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Ofgem’s decision to require developers of data centres to lodge substantial deposits before securing a grid connection has been presented as a simple administrative reform. Too many speculative applications are clogging the queue for new electricity connections, delaying projects that are actually ready to proceed.

But beneath this bureaucratic change lies a much bigger story.

The problem is not really the queue. The problem is that Britain is beginning to discover that electricity is no longer an unlimited resource.

For generations we have assumed that economic growth simply required more investment. If demand increased, more power stations would be built, more transmission lines erected and more capacity made available. The industrial economy was founded on this assumption.

That assumption is now breaking down.

The country is attempting to electrify transport, heating and much of industry while simultaneously expanding artificial intelligence, cloud computing and digital services. Every one of these developments demands more electricity, yet the energy system itself is becoming more expensive and more difficult to expand.

This is exactly what a shrinking economy looks like.

A shrinking economy is not one in which everything suddenly stops. It is one in which physical limits gradually replace financial ones. Money may still be available, but energy, materials, skilled labour and engineering capacity become increasingly scarce. Instead of asking, “Can we afford it?” society begins asking, “Can we actually build it?”

The queue for electricity connections is one manifestation of this transition.

The race to build AI data centres illustrates the problem perfectly. The world’s largest technology companies are investing hundreds of billions of pounds in facilities that consume astonishing quantities of electricity. Some proposed British developments would require as much power as a medium-sized city.

Yet every megawatt devoted to a data centre is a megawatt that cannot be used elsewhere.

As surplus energy declines, these choices become unavoidable.

For most of the industrial age there was enough surplus energy to support almost every new activity. Today that surplus is steadily shrinking. More of society’s effort is required simply to obtain and distribute energy itself. Less remains available for discretionary activities.

This changes the nature of economic decision-making.

The important question is no longer how rapidly we can expand electricity generation. It is how wisely we allocate the electricity we already have.

From a localist perspective the priorities are obvious.

Communities need reliable electricity for homes, water supplies, food production, workshops, healthcare, communications and local businesses. These are the foundations of everyday life.

By contrast, much of the electricity demanded by large AI data centres supports activities that are geographically distant and economically concentrated. The benefits accrue largely to global corporations, while the costs are carried by national infrastructure and local communities.

This is not an argument against technology. Digital communications, local computing and information systems have an important role to play in the future.

It is an argument against believing that every new technological possibility deserves equal access to increasingly scarce resources.

The industrial age encouraged centralisation because energy appeared abundant and cheap. Enormous generating stations supplied electricity across national networks to ever larger centres of population and industry. Scale appeared to solve every problem.

The emerging age of contraction points in the opposite direction.

Local generation, local storage and local resilience become more valuable as national systems become increasingly stretched. Solar panels on roofs, community batteries, small-scale wind generation, micro-hydro schemes and neighbourhood energy systems cannot replace the national grid, but they can reduce dependence upon it while strengthening local resilience.

Most importantly, they encourage communities to think differently about energy.

Electricity is no longer something that can simply be assumed to exist in unlimited quantities. It becomes a resource to be managed carefully, directed first towards essential needs before discretionary wants.

The debate over data centres is therefore about much more than planning applications or connection fees.

It is one of the first visible signs that Britain is entering an era in which physical limits matter once again.

The shrinking economy will increasingly require difficult choices over where scarce energy should be used. Those choices will determine whether communities become more resilient or more dependent.

Localism provides one answer. Rather than chasing ever greater concentrations of energy and economic activity, it seeks to build capable localities that can meet more of their own needs with fewer external resources.

The queue for electricity connections is not simply an administrative inconvenience. It is a glimpse of the future.

The age of unlimited expansion is drawing to a close. The age of careful allocation has already begun.