An ordered queue: reform of the GB grid connections process

The new National Energy System Operator (NESO) is taking forward significant reforms of the electricity grid connections process, which are scheduled to go live in the second quarter of 2025. The connections reforms – often referred to as the TMO4+ reforms – are intended to address the connection delays currently resulting from the existing "first come, first served" connection applications model, and achieve the goals set out in the Government's Clean Power 2030 Action Plan (CP30 Action Plan). The reforms will have implications not just for new connection applicants, but also for most projects that currently hold a connections offer to connect to the transmission or distribution system.

The regulator, Ofgem, published a consultation on 14 February 2025, setting out its "minded to" decision to approve the key elements of the TMO4+ reforms – those elements being the code modifications CMP434 and CMP435 (relating to the Connection and Use of System Code (CUSC)), CM095 (relating to the System Operator Transmission Owner Code), and the three Connections Methodologies: Gate 2 Methodology, Connections Network Design Methodology, and Project Designation Methodology. This latest development brings the reforms one step closer to implementation. In parallel, there are also other code modifications that have been raised and which are relevant in this context – in particular, CMP448, which seeks to implement a new financial instrument requirement for connection applicants.

In this briefing we set out a summary of the key elements of the reforms, implications for different categories of projects and the timetable for implementation of the reforms.

Background: the story so far

NGESO's five-point plan

NESO's predecessor, National Grid Electricity System Operator (NGESO) first paved the way for the reforms currently being implemented with its "five-point" plan, which was launched in early 2023.

The five-point plan represented interim solutions to the queue, and was made up of the following elements:

• a Transmission Entry Capacity Amnesty which ran until April 2023, allowing connection offer holders to terminate their contracts without incurring penalties, freeing up capacity in the queue;
• updating the assumptions made in modelling the impact of new connections on the network, including, for example, by applying attrition rates to connection offer holders
• changing the modelling of network impacts of battery energy storage systems (BESS) (in particular, recognising that BESS operates for relatively short periods) and therefore allowing BESS to connect faster, while increasing capacity for other projects;
• new contractual terms, comprising progression milestones (the "User Progression Milestones") which must be satisfied by offer holders to avoid termination. This was applied not only to new projects but also certain existing connection offer holders. In particular, offer holders with a completion date post-November 2025, had two options: either to have queue management milestones applied to their current completion date or submit a modified application for a new completion date where queue management milestones will be applied; and
• offering non-firm connection options to BESS, to connect to the network sooner, but on the basis that they may be curtailed more frequently when the system is under stress.

Energy Network Association's (ENA) three-step plan

The ENA, which represents Distribution Network Operators (DNOs), also implemented reforms to address connection delays for developers seeking connection to the electricity distribution network. This plan comprised:

• the inclusion of milestones into pre-2017 generation connection contracts, progressing connection offer cancellations (including by enforcing existing milestones) and extending the insertion of milestone requirements to demand connection offers;
• improving the interaction between the transmission and distribution networks, to allow DNOs to manage connections within technical limits set by the system operator; and
• introducing more flexibility for BESS, by offering standardised "non-firm" connections that allow BESS to be connected more quickly.

Connections Action Plan

In November 2023, Ofgem and the Department for Energy and Net Zero published a joint "Connections Action Plan", which set out a vision for a connections process that "should facilitate viable projects to connect in line with their required timeframes and the required pathways to net zero". Significantly, the Plan outlined how grid connections reform would be implemented, with a dedicated Connections Delivery Board (comprising representations from Government, Ofgem, NGESO, network companies, the ENA and industry), and Government and Ofgem working closely with NGESO (now NESO) and the DNOs.

The new regime in a nutshell

The new regime being implemented through the connections reforms means that most projects seeking a new connection (or a modification to an existing connection) to the transmission or distribution system will no longer be able to apply at any time to secure a place in the connections queue. Instead, there will be set application windows. To secure a place in the queue, applicants will need to meet certain Gate 2 criteria. Applicants that are unable to satisfy the Gate 2 criteria may be eligible for a Gate 1 connection offer, which serves to provide only indicative connection details.

