Open consultation

Accelerating electricity network connections for strategic demand (accessible webpage)

Published 11 March 2026

Amending the connections process to address speculation and prioritise future capacity for strategic demand including data centres.

Introduction

Electricity networks are the backbone of Britain’s economic growth, decarbonisation, clean energy, and digital future. Demand for electricity is set to more than double by 2050 as we race to electrify sectors across the entire economy, from hydrogen production, manufacturing, and transport to housing developments and data centres.

However, too many projects vital to national priorities are being held back by long lead times to build new network infrastructure and a connections process that is overwhelmed by unprecedented growth in demand for new connections, intensified by the global race to secure AI capacity. At the same time, the growing UK data centre market offers a major opportunity to attract investment, drive innovation, and create new jobs.

Government cannot allow vital demand projects representing billions in investment to be stuck behind non-viable or less-developed projects in the connections queue. In partnership with Ofgem and NESO, Government is intervening to restore fairness, protect the integrity of the system, and ensure that the right demand projects can connect in a timely manner.

Government is taking bold action to accelerate network build, including through reforms to planning & consenting; support for the supply chain and skills pipeline; reforming land access rights; and reform of the system access process. These interventions will support delivery of the 80 critical transmission projects required for Clean Power 2030. The Government is also reforming the connections system for generation, storage, and interconnection, working with NESO and Ofgem to deliver reforms that align the connection queue with future system needs. We are also launching a Connections Accelerator Service to support critical demand projects facing delays. However, further action is needed.

In November 2025, Government announced its commitment to address speculation in the demand queue ^{[footnote 1]} while Ofgem provided new guidance on its approach to demand connections, and NESO issued a Call for Input in support of this shared endeavour. We welcome Ofgem’s recent update ^{[footnote 2]} on its plans to ‘Curate, Plan, and Connect’ demand connections.

Building on this, we set out a proposal to better align data centre connections with the energy system, and to introduce prioritisation mechanisms for reserving and reallocating scarce available network capacity. These measures could benefit strategically important projects, such as AI Growth Zones, EV charging hubs, and electrification of manufacturing sites. Reflecting the urgency of improving the process for demand connections, we intend to exercise new powers taken in the Planning and Infrastructure Act 2025 (PIA) to expedite these changes, working with Ofgem, NESO, and the network companies to implement actions as quickly as is practicable.

We welcome views on these proposals as we work to progress these urgent and necessary reforms.

General information

Why we are consulting

The UK Government is responsible for setting the policy and legislative framework for the gas and electricity sectors in Great Britain and therefore has a strong public policy interest in electricity grid connections, given their critical role in achieving national objectives for economic growth, decarbonisation, digital infrastructure, and clean energy. Government has already worked closely with NESO, Ofgem, and network companies on measures to reform the grid connections process. These are currently being delivered by NESO and will align connections for generation, storage, and interconnection, to Government’s Clean Power 2030 Action Plan.

In support of these reforms the Government has taken new powers in the Planning and Infrastructure Act 2025 (PIA) for the Secretary of State and the Gas and Electricity Markets Authority (GEMA) to directly amend the regulatory framework, and designate strategic plans, for the purpose of improving the process for managing connections, and is committed to ensuring the connections process continues to be fit for purpose for all types of customer.

Government therefore proposes to build on the existing package of reforms, known as TMO4+, which is implementing a new, ‘first ready and needed, first connected’ process for generation and storage, by exercising PIA powers to accelerate improvements to the connections process for demand-side projects. This is necessary because the benefits of TMO4+, while significant, are highly dependent on project location and other characteristics which means not all demand projects will see quicker connections. This challenge is exacerbated by recent rapid growth in the queue of demand projects driven by speculative activity, which risks delaying connections for viable projects across the system.

To address these issues, Government has worked closely with Ofgem and NESO to develop proposals for more robust entry requirements on data centres, which Ofgem recently set out in its recent Call for Input ^{[footnote 3]} as options to ‘curate’ the demand queue. Ofgem is also developing measures to speed up delivery of physical transmission connections under its ‘Connect’ work package.

Under the ‘Plan’ pillar of reforms, Government proposes to introduce new mechanisms that will ensure that NESO and network companies can prioritise demand projects that Government identifies as having strategic national importance, through reservation of future network capacity, reallocation of capacity released when projects exit the queue, and (at transmission) prioritisation in network design batches in future connections application windows. Government is also considering moving to a strategically aligned process to manage data centre connections, in a later phase of reforms.

Government expects that all of these measures will be expedited by exercising a combination of PIA powers. This reflects the urgent need to improve the connections process for all viable demand customers, to release blocked capacity, and ensure that strategic demand projects secure the earliest possible connection dates. It is crucial to maintaining a fit-for-purpose regulatory environment and investor confidence in Great Britain, and to secure Government ambitions for digital infrastructure in a way that balances the needs of a constrained electricity system.

In developing these proposed measures, the Government has engaged extensively with Ofgem, NESO, network companies, and demand customers, and welcomes further stakeholder views. We also encourage stakeholders to respond to Ofgem’s recent Call for Input and forthcoming policy consultations.

This document outlines the background, scope, and proposals as well as consultation questions and how to respond. Respondents should submit a response by 15 April 2026. Responses can be provided in confidence. Parties are asked to clearly indicate any parts of a response that are to be treated confidentially. Once the consultation is closed, we will consider all responses.

Consultation details

Issued: 11 March 2026

Respond by: 15 April 2026

Enquiries to:

Strategic Demand Connections
Department for Energy Security and Net Zero
7th Floor, ESN
3-8 Whitehall Place
London
SW1A 2AW

Email: connections.consultation@energysecurity.gov.uk

Consultation reference: Accelerating electricity network connections for strategic demand

Audiences:

Territorial extent:

The proposals apply across Great Britain; they rely on GB energy market regulation and do not require devolved consent.

How to respond

Online responses can be provided at the following link:

Respond online at: energygovuk.citizenspace.com/energy-infrastructure-planning/grid-connections-reforms

When responding, please state whether you are responding as an individual or representing the views of an organisation.

Your responses will be most useful if framed in direct response to the questions posed.

Confidentiality and data protection

Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018 and the Environmental Information Regulations 2004).

If you want the information that you provide to be treated as confidential please tell us, but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request.

We will process your personal data in accordance with all applicable data protection laws. See our privacy policy.

We will summarise all responses and publish this summary on GOV.UK. The summary will include a list of names or organisations that responded, but not people’s personal names, addresses or other contact details.

Quality assurance

This consultation has been carried out in accordance with the government’s consultation principles.

If you have any complaints about the way this consultation has been conducted, please email: bru@energysecurity.gov.uk.

Background

Grid connections process

Since 2023, the grid connections process in Great Britain has undergone fundamental reforms in the face of unprecedented growth in demand for new connections, driven by years of record investment in renewable generation and the accelerating electrification of demand.

Whilst the ‘first-come, first-served’ process worked effectively when application volumes were lower, the recent growth in applications, combined with low barriers to entry, meant that slow or stalled projects have impeded the progress of other viable projects awaiting connection. This has represented one of the biggest blockers (along with build times for network infrastructure, and supply chain constraints) to Government’s decarbonisation and economic growth missions.

This led Government, NESO, Ofgem, and network companies to design and implement a new, ‘first ready and needed, first connected’ process (TMO4+) which requires all projects to evidence that they are able to progress to obtain a confirmed connection agreement.

Additionally, generation and storage projects must align with the Clean Power 2030 Action Plan, which sets out the capacities needed in the different generating technologies (e.g. Offshore Wind, Solar) and storage across 11 transmission and 8 distribution zones in Great Britain, for 2030 and 2035.

These new requirements have been applied to the existing connections queue, resulting in over 300GW of excess generation and storage capacity being deprioritised. The transmission queue is currently paused to new connection applications while NESO and the network operators issue revised connection offers. When the transmission queue re-opens, applications to connect will be managed through discrete application windows, likely on a twice-yearly basis.

By taking a strategic, planned approach to connections, TMO4+ is removing the need for tens of billions of pounds of unnecessary grid reinforcement, saving billpayers up to £5 billion ^{[footnote 4]} that would otherwise have been funded through charges on bills. This will reduce delays for the projects needed to generate homegrown, renewable electricity for households and businesses and it will support the development of a more secure energy system. It will also facilitate up to £40 billion per year of predominantly private investment in clean power projects and infrastructure, supporting economic growth and jobs across the country.

Problem Statement

Despite TMO4+ reforms, many demand projects are still reliant on securing an earlier or more viable connection date if they are to deliver successfully. This is partly due to long build times for physical infrastructure, caused by decades of underinvestment in our networks, and is exacerbated by the recent spike in the volume of demand projects in the queue.

This problem has been exacerbated by the recent spike in the volume of demand projects in the queue.

