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Accelerating electricity network connections for strategic demand

By Alec Whiter

18 May 2026 5 min read

Data centre developers face a critical challenge: securing grid connections in an increasingly congested queue.

Reforms from the Department of Energy Security and Net Zero (DESNZ) and Ofgem are reshaping how electricity network connections are prioritised, and for data centres, the stakes are high. Crucially, it is central Government, not industry regulators, that will determine which projects qualify as “Strategic Demand” and receive priority access to grid capacity. This shift has significant implications for developers navigating the connections process. Here, we explore what these reforms mean for the data centre sector and practical steps developers should be considering.

Demand for data centres is rapidly increasing with the rise in cloud computing, artificial intelligence and growing digital infrastructure. With this growth, we can see the UK planning system, Governmental bodies and independent regulators adapting to reflect the drive for data centres.

In early 2026, Ofgem released its Call for Input on Demand Connections reform, with DESNZ subsequently releasing its own consultation based on the reforms in Ofgem’s publication. Their coordinated approach is structured around three key pillars: Curate, Connect and Plan. While Ofgem and NESO lead on queue management and the connections plan under the first two pillars, DESNZ is driving the ‘Plan’ pillar – the mechanism by which strategic demand will be identified and given priority access to grid capacity.

For data centre developers seeking to secure or protect their connection rights, this is where the action is.

The reforms centre on three proposals, each building on the last.

Tightening the queue

The first proposal targets speculative applications head-on. Using powers under the Planning and Infrastructure Act 2025, the Government intends to increase queue entry and membership requirements for data centre projects that have not yet connected. The aim is twofold: improve the connections process and deter applications that lack genuine backing.

Prioritising strategic demand

The second proposal creates a prioritisation mechanism for projects deemed strategically important. Once a project is designated as ‘strategic demand’, NESO will be required to reserve capacity, re-allocate capacity from failed projects, and give priority in future queue formation exercises. In practical terms, this means Government-identified projects could leapfrog others in the queue.

Aligning data centres to national strategy

The third proposal looks further ahead. The Government intends to align data centre connections to regional infrastructure targets set out in a forthcoming national data centre strategy. The objective is to secure grid capacity for projects that deliver on the Government’s ambitions for digital infrastructure and AI, whilst balancing the needs of the wider energy system. Importantly, the Government has acknowledged the need to consider protections for viable projects already at advanced stages of development.

How ‘strategic demand’ is determined

Given the significance of being designated ‘strategic demand’, developers will want to understand how the determination is made. The Connection Accelerator Service (CAS) operates a three-stage process:

Stage 1 – Sponsorship: Projects must be nominated by a Government department, Mayoral Strategy Authority, or devolved government. Without this sponsorship, a project cannot progress – making early engagement with the right public sector stakeholders essential.

Stage 2 – Scoring: Submissions are assessed against economic criteria (capital investment, job creation, alignment with Industrial Strategy growth subsectors) and social criteria (alignment with Government missions, level of impact). A ‘boost’ metric may also be applied for national security or exceptional public interest considerations.

Stage 3 – Regional Selection: Projects meeting minimum criteria are organised into regional lists aligned with network operator boundaries. Only a limited number will ultimately be selected, with network companies consulted on feasibility and deliverability.

The key takeaway

The critical point is this: central Government – not NESO or Ofgem – will be the ultimate decision-maker on what constitutes ‘strategic demand’. NESO’s role is to implement the Government’s designation, not to determine it. Regional support from the relevant Mayoral Strategy Authority or devolved government will be crucial, as will demonstrating clear economic or social benefits relative to competing projects.

The reforms centre on three proposals, each building on the last.

Tightening the queue

The first proposal targets speculative applications head-on. Using powers under the Planning and Infrastructure Act 2025, the Government intends to increase queue entry and membership requirements for data centre projects that have not yet connected. The aim is twofold: improve the connections process and deter applications that lack genuine backing.

Prioritising strategic demand

The second proposal creates a prioritisation mechanism for projects deemed strategically important. Once a project is designated as ‘strategic demand’, NESO will be required to reserve capacity, re-allocate capacity from failed projects, and give priority in future queue formation exercises. In practical terms, this means Government-identified projects could leapfrog others in the queue.

Aligning data centres to national strategy

The third proposal looks further ahead. The Government intends to align data centre connections to regional infrastructure targets set out in a forthcoming national data centre strategy. The objective is to secure grid capacity for projects that deliver on the Government’s ambitions for digital infrastructure and AI, whilst balancing the needs of the wider energy system. Importantly, the Government has acknowledged the need to consider protections for viable projects already at advanced stages of development.

How ‘strategic demand’ is determined

Given the significance of being designated ‘strategic demand’, developers will want to understand how the determination is made. The Connection Accelerator Service (CAS) operates a three-stage process:

Stage 1 – Sponsorship: Projects must be nominated by a Government department, Mayoral Strategy Authority, or devolved government. Without this sponsorship, a project cannot progress – making early engagement with the right public sector stakeholders essential.

Stage 2 – Scoring: Submissions are assessed against economic criteria (capital investment, job creation, alignment with Industrial Strategy growth subsectors) and social criteria (alignment with Government missions, level of impact). A ‘boost’ metric may also be applied for national security or exceptional public interest considerations.

Stage 3 – Regional Selection: Projects meeting minimum criteria are organised into regional lists aligned with network operator boundaries. Only a limited number will ultimately be selected, with network companies consulted on feasibility and deliverability.

The key takeaway

The critical point is this: central Government – not NESO or Ofgem – will be the ultimate decision-maker on what constitutes ‘strategic demand’. NESO’s role is to implement the Government’s designation, not to determine it. Regional support from the relevant Mayoral Strategy Authority or devolved government will be crucial, as will demonstrating clear economic or social benefits relative to competing projects.

What should data centre developers be doing?

Given the significance of the prioritisation mechanism to potential grid connection timelines, developers and operators should be taking proactive steps now.

Engage early with Government stakeholders: Projects must be sponsored by a Government department, Mayoral Strategy Authority, or devolved government to be considered for ‘strategic demand’ designation. Early engagement with the right public sector stakeholders is essential – waiting until the formal process opens may be too late.

Build the case for designation: Developers should be preparing the strongest possible case for why their project warrants ‘strategic demand’ status. This means understanding the economic and social criteria against which projects will be scored – and optimising project proposals accordingly.

Understand the criteria: Engage with Government and the Connection Accelerator Service to gain clarity on how projects will be assessed. The more visibility developers have on the scoring framework, the better positioned they will be to present a compelling submission. Consider protections for advanced projects: For projects already at advanced stages of development, the Government has acknowledged the need to consider protections. Developers in this position should ensure their circumstances are clearly communicated to relevant decision-makers.

Contact us

To discuss how these reforms may affect your data centre project, or for advice on securing and protecting your grid connection rights, please contact Alec Whiter or Ros Harris.

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