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Data Centres: Boom and Backlash
8SEP

Fingrid warns 5 GW may not be built

1 min read
13:06UTC

Fingrid put Finnish data-centre projects holding signed connection agreements at nearly 5 GW on 18 August, then said in the same release that a signature does not guarantee build-out.

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Key takeaway

Fingrid's 5 GW of signed agreements reserves grid capacity without committing anyone to build anything.

A signed connection agreement does not guarantee build-out or full-scale operation, Fingrid said on 18 August, in the same release that put Finnish data-centre projects holding signed agreements at nearly 5 GW of planned final combined capacity by mid-August, distribution-network projects included⁠1. Fingrid runs Finland's transmission grid, the high-voltage network that carries power between regions before it reaches local distribution companies.

A connection agreement is a contract for capacity at a future date rather than a working connection. Finland's operator added that capacity from its ongoing grid investments was already almost fully reserved in many areas. Those reservations hold grid capacity whether or not the buildings behind them go up, so the 5 GW measures intent that has reached contract stage and nothing further.

Ofgem answered the same problem with a price in Great Britain in late July. Fingrid answered it with a caveat, which tells a reader the queue is softer than its total suggests and leaves every reservation exactly where it stood. Neither device shortens a queue, and both are admissions that a grid operator cannot tell, from its own register, how much of the signed capacity will turn into load.

Deep Analysis

In plain English

Signing an agreement with the grid operator to get electricity in future is a bit like putting down a deposit on a house before you have a mortgage. It reserves your place, but it does not mean the house gets built. Fingrid is warning that its 5 GW total of signed agreements works the same way: some of those projects may never actually get built.

Deep Analysis
Root Causes

A signed connection agreement reserves grid capacity for a project without requiring the applicant to have secured planning permission, financing or a customer, so operators sign early and cheaply to hold a place in the queue while the harder approvals are still in progress.

Fingrid's caveat exists because the operator has watched headline queue totals get reported as committed capacity in the past, and is pre-empting that reading for its own 5 GW figure.

First Reported In

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