Connections Reform Take Two: Electricity Demand Connections Call for Input

Summary

The allocation and administration of electricity grid connections in Great Britain (GB) is undergoing rapid and profound change. The publication by Ofgem on 13 February 2026 of its Call for Input on Demand Connections Reform (Demand Call for Evidence) represents a continuation of this change. This article sets out an overview of some of the key reforms being considered as part of the Demand Call for Evidence and explores the potential implications, with data centres being a key area of focus, but with the reforms having the potential to affect all new and in development demand connections. The deadline for responding to the call for input is 13 March 2026.

Background

2025 will be remembered by many as the year of TMO4+, CMP 434 and CMP 435, with terms such as “connections reform”, “readiness condition”, “strategic alignment” and “Gate 1” and “Gate 2” being loved (and loathed) additions to the lexicon of all involved in and/or affected by the GB electricity generation sector. 

The changes made by these reforms were though “limited” to export grid connections and transmission connected demand; distribution connected demand was outside the scope of the reforms, with transmission connected demand also only needing to satisfy the “Gate 2 Readiness Criteria” as it was deemed to satisfy the “Gate 2 Strategic Alignment Criteria”. 

At the time, this was felt appropriate as electricity demand was not restricted based on need, given economic growth and decarbonisation ambitions. There has however been a huge increase over the past eighteen months in the number of electricity demand connection requests that the electricity distribution network operators (DNOs) and NESO have received (and the MW being requested), with the majority of this being made up of new data centres. The Demand Call for Evidence indicates that between November 2024 and June 2025, total contracted offers in the demand queue rose sharply from 41 GW (17 GW at transmission level, 24 GW at distribution level) to 125 GW (97 GW at transmission level, 29 GW at distribution level) in June 2025 (with around 50 GW of the queue being comprised of proposed new data centre schemes). For comparison, the peak electricity demand in Great Britain on 11 February 2026 was 45 GW.

This led NESO to publish at the tail end of 2025 a demand queue call for input which closed on 5 December 2025 and Ofgem to publish on 5 November 2025 guidance on the options for reform that it was considering.

The Demand Call for Input published in February 2026 subsequently builds on these documents and sets out Ofgem’s framing of the problems it believes are affecting demand connections (having considered the submissions made in response to the earlier calls for input) namely:

• there has been excessive growth in the demand queue, with many projects in the current queue likely to be non-viable; 

• similar to the export connection queue position prior to TMO4+, the demand queue contains a significant number of well-progressed projects that cannot progress to connection quickly enough, due to the time required for network or generation build, and the presence of non-viable projects; 

• the lack of a mechanism to prioritise strategically important demand projects is problematic; and therefore

• there is a need for timely reform (potentially at both distribution and transmission level to preserve alignment) to the demand connection process (with the reforms applying to projects with electricity demand connection offers as well as projects that are or will be the subject of demand connection offer applications) to ensure that viable projects can secure timely connections and strategic projects can be prioritised.

We explore below Ofgem’s stated pillars around which potential reforms will be based, together with the suggested timings.

Pillars of Reform and Timelines

The Demand Call for Evidence sets out that Ofgem, government and NESO intend to take a phased approach to reforming demand connections and frame any reforms around three broad pillars.

Phase One – Curate

Phase One will comprise of measures to curate the demand connection queue, with a focus on data centres and with Ofgem intending to consult on the reforms in Spring 2026.

The stated intention is to ensure that the demand connection queue does not grow further due to new applications from non-viable data centres or other non-viable projects, and that network companies are able to prioritise strategic projects identified by government

Contemplated reforms include:

• a bespoke financial mechanism to apply to data centre connections to deter applications from non-viable projects, encourage proactive self-termination of non-viable projects and drive timely progression of projects, with the options for this financial mechanism being:

  • a refundable deposit – a data centre developer would need to pay a deposit to the relevant DNO / NESO at the point of application or offer acceptance in respect of a data centre demand connection, with the deposit then being refunded as a lump sum when a specific milestone had been achieved or incrementally if and when specific milestones had been achieved;

  • a progression commitment fee – a data centre developer would need to pay a deposit that increases over time and can be drawn down by the relevant DNO or NESO (contingent on the type of connection) if the data centre project fails to meet certain progression criteria; or 

  • an upfront non-refundable fee - a data centre developer would need to pay a non-refundable fee at the point of application or offer acceptance;

• an updated securities regime for transmission connected demand (that is not yet connected) so that there are clear, consistent rules on the treatment of financial obligations and securities for demand users alongside a (to be introduced) financial mechanism for data centres; and

• enhanced readiness requirements for data centres (with the requirements potentially applying as Gate 2 criteria and as requirements for receiving a connection offer for distribution projects, or as progression milestones) with ideas being considered including evidence of broader financial project backing, outline planning permission (submission or consent received), or full planning permission or consent. 

