked Teesworks for a new AI data centre.

Why grid capacity decides where AI gets built

Large AI training and inference clusters draw power continuously and at a scale that local distribution networks were never designed for. In much of the UK, new large connections face long waits in the grid connection queue. Houchen put it bluntly: "While we've been stuck in the queue, the US, the Gulf and parts of Europe have been getting on with it and hoovering up the investment."

He framed the project as a question of where sensitive data lives: "If Britain is serious about having its own AI capability, with sensitive data stored safely on British soil, it needs somewhere to physically put it, and I'd much rather that was Teesside than Texas or Abu Dhabi."

National Grid's head of land, Matt Pearce, said the agreement "will support the growth of AI and digital technologies, and enable the region's next phase of industrial and economic development". David Smith, chair of the South Tees Development Corporation, said that "for potential investors, having confidence that the energy infrastructure will be there to support their plans is crucial."

The government is moving in the same direction. On October 28 it published a draft National Policy Statement for Data Centres, which will guide decisions on large data centre projects handled under England's Nationally Significant Infrastructure Project regime. The draft describes data centres as "as fundamental to our economy as the railways and electricity networks on which we have long depended". The consultation closes at 11:59pm on January 8, 2027.

The other side: local opposition and open questions

Not everyone welcomes the build-out. Campaign groups have protested against planned data centres in places ranging from Auchtertool, a village north of Edinburgh, to Brick Lane in east London. AI companies have reportedly told ministers they have about 12 months to address public opposition before it threatens construction.

Several questions remain open at Teesside. The substation still needs outline and detailed planning approval. The data centre's operator, tenants and final size have not been confirmed in the announcements. And the jump from 1.44GW to 3.2GW is described as "further expansion... in the near future", with no date or contract attached.

What it means for you

• For UK businesses and developers: Teesside is positioning itself as a place where large power connections can be delivered on a known timetable, a rare offer while connection queues remain long elsewhere.
• For cloud and AI customers in the UK: more domestic capacity could eventually mean more options to keep data and AI workloads in the UK, but not before the end of the decade.
• For residents of Redcar and Cleveland: the spring 2027 consultation is the main chance to comment on the design, layout and access arrangements.
• For readers in the US, Canada and Australia: the same pattern is playing out at home. Grid upgrades and private power networks are deciding which regions win AI campuses.

What happens next

• Teesworks remediation of the 73.3 acres over roughly the next six months.
• A council decision on the outline planning application, reference R/2026/0711/OOM.
• The data centre policy consultation, closing on January 8, 2027.
• A spring 2027 public consultation on the substation's detailed design, then a reserved matters application.

Takeaways

1. Power is the gating factor. Land and planning matter, but the 1.44GW connection is what makes a large AI campus on Teesside credible.
2. Check the dates, not the headline capacity. The first 1.44GW is targeted for the end of 2029, and the 3.2GW figure has no fixed timetable yet.
3. Use the consultation windows. Businesses and residents can respond to the national data centre policy by January 8, 2027, and to the substation design in spring 2027.
4. Watch who signs up. The project's real test is whether an operator and tenants commit to the planned data centre.