DESNZ consults on cutting down electricity demand connection queue

DESNZ has published a consultation on “Accelerating electricity network connections for strategic demand”, marking the latest in a raft of related announcements including Ofgem’s Call for Input. As already stated by Ofgem, demand connections reform will be based on three pillars: curate, plan, and connect. Whereas Ofgem’s Call for Input relates to the “curate” pillar, DESNZ’s new consultation is focused on the “plan” aspect.

The "plan” pillar includes proposals to introduce new prioritisation mechanisms to benefit all strategically important demand projects and to move to a strategically aligned process for managing data centre connections specifically. Crucially, it will examine how the Government can use the powers recently bestowed by the Planning and Infrastructure Act to ensure strategically important, mature projects are granted timely access to the grid while removing speculative and non-viable applications.

Proposals and objectives

This consultation sets out the below three proposals, which will be implemented over two phases:

Proposal 1 – Queue Management: Use Section 14 of PIA to amend connections methodologies, codes and licences (as appropriate) to increase queue entry and membership requirements for data centres for the purpose of improving the process for managing connections to the system and addressing speculative applications.

Proposal 2 – Prioritisation Mechanisms: Use section 165A of the Energy Act 2023 (as inserted by section 18 of PIA) to designate plans to identify demand projects that Government considers strategically important, and Section 14 to amend connections methodologies, codes, and licences (as appropriate) so that NESO and network companies can reserve and reallocate capacity, alongside prioritising strategic demand projects in future batched queue formation exercises.

Proposal 3 – Strategic Alignment of Data Centre Connections: Use section 165A of the Energy Act 2023 (as inserted by section 18 of PIA) to designate plans and to use section 14 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.

Underpinning these proposals are four objectives:

Objective A: Safeguard fairness and efficiency of the demand connections process by minimising speculative activity and oversubscription

Objective B: Equip the connections regime to accelerate access to available network capacity for Government-identified strategic demand projects, including facilitating pre-2030 connections for critical sites such as AIGZs, where possible.

Objective C: Balance Government’s ambitions to accelerate demand connections with the effective management of system costs and maintenance of energy security.

Objective D: Establish aligned processes for strategic demand connections across transmission and distribution networks, as far as practicable.

Specific proposals under consideration include A) whether there is a role for auctions in the allocation of capacity for strategic demand connections and B) whether some categories of very large demand users, such as data centres, should be required to provide a minimum level of demand flexibility as a condition of connection.

techUK will be responding to this consultation. Members, please get in touch at [email protected] if you have any feedback or would like to contribute.

Unlocking barriers to the development of mature data centre projects is critical for the UK’s data centre industry and for the wider economy. Ensuring that viable projects can move forward, while weeding out speculative or non-viable applications, will be key to delivering the infrastructure needed to support growth. These first steps are encouraging, and the next stage will be to establish a clear definition of ‘strategically important projects’ that reflects the value and diversity of different types of data centre and compute capacity both within and outside of AI Growth Zones.

Matt Evans, COO and Director of Markets

techUK

Smart Infrastructure and Systems Programme activities

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