National Grid Electricity Transmission has agreed to acquire more than 70 acres of land at Teesworks for what could become the UK’s largest electricity substation, supporting a proposed AI data centre development in the area.

The planned 400kV substation would connect to the existing high-voltage transmission network, with more than 1 GW of electricity import and export capacity contracted. That would support a proposed private-wire network supplying the neighbouring data centre, alongside a planned battery energy storage system.

Sky News first caught wind of the development, which will be key to ultimately delivering the AI data centre in the region – as long as it secures planning permission, of course. 

Matt Pearce, Head of Lands at National Grid, described the agreement as “an important step forward in the development of the new substation”, adding that the infrastructure would support AI, digital technologies and further industrial development across the region.

More than 1 GW of contracted capacity

The scale of the proposed substation is significant given the electricity connection difficulties facing UK data centre developers, but it won’t quite be enough to meet the lofty ambitions of the AI data centre planned for the wider Teesworks site. 

In fact, Tees Valley Mayor Ben Houchen has suggested that the wider Teesworks site could eventually support up to 3.2 GW of capacity, potentially helping the region attract major international AI infrastructure investment.

How it will secure that capacity is yet to be seen, but the plans are already full speed ahead. In August 2025, Redcar and Cleveland Borough Council approved reserved matters for an AI data centre on part of the former Redcar steelworks site, despite competing proposals from BP to construct its H2Teesside blue-hydrogen production facility on the same land.

The dispute was resolved in December 2025, when BP withdrew its H2Teesside development, citing a material change in circumstances. That ultimately paved the way for the data centre plans to go ahead, which will cover approximately 462,000 square metres of floorspace. 

The site is already reported to be attracting interest from major US technology companies and AI developers, with potential investment decisions expected to be announced in the coming months. 

If it can pull it off, the Teesworks development would represent a success story for the data centre sector here in the UK. That’s especially important now considering some of the challenges that others have faced across the country, such as Nscale’s struggles to get its Essex data centre off the ground, ultimately leading to Microsoft withdrawing its support for the site. 

Nscale’s struggles have ultimately come down to access to power, however, and it seems in Teesworks, that’s a problem that’s already being addressed with moves such as National Grid’s latest substation plans.