Government to tackle speculative demand grid connection requests
Summary
DESNZ will enable government to prioritise strategically important demand projects (AI data centres, industrial sites) in transmission connection queues while requiring higher financial commitments from developers to tackle speculative applications. The demand connection queue grew 460% in six months to June 2025, creating waits up to 15 years. Ofgem will consult on increased deposits or fees for queue participants who miss milestones.
Why it matters
This administers scarcity through government priority lists rather than pricing it through higher charges for all queue participants. Data centres and AI Growth Zones gain preferential treatment, while other demand projects face longer waits and higher barriers — a transfer from industrial users to tech companies dressed as growth policy.
Key facts
- •Demand connection queue grew 460% in 6 months to June 2025
- •Connection waits up to 15 years
- •Government will publish priority project lists
- •Ofgem consulting on increased financial requirements
- •AI Growth Zones get priority access and electricity bill discounts
Timeline
Areas affected
Related programmes
Memo
What this is about
DESNZ is intervening directly in transmission connection queues to prioritise "strategically important" demand projects — primarily AI data centres and industrial sites — while making it more expensive for developers to hold queue positions. The demand connection queue exploded 460% in six months to June 2025, creating 15-year wait times that the government argues are clogged with speculative applications.
This represents a fundamental shift from market-based queue management to government-directed industrial policy. Rather than using price signals to allocate scarce transmission capacity, ministers will pick winners through priority lists while Ofgem increases financial barriers for all queue participants. The policy frames this as tackling speculation, but it's really about accelerating AI infrastructure deployment at the expense of other demand projects.
Key points
Government priority mechanism: DESNZ will publish lists of "strategically important projects" that jump to the front of connection queues as capacity becomes available. AI Growth Zones and data centres get explicit preferential treatment, alongside electrified industrial sites and EV charging hubs. This bypasses normal chronological queue ordering.
Increased financial requirements: Ofgem will consult on higher deposits or fees for all queue participants, payable when developers miss key milestones. This applies universally but disproportionately affects smaller projects with tighter financing constraints — effectively pricing out competition for priority projects.
Data centre connection process: The government will implement "strategically aligned" processes specifically for data centres, prioritising facilities near existing high-capacity grid infrastructure to minimise reinforcement costs. AI Growth Zone locations get additional electricity bill discounts and support for private high-voltage connections.
Queue scope: The 460% growth in demand connections occurred over just six months to June 2025, indicating the scale of speculative activity. Current wait times reach 15 years for transmission connections, making this intervention economically significant for any industrial development requiring substantial power.
Regulatory coordination: NESO will implement the technical queue management while Ofgem handles the financial requirements. The Department retains control over strategic project designation, creating a three-way governance structure that centralises priority decisions in ministerial hands.
What happens next
Immediate consultation: The DESNZ consultation on strategic demand connections closes 15 April 2026. This covers the priority list mechanism and government selection criteria for strategically important projects. Industry responses will shape how broadly or narrowly the priority categories are defined.
Ofgem financial requirements: Ofgem will shortly launch its own consultation on increased deposits and milestone fees for queue participants. This runs parallel to the DESNZ process but affects all demand connections, not just priority projects. The timing suggests coordination to implement both changes simultaneously.
AI Growth Zone integration: The policy links directly to planned AI Growth Zone reforms that provide priority grid access and electricity bill discounts. These zones create geographic clustering of priority treatment, concentrating benefits in designated areas while other locations face longer connection times.
Connections Accelerator Service: DESNZ will update this Industrial Strategy commitment later in 2026, extending fast-track support beyond the current scope of data centres, manufacturers, prisons and hospitals. This suggests the priority mechanism may expand to other sectors.
Implementation timeline: No specific dates are provided, but the policy builds on NESO's success in cutting the generation connection queue by over half. The demand-side reforms likely target similar timeframes to show progress before the next election cycle.
Private connection support: Developers in AI Growth Zones may get assistance building their own high-voltage infrastructure rather than waiting for network operators. This creates a two-tier system where priority projects can bypass standard connection processes entirely through private investment.
The policy creates winners (tech companies, designated industrial users) and losers (other demand projects, ratepayers funding discounts) through administrative allocation rather than market pricing. Success depends on whether government priority-setting proves more efficient than price-based queue management — a proposition that contradicts decades of UK energy market liberalisation.
Source text
* New reforms to tackle speculative grid connection applications which have seen the queue for demand connections to the transmission network grow by 460% in just 6 months * Government will prioritise strategically important projects including AI data centres and industrial sites that can deliver growth and jobs * Measures will support clean energy superpower mission and Industrial Strategy, backed by once-in-a-generation reforms to connect more clean power and upgrade the grid Projects that drive growth and jobs will be powered up faster as government consults on [new powers to clamp down on speculative electricity grid connection applications](https://www.gov.uk/government/consultations/accelerating-electricity-network-connections-for-strategic-demand). The queue for demand connections to the transmission network has been swamped with applications, growing by 460% in the 6 months to June 2025. Speculative applications are inflating the pipeline, delaying connections for strategically important projects. This has contributed to waits of up to 15 years for projects to connect to the grid. To address this, the government is consulting on measures to tackle speculative applications, address the oversubscribed queue, and accelerate viable projects that will benefit Britain. This includes data centres and AI Growth Zones, EV charging hubs and electrified industrial sites to revitalise Britain’s industrial heartlands. These measures will support the government’s clean energy superpower mission and maintain energy security by tackling backlogs in the queue, while unblocking projects that are vital to innovation, economic growth and decarbonisation. This builds on major progress over the past year to clean up the connections queue for clean energy projects - cutting it by more than half - and on new powers secured through the Planning and Infrastructure Act to prioritise investment-critical projects, delivering on an Industrial Strategy commitment. Energy Minister Michael Shanks said: > Industries that can bring real economic benefits are ready and waiting to be powered up, but the queue for grid connections has grown exponentially due to speculative applications. > > We will prioritise the projects, including AI datacentres and industrial sites, that are ready and needed to deliver growth and jobs for communities across Britain. AI Minister Kanishka Narayan said: > The AI revolution is already making breakthroughs from health to clean energy, a reality. The UK is home to Europe’s leading AI ecosystem, with firms like Nscale and Wayve pulling in billions of pounds worth of investment. > > Delivering data centres - which we’re turbo-charging through our AI Growth Zones - is fundamental to this work, and all of this relies on access to the grid. These timely reforms will help us move at pace, to seize AI’s potential to help build a wealthier and fairer Britain. As well as prioritising connections for key projects, the reforms aim to create a fairer, more efficient system by: * strengthening the conditions for joining and remaining in the queue, to tackle speculative applications. Ofgem will shortly be consulting on its preferred conditions, which could include increasing the financial requirements for developers in the queue, such as deposits or fees which would be payable if key milestones are not met * enabling government to publish a list of strategically important projects including AI Growth Zones, which will be at the front of the queue as capacity is freed up or created * moving to a strategically aligned process for data centre connections, so the government can deliver on its AI ambitions while balancing the needs of the energy system. For example, prioritising connections for facilities that are close to parts of the grid with high capacity, reducing the need for unnecessary new infrastructure The government is also delivering the Connections Accelerator Service, an Industrial Strategy commitment which is supporting key projects, from data centres and manufacturers to prisons and hospitals, to secure a faster connection – with further updates expected later this year. Planned AI Growth Zone reforms will provide priority access to the available capacity on the grid, with data centres in some AI Growth Zone locations benefitting from significant discounts on their electricity bills. Developers could also be supported to connect their own high voltage lines and substations to power their data centres – rather than waiting for network operators to do it – driving down costs and accelerating progress. It follows the government’s once-in-a-generation reforms to clean up the queue for clean energy projects looking to connect to the grid, which grew 10-fold in just 5 years. The National Energy System Operator has now cut the queue by over half by prioritising the projects that are ready and needed to help deliver clean power by 2030, with new grid connection offers currently going out to developers. This will help unlock £40 billion a year of mainly private investment while saving billpayers £5 billion by removing the need for unnecessary grid reinforcement. Alongside this, the government is delivering the biggest upgrade in Great Britain’s electricity network in decades to help deliver clean power, end reliance on volatile fossil fuel markets, and bring down bills for good. Kayte O’Neill, NESO Chief Operating Officer said: > The surge in demand applications shows the strength of investment interest across Great Britain, but the demand connections pipeline must reflect projects that are credible, ready and committed to progressing. > > We are committed to working with government, industry and Ofgem to prioritise strategically important projects, while removing speculative applications. This will ensure data centres, industrial sites and vital public services can access clean, reliable power, while also supporting growth, innovation and jobs across Britain. Eleanor Warburton, Ofgem Director for Energy System Design and Development said: > There must be bold action to deal with the growing bottleneck in demand projects connecting to the grid. Ofgem is consulting on tough reforms to block or remove unviable, stalled or speculative projects from the queue - and these are important further steps from government in prioritising and fast-tracking those projects which will drive growth, jobs and innovation. Matt Evans, COO and Director of Markets, techUK said: > These connection reforms are a positive step forward and must reflect the value of different types of data centre and compute capacity both within and outside of AI Growth Zones, which are all critical for the UK’s 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. James Tyler, UK Managing Director, Equinix said: > Data centres underpin the UK’s economy, so it’s essential that we have the physical capacity, in the right locations, that support UK data regulations, protections and sovereignty rules. Equinix strongly supports the effort to prioritise and accelerate viable projects, and we’re working closely with the government and TechUK to ensure reforms serve the public in the right way as well as mirror the demand we’re seeing from customers. ## Notes to editors The [government’s consultation on the reforms](https://www.gov.uk/government/consultations/accelerating-electricity-network-connections-for-strategic-demand) closes to responses on 15 April 2026.