The Gate 2 criteria, set out in the Gate 2 Criteria Methodology, are made up of two elements:

• Gate 2 Readiness Criteria; and
• Gate 2 Strategic Alignment Criteria.

The only projects not impacted will be demand projects seeking a connection to the distribution system or very small generation projects seeking a connection to the distribution system (as these have no significant impact on the transmission system). The small embedded generation projects which will not be required to apply for a Gate 2 offer are projects under the lower limit Transmission Impact Assessment (TIA) thresholds – the current lower limit TIA is 1MW in England and Wales and 200kW in Scotland South and Scotland North.

Before the enduring arrangements commence, NESO will carry out a one-off exercise – the "Gate 2 to Whole Queue" (G2WQ) process – to determine which projects that currently hold a connection offer satisfy the Gate 2 criteria. Recognizing that the G2WQ process will apply retrospectively to many connection offer holders, projects that currently have a connection offer and that fall within certain exceptions (set out in more detail below) will be considered to satisfy the Strategic Alignment Criteria.

In terms of the general architecture of the new regime, there are three new documents (referred to as methodologies) that the NESO has consulted on and which the NESO will be required to maintain pursuant to its licence. These are:

• the Gate 2 Criteria Methodology;
• the Project Designation Methodology; and
• the Connections Network Design Methodology.

In parallel, amendments are also being made to the CUSC to implement the regime, as well as various other code and licence condition amendments.

Arrangements pending full implementation of the connections reform

Transitional Offers

In preparation for implementation of the new regime, since 2 September 2024, any new applications for a direct connection to the transmission system have been receiving a so-called "Transitional Offer". These Transitional Offers have been similar in nature to the "Gate 1" offers being introduced as part of the connections reforms (see below). In particular, Transitional Offers have only included an indicative connection date and an indicative connection location. As the application will not have been studied, no reinforcement works will be included or associated securities required.

The Transitional Offers process was not applied to BEGA, BELLA¹  or modification applications.

The application "pause"

On 15 January 2025 NESO announced a "pause" on accepting new applications from 29 January 2025 (subject to some exceptions). The pause is intended to allow NESO to get ready for implementation of the Connections Reform and therefore applies until the point at which Connection Reform is implemented or Ofgem states that it is not proceeding with the reforms (whichever happens first). The pause will apply to new applications, modification applications, BEGA and BELLA applications and Project Progressions². While Distribution Network Operators (DNOs) and Independent DNOs (IDNOs) will continue to accept and process applications for connection to the distribution system, they will not pass them through to NESO for transmission impact assessments.

Connection applications that will not be impacted by the pause are as follows:

• demand connections to the distribution system: this is because distribution-connected demand is outside of the scope of the connections reforms;
• small embedded generation under the lower limit TIA (discussed above);
• demand connections to the transmission system: these will receive a Transitional Offer, under a modified version of the Transitional Offer arrangements described above. All such applications must be made by 21 March 2025 and "clock started"³  by 4 April 2025 to processed in time for inclusion in the G2WQ process that will be applied to the existing queue when the new regime is implemented (see below); and
• some applications for modifications, where:
  • NESO and the Transmission Owners (TOs) consider that the modification application will not have a material impact on the G2WQ process (e.g. modification applications that request a delay to a customer’s existing connection date, providing it remains within the same Clean Power 2030 pathway;
  • the application relates to the safety and security of the network (e.g. asset replacements);
  • the application is a delivery-critical modification application for a project connecting before the end of 2026;
  • the application is excepted on a case-by-case basis, against set criteria determined by NESO and the TOs, which will cover:
    • possible impact against the overall project programme;
    • committed spend;
    • impact on other projects; or
  • where NESO and the TOs, on a case-by-case basis, consider that failure to admit the modification application will have a material impact on the network.

For applications submitted by 29 January, NESO and the TOs will endeavour to clock start those applications before 12 February. Significantly, any applications that have not clock started by 12 February will not be processed (unless they fall into one of the exceptions listed above).

For projects that miss the 29 January deadline, the next opportunity to apply for a connection will be when the first application window under the new regime opens – NESO has said this is likely to be in Q4 2025.