As of the end of June 2025, when the queue closed for new applications, the total transmission demand queue stood at 96GW with a further 29GW waiting at distribution. The extreme rate of this growth – 460% in 6 months, at transmission – suggests that speculative activity is materially inflating the demand pipeline and obscuring the true level of viable future demand. Analysis suggests that this is driven by applications for data centre connections, with NESO’s recent Call for Input ^{[footnote 5]} identifying ~140 data centres in the queue at transmission alone, representing approximately 50GW of capacity ^{[footnote 6]}.

This level of growth is far beyond market forecasts and what the electricity network can reasonably support, leading to inefficient and more costly network planning and delaying connections for viable demand projects, in turn slowing progress towards decarbonisation and economic growth missions. ^{[footnote 7]}

Additional measures are therefore urgently required to ensure that speculative activity and oversubscription in the demand connections queue is tackled before NESO re-opens the queue to new applications.

These measures will contribute to an enduring connections regime that provides efficient and fair connections for all viable demand customers and priority support to ensure faster connections for the most strategically important projects identified by Government, while balancing the needs of the electricity system.

The regulatory framework

Methodologies, codes and licences

Electricity networks are owned by network companies, with Transmission Owners (TOs) owning the high-voltage networks and Distribution Network Operators (DNOs) owning the lower-voltage distribution system, and National Energy System Operator (NESO) operating the grid to ensure an economic and efficient system and maintaining a constant balance between supply and demand.

Ofgem, the independent regulator, regulates the electricity network in Great Britain guided by its principal objective: to protect the interests of current and future energy consumers, including interests in security of supply and the UK’s net zero targets. ^{[footnote 8]}

Ofgem governs the granting, modification, enforcement, and revocation of licences. Each licence type has binding Standard Licence Conditions ^{[footnote 9]}, and licensees must adhere to relevant industry codes ^{[footnote 10]}, which function as a multilateral contract between participants in the electricity industry in Great Britain, and define the terms for accessing the electricity network.

As part of TMO4+, key aspects of the reformed process have been set out in methodologies, which are linked to, but separate from, industry codes. Connections methodologies are documents that outline procedures, guidelines, and best practices for the electricity network.

The codes process is industry‑led, and NESO is responsible for maintaining the relevant codes as well as methodologies. Ofgem reviews and approves or rejects proposed modifications, and may suggest changes to methodologies, but it cannot raise code modifications itself outside of a Significant Code Review.

Parties to a code can raise modifications which usually involve a formal consultation process. Timelines for implementation vary depending on the complexity and governance route - from several weeks for minor housekeeping, to multiple years for more substantial reforms.

The methodologies that underpin the transmission connections process following TMO4+ reforms are:

• Project Designation Methodology (PDM) ^{[footnote 11]} – allows NESO to prioritise projects under different limbs that are critical to security of supply, system operation, materially reduce constraint costs, are highly innovative, or have a very long lead time. How projects that are designated and treated in queue formation is described in the Connections Network Design Methodology.
• Connections Network Design Methodology (CNDM) ^{[footnote 12]} – defines the queue formation process undertaken during application windows, including allocation of new capacity and reallocation of released capacity when projects exit the queue. It also defines how projects identified through NESO’s PDM are to be prioritised in queue formation.
• Gate 2 Criteria Methodology ^{[footnote 13]} - sets out the criteria that determine whether a project is sufficiently ready and strategically aligned to progress in the reformed electricity connections process. This is based on evidence of land and planning readiness, plus (for generation and storage) strategic alignment to the Clean Power 2030 Action Plan.

In addition to the methodologies, the Connections and Use of System Code (CUSC) allows NESO to reserve future network capacity including connection points, bays and a corresponding placeholder queue position for unknown future projects (non-project specific reservations) as well as identified projects (project-specific reservations) where needed under specific circumstances such as to ensure security of supply.

Distribution networks have two distinct sets of codes:

• The Distribution Code (DCode) sets the technical design and operating criteria for DNOs and users. It covers connections, planning, and operation.
• The Distribution Connection and Use of System Agreement (DCUSA) covers the use of the electricity distribution systems to convey electricity to or from connections to them. The DCUSA provides a common and consistent approach to the relationships between licensed distributors, suppliers and users.

The Planning and Infrastructure Act

The Planning and Infrastructure Act 2025 (PIA) ^{[footnote 14]} received Royal Assent on 18 December 2025. Powers relevant to the reforms outlined in this consultation are below:

Section	Description
14	Provides a time-limited power for the Secretary of State and / or the Gas and Electricity Markets Authority (GEMA) to modify the conditions or terms of a particular electricity licence, the standard conditions of an electricity licence of a particular type, a document maintained in accordance with the conditions of an electricity licence, an agreement entered into in pursuance of a document so maintained, or a qualifying distribution agreement.  This can be done only for the purpose of improving the process for managing connections (which may include changing the order in which connections are made). In practical terms, this allows for the codes, licences, methodologies attached to electricity licences to be modified.
17	Provides a time-limited power for the Secretary of State and / or the Gas and Electricity Markets Authority (GEMA) to direct the Independent System Operator (NESO) and network companies to modify agreements entered into by NESO pursuant to a document maintained in accordance with the conditions of an electricity licence, or to direct an electricity distributor to modify a qualifying distribution agreement entered into by the electricity distributor.  As above, this can only be done for the purposes of improving the process for managing connections (which may include changing the order in which connections are made). In practical terms, this allows for the modification of customer connection agreements.
18	Introduces an enduring power into the Energy Act 2023, for the Secretary of State to designate strategic documents, which NESO and network companies must have regard to when managing the connections process.  (The requirements to have regard are set out in the Energy Act and Electricity Act 1989 respectively).

These powers were designed to support the implementation of connections reform and the delivery of an efficient and strategically aligned connections process. Government and / or GEMA therefore intend to exercise these powers to expedite delivery of a further package of connections reforms which build on TMO4+ by addressing delays to demand-side connections. Without the use of these powers, these measures would not be delivered at the pace required to manage demand-side speculation and oversubscription of non-viable projects, which threaten to undermine the benefits of TMO4+ for demand and cause wider system impacts.

These proposals and the required regulatory changes have been identified through an intensive period of policy development led by Government, working closely with Ofgem, NESO, and network companies, and supported by targeted engagement with significant stakeholders most likely to be affected. This consultation, and parallel engagement by Ofgem through its recent Call for Input and planned Policy Consultation, will provide further opportunities for stakeholders to influence these reforms.

The Policy Landscape

The UK’s Modern Industrial Strategy ^{[footnote 15]}

The CAS builds on an informal ‘triage service’ ^{[footnote 16]} through which Government has, over recent years, supported a small number of flagship demand projects to navigate the grid connections process. This service has secured or safeguarded over £35 billion worth of investment across sectors such as data centres, gigafactories and steelworks, demonstrating that bespoke engagement can meaningfully de‑risk and accelerate strategic projects. 

The CAS brings together DESNZ, the Office for Investment (OfI), other Government departments, network companies, Ofgem and NESO to explore earlier, viable connection options for strategically important projects facing grid connection delays. The pilot phase launched in December 2025, and it now supports a range of key projects, from data centres and manufacturers to prisons and hospitals, with further scaling planned throughout 2026. Detail on the existing and future project selection process for CAS can be found in Annex B.

Support from the CAS does not guarantee a faster connection date, but it helps projects explore flexible alternatives, such as non‑firm, ramped or profiled connections, while working collaboratively within the regulatory framework to remove blockers where possible.

To enhance the effectiveness of the CAS, the Industrial Strategy also announced Government’s intention to use PIA powers to designate the Industrial Strategy as a strategic plan to enable network companies to prioritise demand projects that create high-quality jobs and bring the greatest economic value.

Ofgem Demand Connections Update

On 6 November 2025, Ofgem published an update addressing unprecedented growth in demand connection applications between November 2024 and June 2025 and announcing its intention to act urgently to address speculation and prevent further delays to demand connections. Following the update, Ofgem received feedback from a wide range of stakeholders expressing strong support for reforming the demand connections process.

Unlocking AI Growth Zones

AI Growth Zones (AIGZs) are designated locations designed to accelerate the development of large-scale AI data centres by removing key barriers to investment. Along with network infrastructure build, timely connections to the electricity network are the biggest blocker for establishing AI-capable data centres, with lengthy connection queues delaying critical projects. To support AIGZs, it is essential to both expand network infrastructure at pace and reform demand connection processes to maximise available capacity.

As part of the Delivering AIGZs publication ^{[footnote 17]} on 13 November 2025, Government committed to:

• setting out a plan to manage speculative data centre demand, ensuring only the most strategic and credible projects are taken forward
• creating mechanisms to reallocate the released capacity and reserve future capacity, for AI Growth zones, amongst other strategically important projects; and
• working with Ofgem to enable viable options for AI Growth Zone developers to build their own high voltage grid infrastructure

Ofgem Call for Input

On 13 February 2026, Ofgem issued a call for input, seeking views on its plans to manage demand connections and setting out its intention to deliver a package of reforms consisting of three workstreams: ‘Curate’, ‘Plan’, and ‘Connect’.

Ofgem is leading work on ‘Curate’ reforms, which focus on strengthening queue entry and progression requirements, particularly for data centres, to manage speculation and ensure only viable projects can enter or remain in the queue. With NESO, Ofgem is developing these measures through its Curate Advisory Group which is conducting detailed solution design and targeted stakeholder engagement.

Ofgem, along with Government, is also leading development of ‘Connect’ measures aimed at accelerating physical connections for demand projects connecting at transmission. This includes options to streamline high-voltage connection processes, enabling self-build options where appropriate and expanding on flexible connection arrangements. These measures are being developed with Ofgem, DESNZ, NESO and industry in the Connect Advisory Group.

The ‘Plan’ reforms, as outlined in this consultation, are being led by Government and include proposals to introduce new prioritisation mechanisms to benefit strategically important demand projects (of all types) and to move to a strategically aligned process for managing data centre connections. These proposals have been developed through extensive engagement with Ofgem, NESO, network companies, and industry over the course of 2025.

Stakeholders will have further opportunities to engage with the Curate and Connect reforms through Ofgem’s planned consultations this Spring, while this consultation principally seeks views on the intention to use the Planning and Infrastructure Act 2025 to support demand connections reform and Government’s ‘Plan’ proposals.

Consumer–Led Flexibility

Government has identified flexibility as central to a clean, secure and affordable electricity system, and a critical part of the Clean Power 2030 mission. The expansion of the UK data centre market presents a significant opportunity for economic investment, innovation, and job creation. Government wants to ensure a healthy regulatory environment for data centres that supports timely connections for viable projects. As the electricity system transitions to one dominated by variable renewable generation and rising electrification of heat, transport and industry, the ability to flex demand and supply in near‑real‑time becomes essential to system operability, consumer affordability, and investment efficiency.

Government is therefore exploring a range of options to embed greater demand flexibility into the system. This includes considering whether some categories of very large demand users, such as data centres, should be required to provide a minimum level of demand flexibility as a condition of connection, enabling the system operator to curtail or limit demand during periods of network or system stress. This minimum level of demand flexibility would be well defined within clear parameters, enabling the user to put in place the measures needed to manage this and having regard to investability. Government is also considering whether other demand projects should be encouraged to adopt flexible connection agreements on a voluntary basis through targeted incentives, such as earlier or lower-cost access to the grid.

Auctions

Additionally, Government seeks stakeholder views on whether there is a role for auctions in the allocation of capacity for strategic demand connections. Introducing an auction mechanism to allocate capacity could allow for a market-led approach and can be applied across multiple scenarios. For example, an auction could be deployed where capacity is released in constrained locations where there is high demand for large connections, or where Government has reserved capacity ahead of need.

Government’s Policy Intent

Objectives

Government’s proposed measures are intended to achieve the following objectives:

Objective A: Safeguard fairness and efficiency of the demand connections process by minimising speculative activity and oversubscription

Objective B: Equip the connections regime to accelerate access to available network capacity for government-identified strategic demand projects, including facilitating pre-2030 connections for critical sites such as AIGZs, where possible.

Objective C: Balance Government’s ambitions to accelerate demand connections with the effective management of system costs and maintenance of energy security.

Objective D: Establish aligned processes for strategic demand connections across transmission and distribution networks, as far as practicable.

Proposals

Proposal 1 – Queue Management

Use Section 14 of PIA to amend connections methodologies, codes and licences (as appropriate) to increase queue entry and membership requirements for data centres for the purpose of improving the process for managing connections to the system and addressing speculative applications. This would include data centre projects with an existing agreement as well as data centre projects seeking a connection in future. If necessary, we may also exercise Section 17 to direct NESO to amend connection agreements.

In its recent Call for Input Ofgem sought views on a range of policy measures to ensure the demand connections queue consists of viable projects capable of progressing to connection. These measures would ‘curate’ the queue by increasing the financial requirements that data centres must meet to retain or obtain a confirmed connection agreement. Ofgem is also considering whether additional readiness requirements or post-acceptance progression milestones are required and will shortly be consulting on its preferred ‘Curate’ reforms, including detailed solution designs developed, through its Curate Advisory Group.

Stakeholders will have the opportunity to provide views on the particulars of these reforms by responding to Ofgem’s Call for Input or engaging with its forthcoming policy consultation.

Government intends that PIA powers will be used to ensure swift and effective implementation of the Curate package of queue management measures. Whether the powers are formally exercised by Government or Ofgem is subject to future decision.

Proposal 2 – Prioritisation Mechanisms

Use section 165A of the Energy Act 2023 (as inserted by section 18 of PIA) to designate plans to identify demand projects that Government considers strategically important, and Section 14 to amend connections methodologies, codes, and licences (as appropriate) so that NESO and network companies can:  

• Re-allocate capacity released when projects exit the queue to strategic demand
• Reserve future network capacity including connection points, bays and a corresponding placeholder queue position for strategic demand
• Prioritise Government-identified strategic demand projects in future batched queue formation exercises ^{[footnote 18]}

Government intends to publish a list of strategically important demand projects including AI Growth Zones within a designated strategic plan which NESO and network companies should prioritise using the above measures.

Worked examples of how these prioritisation mechanisms would work in practice can be found at Annex D.

Proposal 3 – Strategic Alignment of Data Centre Connections

Use section 165A of the Energy Act 2023 (as inserted by section 18 of PIA) to designate plans and to use section 14 to amend connections methodologies, codes, and licences (as appropriate) so that NESO and network companies can align connections for data centres to a future Government data centre strategy.

Government is exploring whether, following implementation of the queue management measures being developed under Proposal 1, to introduce a strategically aligned process to manage connections for data centre projects. This means aligning data centre connections to regional infrastructure targets set out in a data centre strategy (currently being developed) to secure capacity for data centres which deliver on government’s ambitions for digital infrastructure and AI, while balancing the needs of our energy system. This approach would also consider protections for viable data centre projects in advanced stages of development.

Implementation

Phased Approach

Government proposes to implement the above measures in phases.

Phase 1: We expect critical queue management measures (Proposal 1) to be in place before NESO reopens the process for transmission connection applications. This will protect against continued inflation of the demand pipeline from speculative activity and provide data centre projects currently in the queue with an opportunity to review their position in light of the new requirements. Proposal 2 (Prioritisation Mechanisms) at transmission-level should also be implemented in this phase.

Phase 2: We expect that strategic alignment for data centre connections would be implemented at the second post-TMO4+ connections application window, along with any further readiness requirements that Ofgem considers are necessary to protect the efficiency of the demand connections process.

Work to implement ‘Connect’ measures to expedite delivery of transmission connections will be ongoing across both phases.

Transmission and Distribution

Government expects these measures to be implemented simultaneously across transmission and distribution systems as far as possible (noting that distribution connections are not subject to the same gated process as transmission). This is important to ensure consistency of the regulatory framework for data centres to avoid driving further speculative activity to different parts of the network and to ensure that benefits of prioritisation measures can be extended to strategic demand projects (of all types) connecting through DNOs as well as through NESO.

Regulatory changes

We plan to use powers in Section 14 of the PIA to make the following changes to connections methodologies and codes to enable Proposal 2 – Prioritisation Mechanisms for demand projects.

• Amend NESO’s Project Designation Methodology (PDM) so that NESO treats specific, Government-identified strategic demand projects as though they are NESO-designated.
• Amend the Connections Network Design Methodology (CNDM) so that Government-designated projects can be prioritised (in the same way as other designated projects) for capacity that is freed up as other projects leave the queue through the Capacity Reallocation process.
• Amend the CNDM so that Government-identified strategic demand projects connecting directly at transmission can be prioritised (in the same way as other designated projects) for capacity allocation in future queue formation batches.
• Amend elements of the CUSC relating to Gate 1 Capacity Reservation so that NESO can reserve capacity ahead of need for Government-identified strategic demand projects

Distribution-connected demand projects are not currently in scope of the connections methodologies and codes listed above. To ensure they receive similar benefits to transmission-connected demand we may need to amend these, as required, to bring distribution-connected demand projects that Government identifies as strategic into scope for the purposes of Proposal 2. Alternatively, a parallel process could be designed for distribution-connected demand. The regulatory changes required for distribution-connected demand will not be in scope of this consultation, but Government will continue to work with NESO, network companies, and Ofgem to determine necessary changes required so that these projects can also benefit.

