Accelerating electricity network connections for strategic demand: DESNZ Consultation Key Points

Summary

As connection reforms in Great Britain continue at pace, the Department for Energy Security and Net Zero (DESNZ) published on 11 March 2026 a consultation on Accelerating electricity network connections for strategic demand, with data centres being a key focus of this consultation. This article sets out how this consultation interacts with Ofgem's parallel Demand Call for Input (please see our separate article on the Ofgem call for input) (the Demand Call for Input), some of the proposals being considered by DESNZ including how “Strategic Demand” will be identified (spoiler alert: the Government decides) and some steps that those in the data centre sector might want to think about. The consultation closes at 11:59pm on 15 April 2026. 

Consultation Season

Hot on the heels of Ofgem publishing its Call for Input on Demand Connections Reform last month, DESNZ has launched its own consultation on elements of the reforms set out in the Demand Call for Input. DESNZ's consultation is though intended to run in parallel with Ofgem's, and DESNZ encourages stakeholders to consider and respond to both consultations.

The alignment is evident in the emphasis and focus by DESNZ on data centres, and the particular concern with speculative grid connection applications for data centres. The consultation also outlines the same phased approach to reform set out in the Demand Call for Input, but indicates that Ofgem and NESO are leading on the 'Curate' and 'Connect' pillars of reform, whilst DESNZ will take the lead on the 'Plan' pillar of reform, and this is what the consultation focuses on.

What is being Proposed?

The consultation sets out three main proposals.

Proposal One: Queue Management

Using the new powers available under Section 14 of the Planning and Infrastructure Act 2025 (PIA) to amend connections methodologies, codes and licences to increase queue entry and membership requirements for all data centre projects that have not already connected to a distribution network or transmission network, with the aim of both improving the connection process and deterring speculative applications. The consultation also indicates that the Government may use the new powers provided under Section 17 of the PIA to amend connection agreements.

The Demand Call for Input goes into more detail however as to what these new entry and membership requirements could be.

Proposal Two: Prioritisation Mechanism

Using section 165A of the Energy Act 2024 (as inserted by section 18 of the PIA) to designate plans which set out the methodology by which strategically important demand projects will be identified, with NESO then having to prioritise these identified projects by reserving capacity, re-allocating capacity from failed projects and prioritising strategic demand projects when designing transmission networks. The consultation also sets out that the Government is considering using the new powers available under Section 14 of PIA to amend connections methodologies, codes, and licences (as appropriate) so that NESO and network companies can:

1. Re-allocate capacity released when projects exit the queue to strategic demand;
2. Reserve future network capacity including connection points, bays and a corresponding placeholder queue position for strategic demand; and
3. Prioritise Government-identified strategic demand projects (that will connect to the transmission network) in future batched queue formation exercise.

The stated documents that the Government is considering amending to implement the prioritisation mechanism include: 

1. NESO’s Project Designation Methodology so that NESO treats specific, Government-identified strategic demand projects as though they are NESO-designated;
2. the Connections Network Design Methodology (CNDM) so that Government designated projects can be prioritised (in the same way as other designated projects) for: (i) capacity that is freed up as other projects leave the queue through the Capacity Reallocation process; and (ii) capacity allocation in future queue formation batches;
3. elements of the CUSC and licence conditions relating to Gate 1 Capacity Reservation so that NESO can reserve capacity ahead of need for Government-identified strategic demand projects; and
4. additional documents to enable distribution connected strategic projects to benefit from the relevant reforms (as distribution-connected demand projects are not currently in scope of the connections methodologies and codes listed above).

The consultation also sets out (in Annex B) the Government’s current working practice in relation to the Connection Accelerator Service project selection process to identify “Strategic Demand”. We explore this in more detail below in the “What is Strategic Demand” section .

Proposal Three: Strategic Alignment of Data Centre Connections

Following the implementation of the queue management measures being developed under Proposal 1 (Queue Management), using section 165A of the Energy Act 2023 (as inserted by section 18 of PIA) to designate plans, and using section 14 of the PIA 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. The overall intention behind this is to align data centre connections to regional infrastructure targets set out in a data centre strategy (which is 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. 

Importantly, the Government acknowledges the need to consider protections for viable data centre projects in advanced stages of development.

When are the Proposals Planned to be Implemented? 

The consultation indicates that the Government intends to implement the proposals in a phased manner, with the first two proposals (Queue Management and Prioritisation Mechanism) currently being intended to be implemented before NESO reopens the process for transmission connection applications. The consultation also indicates that the Queue Management reforms are likely to apply at distribution and transmission level to avoid inconsistency and the gaming of different regimes at transmission and distribution level, whilst the Prioritisation Mechanism reforms will only apply at transmission level initially.

The third proposal (Strategic Alignment of Data Centres) will then 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.

What is Strategic Demand?

Taking into account the significance of a project being designated “strategic demand”, the consultation goes on to set out in Appendix B at a high level the three stage process (and some of the criteria) by which the Connection Accelerator Service (CAS) will determine strategic demand. 

Stage 1: Government departments will 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 will also be considered. Critically, each project must have sponsorship from a relevant government department or MSA to ensure alignment with wider policy objectives and regional priorities. The relevant Government 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 will be assessed to determine their strategic importance. Only projects that meet minimum criteria will progress. Projects will be assessed under a framework and scoring system, developed jointly by DESNZ and the National Infrastructure and Service Transformation Authority, according to economic and social priorities, with the CAS team scoring on a 1-4 Likert scale against each relevant criteria, which will then be totalled for comparison. The intention is that projects would be scored based on either an economic or social objective, with the Economic Criteria being:

• Capital investment;
• Long-term jobs created or safeguarded;
• Alignment of project sector with Industrial Strategy analysis on Growth subsectors,

and the Social Criteria being:

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

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

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 will 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.

Taking into account the above and the proposed amendments to the Project Designation Methodology at Annex C of the consultation and the worked examples at Annex D of the consultation, it is clear that Government has taken the view that central Government (rather than NESO or any other body) should be the decision maker as to what amounts to “strategic demand” with NESO then being required to reflect the Government’s decision, but with regional support being crucial to whether a project may be designated “strategic demand”, together with the social and economic benefits of a particular project as assessed against any other project. 

What steps should those in the GB Data Centre sector be taking?

Given the significance of any prioritisation mechanism to a data centre’s potential grid connection date, we suspect every data centre developer and operator may want to (to the extent they are not already as part of an AI Growth Zone process or otherwise and potentially before any consultation proposals are implemented) start liaising with relevant key Government Departments and the applicable Mayoral Strategy Authority and prepare and put forward the best possible case for why their project(s) should be designated “strategic demand” and assist the relevant sponsor put forward the relevant submissions to the CAS team. As part of this, developers will likely want to gain as much information as they can from Government and the CAS as to the criteria a project will be assessed against and then potentially optimise their project(s) to try and achieve the “best score” taking into account this criteria.   

More generally, we recommend that all interested parties respond to the current consultation, with a potential focus on the Prioritisation Mechanism and any protections available for advanced projects. 

We suspect that many will have strong views on the correct balance between helpful and/or necessary coordination and the risk of central planning being made by decision makers that potentially lack relevant technical and/or market knowledge, with the central planning process itself also potentially becoming highly political at a local and national level. 

If you have any questions in relation to the consultation or data centre developments more widely, please do get in touch with Alec Whiter or Ros Harris.  

This article was written by Alec Whiter, with assistance from Hannah Groombridge.