An update is coming this Autumn from Ofgem on the package of measures it’s developing to accelerate demand connections, according to a recent update from the UK Government on Clean Flexibility.

The new measures are being developed by Ofgem in collaboration with the Government’s Department for Energy Security & Net Zero’s (DESNZ’s) and the National Energy System Operator (NESO).

“Demand connections reform will be critical to support timely access to grid capacity for flexible demand across both distribution and transmission networks,” said DESNZ as part of the update.

The news that Ofgem plans to provide this update follows on from the regulator publishing the results of a “Call for Input” consultation last month, in which the regulator received feedback from 120 different stakeholders on a handful of ideas surrounding demand connections reform.

Oversubscribed demand queue

Like many interconnection queues around the world – including NESO’s own generation queue which is currently undergoing reform under the Gate 2 to Whole Queue (G2TWQ) process – GB’s demand connection queue is hugely oversubscribed.

In December 2025, NESO revealed that cumulative transmission-connected demand requests amounted to almost 100 GW – a figure far exceeding typical country-wide electricity demand.

Even during the recent heatwave that impacted the country towards the end of June this year, where temperatures in some areas exceeded 35 degrees celsius, NESO’s peak electricity demand topped out at 31.74 GW.

Financial mechanism

The package of measures being developed to deliver on demand connections reform is centered around three key pillars, entitled “curate,” “plan” and “connect.”

Leading the “curate” portion of the reform package, Ofgem aims to ensure that the queue is only made up of “viable” projects through “strengthening queue entry and ongoing membership requirements.”

With this in mind, the recent consultation carried out by Ofgem centred around the introduction of a new financial mechanism, alongside increased readiness and progression requirements.

“We launched this review to address a multifaceted challenge caused by a sharp rise in demand projects seeking connection, particularly data centres,” said Ofgem back in March when the consultation was first launched.

Most interestingly, a 63% majority of consultation respondents are in favour of introducing some form of financial mechanism to the demand connection queue, with 25% not expressing a view and a remaining 12% not in support of this.

Ofgem floated several potential financial mechanisms as part of its consultation, ranging from refundable up-front deposits to non-refundable fees to be paid upon offer acceptance.

The most popular idea amongst respondents was the introduction of a deposit that increases over time and becomes payable by data centre developers if the project fails to meet certain milestones.

Similarly to the progression commitment fee (PCF) that’s been introduced by NESO as part of its generation queue process, developers would then be refunded when certain milestones were achieved.

Respondents in support of this mechanism argued that it was the most balanced approach brought forward by Ofgem, and would “encourage self-termination” of projects with “limited prospects of delivery.”

Despite being in favour of a PCF-style arrangement, some respondents expressed caution over implementing an identical mechanism to that which has been deployed for the generation connections process.

It was noted by many that “demand developers often have different development profiles” to that of generation developers and applying “the same default assumptions … would not be appropriate.”

Additionally, with the new generation interconnections process very much still in its infancy, some respondents also wanted to monitor the PCF-arrangement before implementing a similar mechanism for demand.

On the opposite side of the spectrum, the introduction of a non-refundable fee attracted the lowest level of support, with respondents considering it to be a “blunt barrier to entry” that would provide “no continued incentive” to meet future milestones.

Some respondents argued that this sort of non-refundable fee could even do the opposite of what’s intended and create a “perverse incentive for speculative projects to remain in the queue indefinitely.”

With this in mind, Ofgem decided not to progress any further with non-refundable fees, concluding that they would “provide weaker incentives for self-termination and timely progression” compared to other options.

Readiness and progression requirements

When it comes to strengthening readiness and progression requirements, an overwhelming 72% majority of respondents were in support, with just 5% not in support and 23% not expressing a view.

Ofgem sought views from industry on a wide-range of potential measures, including requiring developers to provide evidence of financial backing beyond stated intentions, securing planning consent and also providing proof of securing long-lead equipment.

Despite industry sentiment being very mixed in this part of the consultation, Ofgem has decided to progress policy development on financial backing, and hasn’t ruled out requiring developers to provide evidence of procuring long-lead equipment, such as transformers.

Based on consultation feedback and due to the variation in planning processes throughout the country, Ofgem decided not to require developers to obtain full planning consent.

“Instead, we will continue to focus on alternative readiness measures that provide a clearer, more consistent and more proportionate indication of project maturity,” said Ofgem.

NPM is tracking over 250 individual data centers throughout the United Kingdom.