Additionally, Proposal 3 may require amendments to CUSC Modification Proposal CMP434, 434 (which introduced new Readiness and Strategic Alignment Requirements for entry to the queue) and the Gate 2 Criteria Methodology (which sets out queue entry requirements) to bring relevant distribution-connected projects into scope and set out strategic alignment criteria.

The proposed text of changes to methodologies, codes, and licences underpinning Proposal 2 - prioritisation measures are set out at Annex C.

Designation of strategic documents

Government intends to use the power in s.165A of the Energy Act 2023 (inserted by section 18 of the PIA) to designate strategic documents, that NESO and DNOs must have regard to in the management of connections. To support Phase 1 reforms, we will designate a strategic plan including a list of strategically important demand projects, including AIGZs.

Providing details of the projects that Government considers strategic, combined with underpinning regulatory changes, will enable network companies to give effect to the prioritisation mechanisms listed under Proposal 2.

The designation of a strategic document takes place by way of a Statutory Instrument, and we expect to designate further strategic documents by way of further Statutory Instruments to be laid in future, in order to support Phase 2 reforms and beyond. This will offer the opportunity to extend the benefit of these prioritisation measures to additional strategic demand projects.

Assessment against objectives

This section outlines expected outcomes of the proposals, and how far they deliver on Objectives A – D.

Proposal 1 – Queue Management

Ofgem, with support from NESO and industry, is developing technical policy options for a new financial requirement on data centres and considering whether any additional readiness or progression requirements are needed to ensure the regime for demand connections supports efficient and timely connections for viable projects. The expected outcome of these measures would be that less viable data centres have an immediate incentive to voluntarily exit the queue.

The queue for data centre connections is now over 50GW at transmission alone ^{[footnote 19]} – far beyond all current projections of future growth for the sector. Without measures to ‘curate’ the connections queue and disincentivise further speculative activity, it is highly likely that demand for new data centre connections will continue to spike when NESO re-opens the process for new applications, further inflating the demand pipeline causing even longer connection delays and increasing system and consumer costs.

Government considers that implementing more stringent queue management measures in Phase 1 and importantly, extending these requirements to data centre projects with an existing agreement, is both urgently needed and is the most efficient and effective way to safeguard the fairness and efficiency of the demand connections process for all viable customers, including data centres (Objective A), free up blocked capacity that can be reallocated to provide quicker connections for strategic demand projects (Objective B), and secure pre-2030 capacity for critical infrastructure sites such as AIGZs (Objective B).

More stringent queue management for data centres will also ensure the connections queue is kept open to new, credible applicants (Objective A) and secure Government’s strategic ambitions while balancing the need to manage system costs and maintain energy security (Objective C).

Proposal 2 – Prioritisation Mechanisms

NESO and network companies are currently unable to prioritise specific demand projects for connection. In a constrained system with finite capacity, this means that strategic demand projects are held back by non-strategic demand projects.

These prioritisation measures provide targeted solutions to ensure that network companies can provide certainty for future strategic demand projects, reallocate released capacity to strategic demand projects, and ensure that strategic demand projects are prioritised in future queue formation exercise at transmission (alongside projects designated by NESO and subject to normal considerations in line with NESO’s responsibilities to ensure security of supply).

In combination, these measures are a proportionate way to strengthen the impact of the Connections Accelerator Service for a considered number of vital strategic projects, while ensuring the connections regime remains fair and open for all viable demand customers (Objectives A and B).

Reallocating released capacity, in combination with proposal A, is expected to maximise short-term acceleration potential for pre-2030 AIGZ connections in particular but should also provide benefit for other viable data centre projects and strategic demand projects of other types (Objective B).

Reservation of future capacity will also help network companies align the strategic needs of Government with strategic network plans and anticipatory investment mechanisms (Objective C).

In principle, these measures can be applied across transmission and distribution systems, and Government is working closely with relevant parties to develop appropriately aligned processes and underpinning regulatory changes (Objective D).

Proposal 3 – Strategic Alignment of Data centre connections

The grid connections process is a critical enabler of Government’s growth, digital, and decarbonisation missions and it is crucial that the regulatory framework supports clear network planning. This is increasingly challenging given the extreme levels of oversubscription now present in the demand connections queue, which could dilute the benefits of the wider connections reform process if not carefully managed. To ensure a well-aligned approach between the energy system and the UK’s future digital needs, we consider it proportionate to explore aligning data centre connections to regional infrastructure targets in a forthcoming data centre strategy  so that Government can secure capacity ahead of need or reallocate capacity freed up in order to accelerate growing data infrastructure in a sustainable way, by balancing the need to manage system costs, maintain energy security and secure Government’s clean affordable power objectives (Objective C), as well as ensuring the connections process works fairly and efficiently for all viable demand customers (Objective A).

By deprioritising data centre projects that are highly unlikely to progress, strategic alignment would unblock capacity that can be reallocated to enable faster connections for strategic demand of all types (Objective A).

A strategically aligned approach would also help to optimise network planning by encouraging data centre growth toward areas where the network has sufficient capacity. This could reduce overall system costs (Objective C), improve operability, and better distribute the economic and social benefits of digital infrastructure across Great Britain.  

In principle, this measure can be applied across transmission and distribution systems, and Government is working closely with relevant parties to develop appropriately aligned processes (Objective D).

Consultation questions

We particularly welcome responses from parties directly affected by these proposals, including regulated parties (i.e. licensees) such as network companies, and NESO, as well as connecting customers at all voltage levels. We would also welcome responses from other stakeholders, including civil society and members of the public.

Questions about you

1. Name

2. What is your email address?

If you enter your email address you will automatically receive an acknowledgement email when you submit your response, and a copy of your response.

3. Organisation

4. I am responding to this consultation on behalf of:

a. Myself
b. An Organisation
c. Other

5. I am responding to this consultation as:

a. A demand project developer
b. Generation and/or storage project developer
c. Interconnector developer
d. Legal or consulting firm
e. Investor
f. Financial institution
g. Technology vendor
h. Industry body or trade association
i. Devolved Government
j. Local authority
k. Environmental NGO
l. Academic
m. Research organisation
n. Other – please specify

6. We usually publish a summary of all responses, but sometimes we are asked to publish the individual responses too. Would you be happy for your response to be published in full? (Required)

a. Yes
b. Yes, but without identifying information
c. No, I want my response to be treated as confidential

Section 1 - Proposals

Proposal 1 – Queue management

Stakeholders should respond to Ofgem’s Call for Input and future policy consultation.

Proposal 2 – Introducing prioritisation mechanisms

7. We propose to introduce mechanisms to reserve future capacity, reallocate released capacity, and prioritise government‑identified strategic demand projects within transmission network design batches. To what extent do you agree that these proposals would be an effective approach to enabling faster access to the electricity network for strategic demand projects?

a. Strongly agree
b. Agree
c. Neither agree nor disagree
d. Disagree
e. Strongly disagree
f. I don’t know

Please explain your reasoning and provide any relevant evidence.

Proposal 3 – Strategic Alignment of data centre connections

8. Government is exploring aligning data centre connections to regional infrastructure targets set out in a future data centre strategy. Do you agree that this would be an effective approach to Objectives A, B, and C, set out above?

a. Strongly agree
b. Agree
c. Neither agree nor disagree
d. Disagree
e. Strongly disagree
f. I don’t know

Please explain your reasoning and provide any relevant evidence.

9. Are there any alternative approaches we should consider to achieving the policy objectives laid out in this consultation?

Given the significant increase in demand for very large connections for digital infrastructure and the shift in energy use these could entail, Government is considering how data centres interact with the wider energy system to enable rapid, sustainable growth while protecting system integrity and managing costs. Therefore, in addition to these proposals, we are collecting views on the flexibility of data centre connections and the role of auctions, as described in ‘The Policy Landscape’ section.

10. Do you agree Government should consider the use of flexible connection agreements, particularly for data centres, to support system operability and accelerate connections while protecting consumers from unnecessary costs? Please explain your reasoning and provide any relevant evidence.

11. What are your views on the technical, commercial and operational feasibility of: (i) mandatory or incentivised flexible connection requirements for data centres/very large demand, and (ii) incentivised voluntary flexible connections for other demand projects? Please explain your reasoning and provide any relevant evidence.

12. Do you foresee any risks of implementing flexible connection arrangements either for individual projects or the wider system as a whole? Please explain your reasoning and provide any relevant evidence. In your answer, please comment on whether the risks differ depending on the type of flexibility sought, including:

a. Flexibility activated only during system stress events and scarcity events
b. Flexibility activated during winter peak days, within defined parameters
c. Flexibility applied more broadly during normal operational periods
d. Any other risks.

13. Do you see a role for auctions in the reservation or reallocation of capacity for strategic demand projects? Please explain your reasoning and provide any relevant evidence.

Section 2 - Analytical Annex

Please refer to Annex A (Analytical Annex) when answering the following questions.

