NESO is in the latter stages of consultation which would replace the “first come, first served” model with an approach that prioritises ‘credible and deliverable’ projects. In parallel, DESNZ has launched a consultation to tighten conditions for demand‑side applications and prioritise ‘strategically important’ users which include data centres, EV infrastructure and industrial sites.
As the National Energy System Operator (NESO) progresses reordering the grid connection queue for generation projects, an equally significant shift is proposed for all demand connections, including data centres.
For new demand customers, the current pause in grid applications is a strategic window. This is the time to secure land rights, complete technical due diligence, refine power requirements, advance planning and strengthen commercial arrangements. When applications reopen, project readiness will be needed to secure favourable queue positions.
The demand queue
Demand connection requests have surged since 2024. By mid‑2025, NESO identified around 125GW of demand projects in the queue, 97GW transmission‑connected and 29GW distribution‑connected. The Transmission Entry Capacity (TEC) register, which tracks generation projects, does not apply to demand customers; as a result, demand schemes are not captured or visible in public datasets.
NESO’s subsequent data request from transmission‑connected customers revealed around 140 data centre projects claiming to have reached ‘Final Investment Decision’. Despite this, Ofgem believes a significant share of the demand pipeline is non‑viable, contributing to congestion and inefficient network planning.
Need for reform
Demand projects currently face only readiness requirements, there is no equivalent test, reflecting a policy view that restricting demand could hinder economic growth. This has enabled speculative schemes to accumulate. Ofgem has highlighted the growing mix of credible and non‑credible projects as a driver of queue inflation, delays and poor visibility across the system.
Ofgem’s new programme
Ofgem has launched a ‘Call for Input’ and outlined a new two‑phase demand connections reform programme built around three pillars: Curate, Plan and Connect. Phase one will consult on the package of ‘curate’ measures in spring 2026, including:
- Stronger readiness requirements: Evidence of wider financial backing, planning permission (or submission of an application) and demonstrable land control, to name a few, aiming is to ensure projects are genuinely deliverable.
- Reviewing financial mechanisms: This could include refundable deposits, project commitment fees or upfront non‑refundable charges, to reinforce commitment.
Although Phase one focuses on data centres, the ‘Connect’ workstream is designed to improve how all major demand projects access the grid by clarifying high‑voltage asset ownership, exploring private wire options, enabling self‑build of transmission assets, and creating more flexible non‑firm or ramped connection routes.
Actions for developers
In the reformed regime, if you can’t demonstrate any readiness, your connection is at risk. This has already played out in the generation space. Large numbers of battery projects were unable to meet ‘Gate 2’ requirements and therefore removed from the queue.
With new application windows unlikely to reopen before late 2026, developers have a window to strengthen the credibility of their projects. Applications will likely need to demonstrate:
- Strategic alignment: Efficient network use and wider clean power objectives
- Readiness: Secured land and a deliverable planning pathway
- Technical clarity: Robust load forecasts and defined end‑use
- Financial credibility: Committed funding or investor support
Projects lacking these elements will be unable to demonstrate readiness and are highly unlikely to secure a timely or a grid connection offer. Therefore, seeking expert advice is more crucial than ever.
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