The Gate 2 Readiness Criteria

The applicant, through a Readiness Declaration, will be required to provide evidence that the project is "ready" by demonstrating compliance with the Readiness Criteria, which can be demonstrated through one of the following two routes: the project acquiring appropriate land rights or going through the Development Consent Order process – as summarised in Figure 1. The full details are set out in the Gate 2 Criteria Methodology.

Figure 1: Gate 2 Readiness Criteria

The Gate 2 Strategic Alignment Criteria

The Government's Clean Power 2030 Action Plan (CP30 Action Plan) plays a key role in establishing the Strategic Alignment Criteria.

The CP30 Action Plan sets out the capacity range for the main technologies that are expected to be deployed to allow the clean power objectives to be met, and which will therefore inform the prioritisation of projects for grid connection. As well as setting out the capacity ranges for the period up to 2030, the plan also sets out indicative capacity ranges for the period up to 2035. It is intended that a Strategic Spatial Energy Plan, to be published next year, will set out a longer-term spatial plan, building on the 2030 capacity ranges set out in the CP30 Action Plan. See Figure 2 below for the 2030 capacity ranges.

Figure 2: 2030 capacity ranges

The CP30 Action Plan, published in December 2024, will in the future be replaced by longer-term plans for the GB energy system, as summarised in Figure 3.

Figure 3: Longer-term energy plans

For most projects (in particular, the technologies covered by the CP30 Action Plan), the primary way of satisfying the Strategic Alignment Criteria will be through alignment with the generation technology capacities set out in the CP30 Action Plan – in effect, by fitting within the relevant "technology pots", as described in more detail in Figure 4. However, there are also other ways that projects can satisfy the Strategic Alignment Criteria, including protections for projects currently being progressed. The different alternative routes to satisfying the Strategic Alignment Criteria are summarised in Figure 4, with full details set out in the Gate 2 Criteria Methodology.

Figure 4: Routes to satisfying the Strategic Alignment Criteria

Gate 2 to Whole Queue

Current expectations are that the G2WQ process will commence in Q2 2025, and Gate 2 offers will then be issued to projects by the end of 2025. NESO will publish the timetable for the application window and other details, such as other key dates and milestones. The Connections Network Design Methodology sets out details of how the G2WQ process will be carried out. At a high level, the process will involve the following:

• projects are eliminated if they do not meet the Gate 2 Readiness Criteria or have not been selected for Connection Point and Capacity Reservation (a process by which NESO may reserve connection points and capacity for certain projects – e.g. CATOs);
• remaining projects are eliminated if they do not meet the Gate 2 Strategic Alignment Criteria. Depending on when the relevant projects are able to connect, they will either be considered against the 2030 phase or the 2035 phase. NESO will maintain the existing relative queue positions of projects that align to the 2030 phase. For the 2035 phase, preservation of the original relative queue order is seen as less critical, because the programme of works required to connect these projects will likely require more revision;
• as part of the G2WQ process, capacity will be "freed up" by projects that have not met the Gate 2 criteria being removed from the queue. Therefore, alongside submitting evidence that they have met the Gate 2 Readiness Criteria, projects can also submit a modification application and request that their project is considered for advancement as part of the G2WQ process, as well as changes to their point of connection;
• Gate 2 offers will be issued by NESO in batches, to successful projects. To retain their Gate 2 offer, projects will then need to continue to comply with the conditions of the offer, including any milestone requirements, to avoid termination. In this context it is relevant to note that NESO has signalled that there may be some changes to the Queue Management Milestones (with a further update to be provided in Q1 2025);
• projects that have not been successful in securing a Gate 2 offer will:
  • have their security returned to them; and
  • be issued with a Gate 1 offer (see below), unless they are a small or medium embedded project (to which the Gate 1 offer process does not apply).

The enduring arrangements

Following the one-off G2WQ process, NESO will hold Gate 2 application windows twice a year. Full details on timing have not yet been provided.

Projects that are unable to satisfy the Gate 2 criteria at the time of application will also have the option of applying for a Gate 1 offer instead. A Gate 1 offer will include only an indicative connection date and an indicative connection location (unless the project is selected for connection point and capacity reservation). Importantly, an application for a Gate 1 offer is not a prerequisite to a subsequent application for a Gate 2 offer. Moreover, only transmission connected projects and large embedded projects are eligible to apply for a Gate 1 offer (see below).