Phase Two – Plan

Phase Two will consist of further measures to implement a strategic plan for data centres, alongside additional measures to strengthen project commitments and address applications from non-viable demand projects.

Measures under consideration include:

• prioritisation mechanisms to reserve and reallocate capacity for strategic projects;

• developing and designating relevant strategic plans to network companies to implement prioritisation mechanisms or manage data centre demand, with the hope that such plans can enable smarter sequencing of connections by identifying where and when capacity is needed on the network, enabling NESO to align connections queue management with regional priorities and strategic need to ensure that generation, demand and the network are delivered at the same time; and 

• the use of auctions in the reservation and reallocation of capacity for strategic demand.

Phase One and Two – Connect

In addition to the Curate and Plan themes of reform, the Demand Call for Input indicates that strategic reforms to accelerate and increase the number of physical grid connections for demand projects and operate an effective and secure system that includes increasingly large demand loads may be made during Phase One and Phase Two.

Ideas under consideration include:

• greater self-build, and ownership and operation of high voltage assets, with key areas of focus being: 

  • providing greater clarity on whether demand projects can connect at high voltages (132 kV and above in Scotland; above 132 kV in England and Wales) based on the current definitions of “transmission” and “transmission system” in the Electricity Act 1989 (which is an issue we know many developers (and legal advisors) have been grappling with and is currently getting quite a lot of attention) and working with network owners to resolve any uncertainty on how the position interacts with the Gate 2 to Whole Queue exercise;

  • assessing the CUSC Modification Proposals CMP330 and CMP374 and CMP414 (and related CUSC Modification Proposals) which are broadly intended to make a policy change to enable greater self-build of transmission connection assets, and if appropriate, using powers in the Planning and Infrastructure Act 2025 to accelerate the changes; and 

  • introducing greater standardisation and certainty in relation to the ownership of high voltage assets, including the potential development of a dedicated Independent Transmission Owner (iTO) licence or adapting existing licensing regimes to achieve this (which is a development we know many in the industry, including Eclipse, have been pushing for for some time); and 

• changes to achieve a more effective and secure system, including: (a) updates to the technical codes and standards (such as the Security and Quality of Supply Standard and the Grid Code) to maintain network integrity for all parties whilst enabling the greater build out and ownership of high voltage assets by new parties; (b) ramped and non-firm connections as a means of securing earlier connection dates; and (c) identifying the opportunities for large demand to contribute towards consumer-led flexibility.

What does this mean for the GB Data Centre sector?

Much like TMO4+, the proposed Phase One reforms will (if implemented) send a clear warning to all those involved in the early stages of developing, investing in and/or financing a new data centre development in Great Britain and result in winners and losers in the GB data centre sector. 

As a result, we anticipate that interested parties may want to respond to the Demand Call for Input and ensure their views are heard in the Curate Advisory Group and the Connect Task and Finish Group (whether directly or through relevant trade associations). 

More generally, affected parties may want to:

• start reviewing their GB data centre developments now and consider what actions they need to take to ensure their projects are in the best possible position to satisfy any enhanced readiness requirements and any new prioritisation requirements, whilst potentially curtailing spending on those projects that they deem to be non-viable / borderline (taking into account the current  status of such projects including current connection dates, whether planning has been secured and the overall level of data centre demand in the current demand connection queue); 

• update their development models to reflect the new financial mechanism that will likely apply to data centre developments that have yet to connect; and 

• start considering how they might optimise the connection and generation strategy (and construction costs) for their projects to benefit from any reforms that are made to enable greater demand flexibility and/or the build out / ownership of high voltage assets and subsequently enable earlier connection dates.

Closing Remarks

It is perhaps unsurprising that Ofgem, NESO and government have now turned their attention to reforming the demand connection queue with an initial focus on data centres and many in the data centre sector (and more widely) will welcome some or all of the reforms being considered as part of the “Connect” and “Plan” pillars. We anticipate however that some parties may be instinctively nervous around any reforms that could lead to and/or involve a central planner assessing the strategic alignment of any new development that has an electrical demand, comparing this against the strategic alignment of other developments that have an electrical demand and then having the power to allocate connection dates and capacity based on its assessment of these matters.

As alluded to in the section above, we also suspect the potential “Curate” reforms will likely to provoke a more polarised response, with any reforms (and the timing and implementation of such reforms) needing to be carefully assessed and refined to ensure that there is not a prolonged period of uncertainty and investment hiatus at a time when this can be ill afforded. 

Burges Salmon has extensive experience advising on all aspects of the delivery of GB data centres and other major projects with a significant energy demand, including how grid reforms and GB network regulation may affect such projects. If you would like to discuss how any of these potential reforms may affect your scheme, please do get in touch with Alec Whiter, James Phillips or Ros Harris.  

This article was written by Alec Whiter, with assistance from Josh Watson and Rosie Collier.