The proposals – which include the introduction of a commitment fee and new project progress milestones – come as demand connection applications have surged from 41 gigawatts (GW) to 125 GW, in under a year. This rise is driven largely by data centre projects, accounting for at least 80 GWs.
The reforms will help protect consumers, improve confidence in network planning and clear the way for viable projects to connect faster.
The regulator is proposing a new Data Centre Commitment Fee, which would be paid by large data centre developments when accepting a connection offer. The fee would be refunded when the project reaches energisation and forfeited if the project exits the queue early. The fee would be set within a proposed range of £237,500 to £712,500 per megawatt, equivalent to around 2.5 percent to 7.5 percent of average project costs.
The proposals are aimed at tackling speculative projects from securing scarce network capacity without any firm intention to connect, ensuring the queue enables investment ready, viable projects.
The proposals from the regulator follow a sharp increase in demand connection applications, with contracted demand offers increasing from 41GW to 125GW between November 2024 and June 2025, driven largely by demand from data centre projects. Ofgem is concerned that a significant number of projects in the queue may not ultimately proceed, potentially delaying viable developments and creating misleading signals about future network investment needs.
Since the introduction of wider connections reform measures, around 7.8GW of projects have been accelerated by an average of six years, helping to bring forward investment and enabling projects to connect much sooner than would otherwise have been possible.
Ofgem expects these reforms to have a similar impact on demand connections, helping ready projects secure timely access to the grid while freeing up capacity held by speculative applications.
Alongside the proposed fee, Ofgem is consulting on new Data centre specific queue management milestones that would require developers to demonstrate tangible progress through evidence such as financial capability, commercial maturity and procurement activity if they wish to retain their place in the queue. Together, these measures are designed to ensure scarce grid capacity is used for projects that are actively progressing towards delivery, rather than speculative projects that may never connect.
“Britain's electricity demand connections queue has more than tripled in size in less than a year, and consumers should not bear the risks created by speculative projects taking up space in the system” said Ofgem’s Director for Energy System Design and Development Eleanor Warburton. “The connections system must work for consumers and for the projects that are ready to invest, build and connect. Where speculative projects take up space in the queue, they can delay other schemes and create uncertainty about future network needs. We're consulting on a new data centre commitment fee and stronger requirements to ensure projects demonstrate real commitment before securing scarce network capacity. These reforms will help free up capacity for viable projects, improve confidence in network planning and support faster connections where they are needed most. By helping projects that are ready to move forward and connect more quickly, these reforms can also support economic growth, bringing forward investment, enabling businesses to be built and expanded sooner, and ensuring the benefits of that investment are felt across the economy more quickly.”
The consultation forms a key part of Ofgem, DESNZ and NESO’s wider Demand Connections Reform programme, which is built around three pillars:
Curate: to ensure only viable projects enter and remain in the queue
Plan: to support government-led prioritisation of strategically important projects
Connect: to accelerate physical grid connections
Demand for electricity connections is growing rapidly as sectors across the economy electrify and new large-scale power users seek access to the grid. Data centres currently account for a significant proportion of demand in the connections queue, with around 73 GW referenced in Ofgem's consultation.
Ofgem's assessment is that a queue containing a large number of non-viable projects risks slowing down projects that are ready to proceed, while also making it more difficult to plan future network investment efficiently. The reforms are intended to create a queue made up of projects that are both viable and capable of progressing to connection.
The change has been welcomed by Shilpika Gautam, Founder and CEO of Opna, the London based company building the market infrastructure for critical power equipment, who said that the changes will help combat the lack of grid capacity.
“Data centres should have to earn the right to site, and they should have evidence that the connection queue they are sitting in is one where they actually intend to deliver, and that they have their ducks in a row to make that happen” said Ms Gautam. “We do not have unlimited grid connection offers to hand out. Data centres are competing with renewables, with industrial projects, with transport. So, it is quite serious how we think about who gets to go first in the queue and what evidence sits behind that. It is almost like a bond, and I like that it looks more like a bond. The fee is linked to the project's total megawatts, with a minimum of 40 megawatts. You accept the connection offer, you post the security, and when you energise and go live with your customers, you get the money back. If you do not deliver, that money goes back to consumers through lower network charges. Ofgem could have made this more like a tax. That is closer to what is happening in the US, where you are looking at bringing your own generation or non-refundable fees designed to guarantee no rate increases for consumers. Britain has said something different. Make good on the connection offer, and you get your money back. I think that is really smart.”
However, she also argues that there is further work that can be done on fixing the crucial equipment supply chains these projects rely on:
“Even the most efficient teams we work with know how hard it is to lock in long lead items” added Ms Gautam. “They are just not used to planning for it at Day 0. Procurement usually happens after FID. This asks developers to think about their supply chain right at the start, and to treat it as evidence. A connection date is set in a factory, not in a queue. The most interesting part of this is what will count as evidence of access to the supply chain. That detail decides whether it works.”
Shilpika’s insights helped contribute to Ofgem’s proposal during the consultation period.
Opna works with data centre operators, renewables developers, and industrials across Europe to help them secure and finance transformers, switchgear, HV cables, and generators on their project timelines, with capital aligned to how infrastructure is actually built, and the flexibility to adapt when grid connections, planning, and funding do not all land at once.
The consultation is open until 16 September 2026.
For additional information:
