The direct award was made under the Procurement Act 2023, Schedule 5, Section 5(a)(b) — the statutory exception for single-supplier services
Decision Lens
Colocation power exclusivity converts your energy procurement strategy into a captive pass-through cost. Any workload placed in a third-party colo facility carries power pricing that cannot be competed, hedged, or sourced elsewhere — and UKAEA’s sole-source award to Equinix confirms this is a recognized statutory reality, not merely a commercial inconvenience.
90-Second Brief
This week, a UK government procurement notice published 9 March 2026 confirms that the UK Atomic Energy Authority directly awarded a three-year power supply contract to Equinix for its Culham Science Centre colocation installation, running May 2026 to May 2029. The award bypassed competitive procurement under the Procurement Act 2023 because Equinix holds exclusive rights to supply power within its own facility, no alternative supplier can physically deliver the service. Power costs will run on a pay-as-you-go basis, with the contract value estimated across 36 months of projected energy usage. The hardware itself was procured through a separate collaboration agreement with the University of Cambridge; the power contract stood apart because only one entity can legally supply it.
What’s Actually Happening
The UK Atomic Energy Authority — the government body responsible for fusion energy research at Culham Science Centre in Oxfordshire — is executing Phase 1 of a computing infrastructure programme. Hardware was procured through UKAEA’s existing collaboration agreement with the University of Cambridge. When it came to powering that hardware inside the colocation facility, UKAEA had no competitive procurement options.
The contract awarded to Equinix covers power supply costs only, structured on a pay-as-you-go basis. The legal basis for bypassing competitive tender is direct: only the colocation provider is permitted to supply power to the site. Equinix holds exclusive rights to power delivery within the facility, and no third-party energy supplier can intervene. The direct award was made under the Procurement Act 2023, Schedule 5, Section 5(a)(b) — the statutory exception for single-supplier services.
The contract runs three years, from 7 May 2026 to 6 May 2029. The stated value is an estimate based on projected energy usage over that period; no absolute figure is disclosed in the public notice. Equinix’s named contact is Mark Simms; UKAEA’s counterpart is Guy Wells at Culham.
This structure is not unusual — it is the standard commercial architecture of colocation. What makes this notice strategically useful is that it surfaced in a public procurement record, making explicit what is typically buried in colo contract schedules: power is a captive cost the moment hardware enters the building, and competitive procurement law agrees.
Why It Matters for Global Heads of Data Center Energy?
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From a budgetary standpoint, any workload placed in a third-party colocation facility carries power costs that are structurally non-competitive. Pay-as-you-go pricing offers consumption flexibility but eliminates the ability to hedge rates, lock in long-term pricing, or benchmark against alternative suppliers. Budget forecasting for colo-hosted power becomes entirely dependent on the provider’s tariff decisions.
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From a procurement standpoint, even government entities with strict competitive procurement obligations must accept sole-source power awards in colo environments. If your organization places hardware in any colocation facility, you are carrying sole-source power exposure — whether or not it has been formally documented. This is now a matter of statutory record, not just contract negotiation.
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From an operational standpoint, a pay-as-you-go power structure provides flexibility during a Phase 1 buildout when workload profiles are uncertain. It also means power costs are variable and unhedged — a material planning constraint if workload intensity increases sharply, as is increasingly common with AI-driven compute deployments.
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From a regulatory standpoint, the direct award justified under UK Procurement Act 2023 exceptions for single-supplier services details a clear legal precedent. For any public-sector entity or regulated organization procuring colocation, power exclusivity is now a recognized statutory basis for bypassing competitive tender — not a workaround.
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From a competitive standpoint, hyperscalers and large colo buyers negotiating master service agreements with providers including Equinix should be seeking explicit power tariff transparency, escalation clause caps, and pricing review rights. A direct-award structure like UKAEA’s carries none of those protections on its face.
The Forward View
Over the next 30–90 days, watch for further UKAEA procurement notices related to Phase 1 computing infrastructure at Culham — particularly any involving power infrastructure expansion or additional colocation capacity. Culham also hosts significant fusion energy research operations, making future power demand growth at the site plausible. More broadly, as AI workloads drive higher rack power density across colocation facilities industry-wide, the sole-source power pricing dynamic will become an increasingly prominent negotiation point in colo master agreements. Providers setting per-kWh pass-through rates with discretionary markup carry growing structural leverage once customers have hardware installed and nowhere else to go.
What We’re Uncertain About?
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What is the actual estimated contract value? The notice confirms a 36-month estimate based on projected energy usage but does not disclose the figure. Without it, there is no basis for assessing whether the rate reflects market pricing or carries a colocation premium. This resolves if the full contract is published under UK transparency obligations.
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What is UKAEA’s total power draw for Phase 1? The notice references computing hardware but does not specify rack count, MW demand, or PUE assumptions. Whether this is a modest research cluster or a substantive compute deployment materially changes the relevance of this contract as a benchmark. Resolution comes from UKAEA programme documentation or follow-on procurement notices.
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What escalation or tariff review rights exist within the pay-as-you-go structure? Pay-as-you-go could mean a fixed per-kWh rate or a fully variable tariff subject to provider adjustment with no ceiling. The notice does not specify. Any colo power customer should establish this before contract execution; resolution requires access to the full contract schedule.
One Question to Bring to Your Team
For every colocation facility in our portfolio where we are paying pass-through power costs, do we have contractual visibility into the provider’s tariff structure and any escalation rights — or are we carrying unhedged, sole-source power exposure with no ceiling and no competitive recourse?
Sources
- Service — Power Costs – Hosting – Find a Tender (Link)