Implications for connections to the distribution system

It is proposed that for small and medium embedded generators, DNOs will carry out initial checks on whether projects satisfy the Gate 2 criteria and will then follow a process largely based around the Project Progression process that currently applies. The Statement of Works process is being removed, with Transmission Evaluation being introduced as a route for a DNO to request an Evaluation of Transmission Impact. DNOs will submit a Transmission Evaluation Application to NESO on behalf of their embedded customers, within the Gate 2 application window. The application can contain multiple embedded generator projects or one submission per embedded generator project.

Large embedded generators will be able to apply for a BEGA/BELLA Gate 2 offer throughout the year, but the DNO will still need to submit a modification application (for transmission assessment) in the Gate 2 application window. NESO will verify whether a project has met the Gate 2 criteria as part of the processing of the BEGA/BELLA application. If a large embedded generator wishes to receive a Gate 1 offer prior to having met the Gate 2 criteria, it must submit the BEGA/BELLA application to NESO in the Gate 2 application window, but no modification application is needed from the DNO – the large embedded generator will receive a Gate 1 offer from NESO based on their BEGA/BELLA application.

The ENA has advised that DNOs are still evaluating what approach will be taken in relation to projects that are not successful in securing a Gate 2 offer but are not eligible for a Gate 1 offer.

Increasing the threshold for Transmission Impact Assessments

As part of other adjustments related to the main connections reforms, NESO in January 2025 NESO raised a further CUSC modification proposal (CMP446) to increase the lower threshold for the Evaluation of Transmission Impact Assessment. It has been proposed by NESO that this lower threshold applying in England and Wales should be increased from 1MW to 5MW. It is intended that this modification should be implemented before the G2TWQ process is commenced. If it is, then, according to NESO, this would relieve around 400 distributed generation projects from having to demonstrate Gate 2 compliance. To expedite the process, Ofgem has consented to this modification proposal being treated as urgent.

New financial instrument requirement

As part of the proposed connection reforms, NESO has also been considering the introduction of a new requirement for Gate 2 offer holders to provide financial security (referred to as a "financial instrument"), to further signal their commitment to progressing their project. NESO published a "call for input" on these proposals in November 2024.

Following this call for input, NESO has now raised a new CUSC modification (CMP448) to introduce a Progression Commitment Fee (PCF) that will support future connections in the queue. The PCF will only apply to generation projects that have already progressed through the first stages of the connections process to join the future Gate 2 connections queue but have not yet initiated statutory consents and submitted a planning permission which is a requirement of Milestone 1 (which is one of the "User Progression Milestones" referred to above).

Under the proposals, NESO has indicated that the PCF will remain dormant unless a metric, which is indicative of the health of the connections queue exceeds a defined threshold. The proposed PCF applicable to a project will have an initial value of £2,500/MW, increasing at a rate of £2,500/MW at 6 monthly intervals up to a maximum of £10,000/MW for any individual project. Projects will be liable for the full value of their PCF upon termination of the project (or the appropriate portion of the PCF upon reduction of capacity) prior to successfully demonstrating achievement of Milestone 1.

If the PCF is activated, developers of projects between Gate 2 and Milestone 1 will be required to post a security against the PCF, the “Progression Commitment Fee Security” (PCFS). The PCFS must remain in place until the developer successfully demonstrates that the project has achieved Milestone 1. After achieving Milestone 1, developers will no longer be subject to the PCF if they terminate and there will no longer be a requirement to secure against the PCF.

It is currently contemplated that if Ofgem agrees, this modification will be treated as an "urgent" modification, so that it can follow an expediated timetable.

Next steps

Ofgem's consultation on its "minded to" decision to approve the TMO4+ proposals closes on 14 March 2025. Ofgem expects to make a final decision by the end of Q1 2025 (or as soon as possible after that). Ofgem is also carrying out a separate consultation on modifications to the electricity transmission, distribution and Electricity System Operator licence conditions, that Ofgem considers are required to implement the reforms. This consultation is also closing on 14 March 2025.

Authors: Justyna Bremen, Counsel; Antony Skinner, Partner; Hannah Roberts, Associate