14. To what extent do you agree with the rationale for intervention and the market failures we have identified?

a. Strongly agree
b. Agree
c. Neither agree nor disagree
d. Disagree
e. Strongly disagree
f. I don’t know

Please explain your reasoning and provide any relevant evidence.

15. To what extent do you agree with the impacts that have been identified?

a. Strongly agree
b. Agree
c. Neither agree nor disagree
d. Disagree
e. Strongly disagree
f. I don’t know

Please explain your reasoning and provide any relevant evidence.

16. Do you think there are other impacts that have not been identified?

a. Yes
b. No

If yes, please describe these impacts and provide any relevant evidence.

17. Are there any groups you expect would be uniquely impacted by these proposals, such as small and micro businesses, or any groups of people sharing a particular protected characteristic?

a. Yes
b. No

If yes, please describe these groups and provide any relevant evidence.

Section 3 – Changes to Methodologies, Licences, Codes

Please refer to Annex C (Prioritisation Mechanisms - Draft Changes to Methodologies, Codes and Licences) when answering the following questions.

18. To what extent do you agree that the textual changes to methodologies, licences and codes proposed in Annex C would achieve the intended effects, as described in the Proposals section of this document?

a. Strongly agree
b. Agree
c. Neither agree nor disagree
d. Disagree
e. Strongly disagree
f. I don’t know

Please explain your reasoning and provide any relevant evidence.

19. Can you foresee any unintended consequences of making the proposed textual changes?

a. Yes
b. No

Please explain your reasoning and provide any relevant evidence.

20. If you would suggest any alternative textual changes to achieve the intended policy effects, please describe them.

Next steps

This consultation principally seeks views on the intention to use the Planning and Infrastructure Act 2025 to support demand connections reform and Government’s ‘Plan’ proposals.

If significant new evidence comes to light or if the policy design changes substantially as a result of consultation, we will update our analysis accordingly before implementing any proposals.

A summary of responses should be expected to be published by Government within 12 weeks of the closing date of this consultation.

Stakeholders will have opportunities to engage with the proposed ‘Curate’ and ‘Connect’ reforms through Ofgem’s planned consultations this Spring.

Government will continue to work closely with DSIT, Ofgem, NESO, network companies and industry to develop further detail on the proposal to introduce strategic alignment of data centre connections to a future data centre strategy (the principle of which can be found in Proposal 3), including undertaking further stakeholder engagement.

Annex A - Analytical Annex

This annex outlines the rationale for Government intervention and the potential impacts of the proposals described in the Accelerating electricity network connections for strategic demand consultation.

Rationale for intervention

Electricity networks are the backbone of Britain’s clean energy and digital future, especially as we accelerate towards net zero. The prior “first come, first served” connections queue was highly oversubscribed – the combined transmission and distribution queue to connect as of end-June 2025 being 889GW, of which 737GW was generation, interconnection, and storage. This significantly exceeded the amount needed to achieve net zero. The market failure was that the scarcity value associated with a place in the connections queue was not reflected in the very low private cost associated with obtaining a connection agreement (and a place in the connections queue). This potentially has a high social cost as it leads to an influx of speculative applications which risks vital projects in housing, transport, manufacturing or AI Growth Zones (AIGZs) being stuck behind applications that would not materialise. Therefore, the Government is supporting the regulator, Ofgem, and National Energy System Operator (NESO) by intervening to re-align economic incentives, protect the integrity of the system, and ensure that strategic demand projects can connect when and where they are needed.

We have already begun major reforms through the TMO4+ connections reforms, and through the Industrial Strategy (IS), we have launched the Connections Accelerator Service (CAS) to support critical projects facing delays.

But further, more decisive action is required. Using new powers in the Planning and Infrastructure Act 2025 (PIA), we are now setting out proposals to tackle speculation in the demand queue and accelerate the demand connections essential to the UK’s economic growth and net zero ambitions.

In November 2025 Government announced that it would address speculation in the demand queue and create prioritisation mechanisms to reserve and reallocate capacity that strategic demand projects (including AI Growth Zones) could benefit from.

Potential Impacts

This section outlines potential impacts. Costs and benefits are summarised below, and Table 1 outlines which groups are impacted by these. The work to be undertaken by Ofgem in parallel with these reforms, as described in the consultation, is expected to supplement the benefits listed below.

Costs:

• Potential short-term negligible increases to electricity bills: Funding these measures via network charges might lead to higher electricity bills in the short run, due to familiarisation and implementation charges to NESO and network companies not included in price controls. The Ofgem TMO4+ impact assessment ^{[footnote 20]}, estimated that the NESO one-off network re-design would cost £8 million, resulting in a negligible increase in household bills. Preliminary estimates for these measures suggest comparable, or lower, costs as these. This cost has not been quantified.
• Familiarisation costs: Network companies (TOs and DNOs) could incur time costs to familiarise themselves with the new measures, including time taken to read the guidance and formulate a plan to respond to it. (As these are network codes and methodologies changes, they are not expected to affect customers directly). This cost has not been quantified, though is expected to be relatively small (by comparison with similar costs for TM04+).
• Policy development and implementation costs: Government and Ofgem are likely to incur costs to develop and implement the measures. This cost has not been quantified.
• Administration costs: Transmission owners, NESO and DNOs may incur costs to administer the measures. This cost has not been quantified.
• Earlier delivery of strategic demand projects: If these measures accelerate connections of strategic demand projects, capital and enabling works costs may be higher due to discounting (net present value terms) as they could occur sooner. There may also be costs of delays for projects that are not so accelerated. These costs have not been quantified.

Benefits:

• Accelerated connection of demand projects: Society will benefit from strategic demand projects (e.g. AI Growth Zones) being connected quicker across GB. Reserve and reallocate measures will likely initially have modest effects but will provide some aid to growth by bringing forward capital spending. This in turn could deliver investment and jobs earlier than without implementing these measures. As initial acceleration might encompass high productivity sectors such as AI Data Centres, there may also be an increase in labour productivity. This benefit has not been quantified.
• A more realistic, aligned demand connections queue: In the same way as for TM04+, these measures will help to start to tidy up an unrealistic demand connection queue that is not aligned to UK strategic priorities. This potentially will reduce workload on network companies and NESO, give clearer network build signals, increase investor confidence, and save money on enabling works that will not be required.
• Electricity bill impacts: Accelerating demand projects will increase the flow of electricity over network infrastructure. In network locations where these new flows are over existing infrastructure with spare capacity, there is the potential to make a small reduction in electricity bills. This is because network charges are shared as levies per KWh transmitted, and the more electricity transmitted, the less the charge per unit. Conversely, accelerating demand where extra infrastructure needs to be built to accommodate the new flows, could have the opposite effect and increase bills slightly. There is too much uncertainty at this point to say whether accelerating demand would be a benefit or cost and what magnitude any impact would be.
• Network impacts: In a similar way to electricity bill impacts, accelerating demand might give benefits or drawbacks. It could help with electricity stability and constraint costs, provided it is in the right place and has the right characteristics (flexible, controllable and well located). Conversely, it might give drawbacks if in locations where the network is already congested, especially it increases peak demand and thus triggers network upgrades. There is too much uncertainty at this point to say whether accelerating demand would give network benefits or drawbacks, magnitude any impact would be.

Costs and benefits have been identified qualitatively but not quantified as this is being addressed in a separate publishable piece of analysis. We expect the net overall effect to be small and so under the de minimis regime.

Table 1: Groups impacted by these costs and benefits

Group	Costs	Benefits
Electricity consumers	Negligible increases in electricity bills in the short run – this policy will likely be funded through network charges which are paid via electricity consumer bills, though this is likely to be very small.	Accelerating demand projects will increase the flow of electricity over network infrastructure. In network locations where these new flows are over existing infrastructure with spare capacity, there is the potential to make a small reduction in electricity bills. This is because network charges are shared as levies per KWh transmitted, and the more electricity transmitted, the less the charge per unit. Conversely, accelerating demand where extra infrastructure needs to be built to accommodate the new flows, could have the opposite effect and increase bills slightly. There is too much uncertainty at this point to say whether accelerating demand would be a benefit or cost and what magnitude any impact would be
Developers	In the current situation, capacity released would typically be assigned to the next project in the queue. In the reformed situation, this would instead be to an important project (which might not be the next in the queue).	Acceleration of a project may be the difference between it going ahead, or not; will also improve project viability by bringing forward income cashflows A more realistic, aligned demand connections queue
Transmission owners	Familiarisation costs – TOs could incur time costs to familiarise themselves with the measures. Administration costs – TOs may incur costs to administer the methodologies.	Workload savings from managing a more realistic aligned queue
Government	Policy development and implementation costs – government is likely to incur costs to develop and implement the measures.	N/A
Ofgem	Policy development and implementation costs – Ofgem is likely to incur costs to implement the scheme.	N/A
NESO	Policy development and implementation costs – NESO is likely to incur costs to develop and implement the measures.	Workload savings from managing a more realistic aligned queue
Society	N/A	Acceleration of important demand projects (such as AI Growth Zones) across GB. This will aid growth by bringing forward capital spending. This in turn will deliver investment and jobs earlier than without implementing these measures. This is likely to also increase labour productivity if acceleration encompasses high productivity sectors such as AI Data Centres. Improved investor confidence in investing UK demand projects Savings on network enabling works not required

Distributional impacts and small and micro business impacts:

Distributional impacts: The proposed measures aim to accelerate strategic demand projects across GB by reserving and then reallocating capacity to projects identified as strategic. The methodology and code changes will be independent of location or size of developer. Any distributional impacts will depend on how these changes are implemented by NESO and DNOs, which in turn may depend on the Strategic Spatial Energy Plan and Regional Energy Spatial Plans. It is worth noting, though, that the AI Growth Zones announced to date have considered distributional factors in site location.

