A power connection is a critical ingredient for any data centre project, and in recent years in Great Britain it has become harder to obtain the power than the land required to develop facilities. It is now apparent that the existing approach to power connections in Great Britain is no longer fit for purpose. The regulator Ofgem has itself acknowledged that the waiting times for new connections are too long and this is one of the factors holding back data centre development.

As part of the UK Government's current focus on data centre development (in part to support its AI strategy), the National Energy System Operator (NESO) has been tasked with reforming the connection process. The reform programme – which has already taken almost two years – reached an important milestone in April, when Ofgem approved the new methodology, and we are now moving into the implementation phase.

Which projects are covered by the reforms?

The reforms apply to data centre projects which are seeking to connect to the transmission system. The reforms do not apply to data centre projects which are seeking a connection to the distribution network. In England and Wales, connections at a voltage higher than 132 kV constitute transmission. In Scotland, connections at 132 kV and above constitute transmission.

What's changing?

The general principle of the reforms is to move away from an approach of 'first come, first served' towards an approach of 'first ready and needed, first connected' – prioritising connections based on their readiness and on strategic alignment.  

The newly introduced connections methodology introduces Readiness Criteria and Strategic Alignment Criteria. These criteria will be applied to the existing connection queue this year (Gate 2 to Whole Queue process), and then as standard going forward.

Because data centres are demand connections rather than generation, they are automatically deemed to meet the Strategic Alignment Criteria.

Readiness Criteria

In high-level terms, data centres will need to demonstrate that they satisfy one of the following:

  • Land – freehold, leasehold (20+ years) or option (3+ years) meeting the minimum acreage requirements for the technology type.

OR

  • Planning – where following the Development Consent Order (DCO) process.

What's next?

The licence and code changes approved by Ofgem are now subject to a standstill period to allow for challenge.

The Gate 2 to Whole Queue process commence in July. All projects holding accepted transmission offers will need to submit evidence that they meet the new criteria. Having assessed eligibility, NESO will then issue revised offers based on the reformed queue. These are expected in the Autumn for projects connecting before the end of 2027.

This is a key change for all developers of data centre facilities. It will inform the approach to obtaining land and planning as well finance requirements as the possibility of power on accelerated timescales to the current queuing system will change the finance available and radically change conversations with potential customers/tenants.

For further information on the connection reform programme, contact Gus Wood or James Stanier or from our Energy team or Jocelyn Paulley, co-leader of our Data Protection and Cyber Security sector.