Small and micro business impacts:  Projects to be accelerated will be those in the designated strategic plans which is business size agnostic.

Annex B - Definition of Strategic Demand

CAS Project Selection Process

Over summer 2025, DESNZ and the Office for Investment (OfI) collaborated with other Government Departments to design the CAS Project Selection process. This work drew on advice from the National Infrastructure and Service Transformation Authority (NISTA) and the Industrial Strategy analytical team at DESNZ.

The process is structured in three stages:

1. Submission for consideration
   
2. Assessment against defined criteria
   
3. Regional shortlisting based on strategic importance, urgency and deliverability

This a live process, meaning projects can be submitted at any time and are assessed continuously using the agreed framework. This enables sponsors to send updates relating to previous submissions in real time so the relevant project can be re-assessed based on the new data submitted.

Stage 1: Government departments submit proposed projects with supporting information in a set template provided by the CAS team at DESNZ. Nominations from Mayoral Strategy Authorities (MSAs) and devolved governments are also considered. Each project must have sponsorship from a relevant government department or MSA to ensure alignment with wider policy objectives and regional priorities. The sponsor must also maintain due diligence ensuring that the projects they submit are credible and that the data accompanying them is accurate.

Stage 2: All submissions are assessed to determine their strategic importance. Only projects that meet minimum criteria progress. Projects are assessed under a framework and scoring system, developed jointly by DESNZ and NISTA, according to economic and social priorities. Projects are grouped into these two categories to capture their distinct benefits.

Clear metrics guide selection: Projects would be scored by the CAS team on a 1-4 Likert scale against each relevant criteria, which would then be totalled for comparison. The intention is that projects would be scored based on either an economic or social objective.  

Economic criteria:

• Capital investment
• Long-term jobs created or safeguarded
• Alignment of project sector with Industrial Strategy analysis on Growth subsectors (e.g. is it a growth subsector, if not, is it part of the wider Industrial Strategy 8 sectors)

Social criteria:

 

• Alignment to one of the four missions (excluding growth)
• Level of impact (including departmental assessment of criticality of projects for meeting objectives)

A final ‘boost’ metric can be applied for either economic or social projects where needed to cover national security considerations and exceptional circumstances such as public interest. 

Should the project fall under both the economic and social category, it will be scored holistically. This structured approach ensures CAS projects deliver maximum value across different sectors.

Stage 3: Projects that meet the minimum criteria will be organised into regional lists, aligned with DNO or TO boundaries. Local network characteristics will help determine feasibility.

Due to limited resources within the network companies, only a small number of projects can be selected for inclusion in the CAS and each department and network company will be consulted on projects for their area to ensure continued alignment with priorities and deliverability. We are continuing to improve the project selection process including considering how specific projects will be designated and make use of the PIA powers.

Annex C - Prioritisation Mechanisms - Draft Changes to Methodologies, Codes and Licences

Draft amendments to the Project Designation Methodology (excerpted). Amendments in square brackets.

1.1 . Purpose of this document

[1.1.5. In addition to projects NESO considers should be designated, the UK Government can also identify specific demand projects which it considers to have strategic national importance, through a direction to NESO. These projects will be treated as though they had been designated by NESO.]

[1.1.6 However, the developers of these projects will not apply to NESO in order for NESO to make the decision on whether to include these. The UK Government will have its own decision-making process to establish which demand projects should benefit from designation and will publish details of these projects, which will then automatically fall to NESO to treat as designated. This methodology primarily relates to projects which apply to NESO, and NESO decision making. However, it also includes a category of demand projects which have been identified by the UK Government.]

1. Key characteristics of categories of projects that can be designated

1.2.1 This Methodology:

• Explains the reasons projects could be designated.
• Sets out the criteria to be used by NESO to assess whether individual projects should be designated.
• Sets out the process by which NESO will designate projects [that apply to NESO], including communication of decisions NESO makes.
• [Explains that the UK Government can identify strategic demand projects which will be treated as though they had been designated by NESO.]

2. Identifying projects that can be designated

2.1 The categories of projects that can be designated

2.1.1 NESO considers that the following categories of projects are most likely to provide significant additional net zero, and/or other benefits to the GB Energy system and energy consumers. NESO therefore only intends to designate individual projects that fall within one or more of the below categories:

a) Projects that are critical to Security of Supply;
b) Projects that are critical to System Operation;
c) Projects that materially reduce system and/or network constraints;
d) Projects that are new technologies and/or highly innovative, that are not included within the scope of Government’s Clean Power 2030 Action Plan (CP30 Action Plan) or do not correspond with a technology that has been deemed by NESO to have met the strategic alignment criteria1 ; and/or
e) Projects with very long lead times (i.e. long design, consenting and construction periods) that may be needed beyond the 2035 capacities within the CP30 Action Plan.
[f) Demand Projects identified by the UK Government]

2.1.4 This methodology applies to any project in scope of the reformed process for connection to or use of GB’s electricity transmission system, i.e. any projects in the current queue, or in future in the reformed queue (including new applicants) can be considered for designation. A User seeking designation must make a formal application to NESO for their project to be designated via the process set out within this document [or have been specifically identified by the UK Government].

[F. UK Government identified projects

2.2.11. NESO will treat demand projects identified by the UK Government as strategic as though they had been designated by NESO. The UK Government will publish details of those demand projects it considers strategic and which it expects NESO to treat as designated.]

2.2.3. For categories D and E (‘new technologies and / or highly innovative’ and ‘very long lead times’) Users can make designation applications at any point (i.e. not requiring a Notice from NESO). NESO will assess projects against the criteria outlined in the following pages. [For Category F projects, the UK Government will publish details of the projects NESO should treat as designated projects and why it considers them to be in scope of a Government-designated plan or strategy.]

3. Key characteristics of categories of projects that can be designated

3.1 Introduction

3.1.1 The characteristics that are set out in Section 3 are intended to frame the designation criteria and provide background information on the categories of projects covered by the Project Designation Methodology.

3.1.2 These characteristics are therefore not assessment criteria. Aligning with these characteristics does not mean that a User has met the designation criteria. NESO’s will assess each designation application against the relevant criteria referred to in Section 2.2.

[3.1.3 This section does not describe the characteristics of Category F: UK Government identified demand projects, which will be set out separately.]

4. Process for designating projects

4.1.1 How will the application process work?

[4.1.2.1 This section does not describe the process by which the UK Government identifies demand projects under category F.]

4.1.3 Who will designate projects?

[4.1.3.3 Under category F, the UK Government will notify NESO of any demand projects it identifies as having strategic national importance which will be treated as though they had been designated by NESO]

4.1.4 Decisions and Disputes

4.1.4.3 If, after receiving designation, a party seeks to amend their project (for example to an alternative technology or to a different connection location or date) then it must notify NESO. In such an instance, NESO will consider whether the project should continue to be designated (for clarity, this NESO designation decision would be outside the Gate 1 or Gate 2 process). Where NESO decides that the project should no longer be designated, NESO would notify the relevant project developer and publish the relevant details of the NESO decision. Unless otherwise specified by NESO in its decision, the relevant project would need to re-apply at the next Gate 2 window, in line with the process set out in CMP434. This would be to allow NESO to determine the status of the project, i.e. whether it continues to meet the Gate 2 criteria and should be provided with a revised Gate 2 contract, or whether it does not meet the Gate 2 criteria and should be provided with a Gate 1 contract. Unless otherwise specified by NESO in its decision, any failure to re-apply at the next Gate 2 window would result in the project being provided with a Gate 1 contract. [We will work with the UK Government if a project it has identified changes its technology to understand how we should treat it.]

4.2 Indicative decision making process

[4.2.3 The UK Government will follow a separate process for determining whether a strategic demand project should be treated as though it had been designated. The UK Government will clearly and transparently set out which projects NESO should treat as though they had been designated.]

5. Information Provision

5.1 Indicative information likely to be required to inform NESO’s decision whether or not to designate a project

This section is intended to provide a non-exhaustive list of the information Users should expect to provide if seeking designated status for their project. The precise information to be provided may vary by project.

We will work with Users seeking designation to understand the best information that allows NESO to consider specific applications.

[This section is not relevant to the UK Government’s process for identifying demand that NESO will treat as though it had been designated.]

Draft Amendments to Project Designation Licence Condition

Purpose of Project Designation Methodology

E17.2. The Project Designation Methodology is used to identify applications for connection that will be subject to special conditions and processes as set out in the CUSC and the Connections Methodologies when the ISOP is offering to enter into or modify a relevant Bilateral Agreement and/or Construction Agreement.

E17.3. The ISOP may designate an application for connection where it is satisfied that it meets one or more of the following Designation Criteria:

• projects that are critical to security of supply;
• projects that are critical to system operation;
• projects that materially reduce system and/or network constraints and/or associated costs;
• projects that are new technologies and/or highly innovative, that are not included within the scope of the pathways in the Strategic Plan;
• projects with very long lead times (i.e. long design, consenting and construction periods) that may be needed beyond the 2035 pathway within the Strategic Plan;
• [demand projects which the Secretary of State directs NESO to treat as though they have been designated; or]
• projects not meeting (a)-(f) above as agreed with the Authority and as included in an update to the Project Designation Methodology in accordance with E17.16.Part C:

E17.4. When designating an application for connection unless otherwise agreed in advance with the Authority, the ISOP must:

a) Publicly consult for a minimum of 28 calendar days, clearly setting out the application for connection it is minded to designate and the reasons it is designating it with reference to the Designation Criteria, and the impacts of the designation it is minded to make.

b) After the consultation publish on its website its decision to designate an application for connection, the name of the applicant, and the reasons it is making the designation, with reference to the Designation Criteria, and the impacts of the designation.

E17.5. Any decisions made by the ISOP to designate an applicant for connection must be submitted to the Authority for approval.

E17.6. Within 28 calendar days of receipt of the submission under paragraph E17.5, the Authority will determine whether to reject the designated applicant in the submission. In such circumstances the Authority may, at its discretion, give a direction to the ISOP, if more information is required regarding the relevant application or if the decision is final.

E17.7 If, within 28 calendar days of receipt of the submission under paragraph E17.5, the Authority has not decided that it will reject the applicant for designation in the ISOP submission or given a direction to the licensee in accordance with paragraph E17.6, the designated applicant proposed by the ISOP can be deemed to be approved by the Authority.

[E17.8 Paragraphs E17.4-E17.7 above do not apply where the ISOP is following a direction from the Secretary of State to treat a project as though it has been designated under paragraph E17.3(f). Such a direction must:

a) Be issued before the closure of the relevant application window;

b) Clearly identify the project(s) that is to be treated as a designated project, and; c) Explain why the project(s) is in scope of a Government designated plan or strategy and therefore should be treated as designated.]

Draft amendment to the Connections Network Design Methodology (excerpted)

6.5 Connection Point and Capacity Reservation at Gate 1

6.5.1 NESO may reserve connection points and capacity for as yet unknown projects (non-project specific reservations), as well as for specific Gate 1 projects that require it (project-specific reservations). Examples of the types of reservation NESO may make include those for:

a) undersupply against CP30 Action Plan 2030 permitted capacities

b) future Network Services Projects ahead of tendering

c) facilitating network competition

d) facilitating future leasing rounds initiated by The Crown Estate and Crown Estate Scotland

e) ad-hoc Interconnector, Offshore Hybrid Asset, or non-GB Generation projects

[f) demand projects identified in a direction from the Secretary of State]

Draft amendment to the Connection and Use of System Code (CUSC) for Reservation

Reservation

Where for the purposes of a Gate 1 Offer or Gate 1 ATV for a New Connection Site or new Large Embedded Power Station with a BEGA or BELLA as appropriate a connection point to and/or capacity on the National Electricity Transmission System and/or a completion date for that New Connection Site or new Large Embedded Power Station with a BEGA or BELLA is reserved by The Company (and reference to Reservation and Reserved in any Gate 1 Agreements shall be construed accordingly) either at its own discretion [or where it is directed to do so by the Secretary of State.]

Draft licence condition for capacity reservation for strategic demand

Condition XXX: Duty to use Reservation powers upon Direction by the Secretary of State

Introduction

1. The purpose of this condition is to set out certain obligations of the ISOP in relation to exercising its Reservation powers set out in the Connection and Use of System Code.

2. This relates to the ISOP exercising its Reservation powers where it is Directed to do so by the Secretary of State.

[Part B: Form of Secretary of State Direction

3. The ISOP will only exercise its Reservation powers where the Direction issued by the Secretary of State:

• Is issued before the closure of the relevant application window;
• Provides all information necessary for NESO to develop and issue either a project-specific or non-project-specific ‘Gate 1 with reservation’ connection offer;
• Explains why the project(s) is in scope of a Government designated plan or strategy and does not yet meet Gate 2 readiness criteria and therefore should be reserved for, and;
• Confirms that the Secretary of State has considered the principal objective and duties under section 3A of the Act in making this direction.]

[Part C: Duty to exercise Reservation power where directed to do so

4.  Where the Secretary of State issues a Direction in the appropriate form (described in Part B of this condition) prior to the date (described in Part A of this condition), the ISOP must exercise its Reservation powers in relation to the project named in the Direction.]

[Definitions

Reservation: has the meaning given to it in the Connection and Use of System Code.

Gated Application Window: has the meaning given to it in the Connections and Use of System Code.]

Annex D - Prioritisation Mechanisms - Worked Examples

The following examples illustrate how the prioritisation mechanisms set out in Proposal 2 could work in practice for transmission-level demand projects.

The PIA powers we intend to use to reserve, reallocate, and prioritise in batch are:

• Section 14 of the PIA introduces powers allowing the SoS and/or GEMA to amend industry codes, licences and methodologies. This enables them to require the creation of mechanisms that allow network companies (or NESO) to reserve, reallocate, and prioritise in batch electricity network capacity.
• Section 18 of the PIA introduces enduring powers in the Energy Act 2023, for the SoS to designate documents which NESO and the network companies must have regard to when issuing connection offers.

Reallocation (Short-term) – AI Data Centre

• Project X is a 200MW AI data centre that already holds a connection offer for 2033 and is seeking advancement of its connection date to 2029. A 200MW battery storage project with a 2029 connection date and a 100MW data centre with a 2031 connection date are ahead of the Project X in the queue at the relevant substation.
• Government has designated Project X as a strategic project through use of Section 18 of PIA powers. As part of designation, the project is given a unique identifier so that NESO is aware of the relevant substation and capacity being requested.
• Shortly after designation, the battery storage project drops out of the queue, freeing up 200MW capacity at the substation and on the overhead line.
• Under existing arrangements, NESO would automatically allocate the released capacity to the next suitable project in line, in this case, the non-strategic 100MW data centre currently ahead of Project X. This would result in a phased connection for Project X, with 100MW connecting in 2031 and 100MW connecting in 2033. While an improvement, this would fall short of government’s strategic requirements for AI in this region.
• NESO is aware of Project X’s designation and invites it to re-apply for a 2029 connection at the next application window. This enables Project X to secure FID and progress to connection in 2029. The non-strategic data centre can still connect in 2031.

Reallocation (Longer-term) – Port Decarbonisation

• Government publishes an update to the Industrial Strategy which it designates as a strategic document using Section 18 of the PIA. This document identifies a major port – Project Y - as a strategic project.
• Project Y already holds a 50MW connection agreement for 2040 but needs to fully electrify key equipment in 2036 in line with its 10-year asset replacement cycle and net zero commitments. It is not financially viable to electrify in 2039 as this would mean disposing of new equipment. The 2036 connection is therefore essential to avoid locking in significant carbon emissions until 2046.
• Project Y makes a new application for a connection in 2036 (a ‘modification application’) at the next NESO application window.  Government’s designation, as well as the amendments to the Connections Network Designation Methodology, mean that Project Y can receive a priority queue position in the batched queue formation process for that substation, in that window. This means that if capacity should become available at a later date due to another demand project exiting the queue, Project Y should be offered this capacity first, provided the exiting project has a similar load profile (i.e. has a similar impact on the network).
• In 2028, a 60MW data centre project with a 2036 connection date exits the queue at the relevant substation. Instead of offering the capacity to the next projects in line, NESO is able to offer Project Y its requested 50MW connection in 2036 allowing it to electrify in 2036 in line with its asset replacement cycle.

Reservation – Future AI Growth Zone

• Government is developing plans for a new AI Growth Zone to support regional investment. It has worked with the TO and NESO to identify an area of network with potential for 500MW in 2034 and is aware of an established data centre developer with plans to establish a large facility in this area. These plans are well progressed and credible, but the developer has not yet obtained land rights for the project or applied for a grid connection
• Government signals its intention to designate an AI Growth Zone in this area in a published strategy document, which it designates using Section 18 of the PIA.
• On this basis, NESO makes a ‘non-project-specific’ Gate 1 capacity reservation for 500MW for ‘Project V’. This allocates a point of connection on the network and a placeholder position in the queue for ‘Project V’ as if it had already applied for a connection and had achieved Gate 2 status by obtaining land rights. This enables the TO to build the required network infrastructure for the project with NESO securitising the costs of works until Project V is ready to progress.
• In 2028, the developer purchases the land for its project and applies for a Gate 2 connection at the next NESO application window. It then takes over the connection agreement, including all liabilities, from NESO. Provided the project continues to meet the standard progression milestones, it will connect in 2034 in line with government’s AI Growth Zone ambitions.

In-Batch Prioritisation – New Green Steel Application

• Government designates a green steel project – Project Z - as strategic due to its contribution to industrial decarbonisation and the new jobs it will bring.
• The project requires a 100MW connection by 2033 to align with its investment and construction timeline.
• Using powers introduced under Section 14 of the PIA, NESO can treat government-designated projects in the same way as NESO-designated projects in Gate 2 queue formation batches. This allows government-designated demand projects to be ranked ahead of non designated demand projects.
• During the Gate 2 assessment window for projects targeting 2033 in Project Z’s region, NESO assesses a batch of 7 demand projects seeking capacity in the same constrained area.
• For this particular network grouping, only the first three projects in the batch can be connected before wider reinforcements are triggered. The works will not be completed until 2038.
• Under existing arrangements Project Z would be assigned queue position 5, because of the date it obtained land rights in relation to the other projects in the batch, and would be offered a 2038 connection.
• However, government designation allows NESO to rank Project Z first in the batch, with a 2033 connection date.

Annex E - Glossary of terms

AIGZ	A designated geographic area where Government prioritises the development of largescale AI data centres, including prioritised access to network capacity, planning alignment, and strategic support.
Application Window	A defined period during which new connection applications can be submitted under the TMO4+ reformed process.
Capacity Reallocation	The process through which unused or released network capacity (e.g., when projects withdraw) is reassigned to other eligible projects.
CMP434	CUSC Modification Proposal 434 which introduced new Readiness and Strategic Alignment Requirements for entry to the queue.
CMP435	CUSC Modification Proposal 435 which provided NESO with the powers to apply new Readiness and Strategic Alignment Requirements to existing agreements.
ConnAG	Ofgem’s Connect Advisory Group, which explores options, with industry support, to accelerate physical grid connections at transmission.
Connections Accelerator Service (CAS)	Government’s prioritisation programme for strategic demand projects. Currently provides enhanced optioneering through the existing regulatory framework for projects selected using the CAS selection framework. Once PIA enabled prioritisation measures are in place, some CAS projects will be eligible for further support through these provided they are identified in a designated strategic document.
Connections Network Design Methodology	A document NESO required to have in place and maintain under its licence. This methodology provides an overview of NESO’s approach to reassessing the connections queue under CMP435 and assessing future Gate 1 and Gate 2 applications under the reformed connections process, CMP434.
CurAG	Ofgem’s Curate Advisory Group, which develops policy options, with industry support, aimed at reducing speculative applications and ensuring only viable demand projects enter or remain in the queue.
CUSC	Connections and Use of System Code – the contractual framework for connecting to and using the National Electricity Transmission System (NETS).
Demand connections queue	Collective term for all demand projects currently holding a connection agreement but yet to be connected.
Demand Project	A Project that imports power for use on the site and does not generate power and export it to the electricity network.
Designated document	PIA powers enable Government to designate published documents as strategic, meaning that network operators must have regard to these documents in the management of connections. Projects that Government wishes to benefit from prioritisation (as set out in NESO’s Project Designation Methodology) must be identified in a designated document.
Designated Project	A project (of any type) that has been designated through NESO’s Project Designation Methodology.
Developer	The sponsor or owner of a Project responsible for the delivery and liabilities of a Project.
Financial Requirement	Any financial requirements Projects must discharge to either enter the queue or remain in the queue, in addition to existing security and other liabilities.
Gate 2 Criteria Methodology	A document NESO is required to have in place and maintain under its licence. This methodology sets out the Gate 2 criteria for both new applications and existing agreements and the evidence requirements and assessment of these criteria.
Generation Project	A Project that generates power and exports it to the electricity network, the project does not import power for use on the site other than to manage a generator.
Government Reservation	A proposed new process replicating the NESO Gate 1 reservation process for Government-identified strategic demand projects.
Hybrid Project	A scheme that includes multiple generation technologies and/or is a Demand Project and a Generation Project.
Network self-build	A connecting customer or developer, instead of the transmission owner, is allowed to design, construct, and sometimes own the transmission-level assets, such as high-voltage lines and substations, needed for their grid connection.
Non-Firm / Ramped / Profiled Connections	Alternative connection arrangements: Non-firm – connection subject to curtailment during constraints, Ramped – gradually increasing capacity allocation over time, Profiled – bespoke connection profile matching predictable patterns of demand.
Prioritisation	Either one, or a combination, of the following - prioritisation within a batch as per CNDM, reallocation of capacity as per CNDM or Reservation as per CUSC.
Project	A scheme that may include a single technology or multiple technologies that either imports, exports or imports and exports to the electricity network.
Project Designation Methodology	A document NESO is required to have in place and maintain under its licence. This Methodology sets out how projects can apply to be designated and the process NESO will follow to designate them.
Readiness Requirement	Gate 2 Readiness Requirements established by TMO4+ namely that the project has secured land rights or, where appropriate, has submitted a DCO application which has been acknowledged.
Reservation (status quo)	When capacity and or a bay is reserved for a project as though it had passed through Gate 2 until an expiry date is reached - this can be done to support undersupply or for network services.
Speculative Demand	Demand connection applications that are unlikely to progress to delivery
Strategic Alignment Requirement	Under the Gate 2 Requirements Methodology, projects must meet at least one of the following criteria: (a) eligible for protections; (b) aligned to capacities in the CP30 Action Plan; (c) be a designated project; or, (d) a project not within the scope of the plan and listed in the methodology. All demand projects currently fall in to (d) at the moment.
Strategic Demand Project	Government identified demand Project eligible for the proposed Prioritisation mechanisms
Strategic Plan (within PIA context)	A Government-published document designated under Section 18 of the Planning and Infrastructure Act 2025, which NESO and DNO/TOs must have regard to when managing connections.
System Event	System Stress Event has the meaning given in Rule 8.4.1 of the Capacity Market Rules

*[OFI}: Office for Investment *[PDM]: Project Designation Methodology *[PIA]: Planning and Infrastructure Act 2025 *[SoS]: Secretary of State *[TMO4+]: Target Model Option 4 + (‘first ready and needed, first connected process’) *[TOs]: Transmission Owners *[TO]: Transmission Owner

1. Delivering AI Growth Zones - GOV.UK ↩

2. Ofgem: Demand connections reform ↩

3. Ofgem: Demand connections reform ↩

4. TMO4+ Impact Assessment ↩

5. National Energy System Operator: Demand Queue Call for Input (CFI) ↩

6. This does not capture all data centre projects in the transmission queue and does not include data centre projects contracted but not connected at distribution. ↩

7. Further information gathering exercises will be undertaken by NESO over the coming months to ensure we can rapidly identify emerging trends and underpin effective long-term policy development. ↩

8. Ofgem also has broader statutory duties, such as promoting economic growth and net zero and aligning with the strategic priorities set out in the Strategic Policy Statement. ↩

9. Ofgem: Licences and licence conditions ↩

10. Rules that govern how the electricity and gas systems in Great Britain operate. They set out the technical, commercial and operational arrangements that all licensed market participants must follow. ↩

11. Project Designation Methodology (PDM) ↩

12. Connections Network Design Methodology (CNDM) ↩

13. Gate 2 Methodology ↩

14. Planning and Infrastructure Act 2025 ↩

15. Hereafter referred to as the ‘Industrial Strategy’ ↩

16. Electricity networks: connections action plan - GOV.UK ↩

17. Publication - Delivering AI Growth Zones - GOV.UK ↩

18. At transmission only – connections at distribution level are not tied to application windows. ↩

19. 142 data centre projects responded to NESO’s Call for Input on demand connections in December 2025, representing ~52GW of capacity. This does not capture all data centre projects in the transmission queue and does not include data centre projects contracted but not connected at distribution. ↩

20. Ofgem, April 2025, TMO4+ Impact Assessment Decision. ↩