The Department for Energy Security and Net Zero (DESNZ) has confirmed it will prioritise strategic demand and strategically align datacentre connections to the grid. That came on 28 October in its response to a consultation that drew 156 responses from across the industry.
The response completes a consultation that ran from 11 March to 15 April using powers taken under the Planning and Infrastructure Act to manage demand-side connections.
It follows reforms that have already deprioritised up to 300GW of battery and solar capacity from the connection queue, as demand for electricity heads towards more than doubling by 2050. The 156 responses spanned developers, industry bodies and trade associations, network operators, local and mayoral authorities, consultancies, investors and technology suppliers. The largest single group, 42, came from demand-side project developers.
The programme is built around three pillars – Curate, Connect and Plan. Ofgem leads Curate, around speculation and queue management, and Connect, on flexibility and connection choice. Meanwhile, the government leads Plan, covering prioritisation of strategic demand and strategic alignment of datacentre connections.
Support for prioritisation was broad but not unanimous. Among demand-side project developers, 81% backed the introduction of prioritisation mechanisms, and 80% of non-datacentre demand developers agreed, arguing that strategic importance helps direct scarce capacity to projects that deliver wider economic and societal outcomes.
A further 14% of respondents were neutral, their support conditional on clear, published criteria for what counts as strategic demand. Eight respondents – five of them private individuals – disagreed. Investors warned that confidence depends on credible, well-sequenced implementation, and that government priorities could change over time.
On queue management, there was widespread agreement that speculative and non-viable projects have crowded out deliverable ones. Respondents backed datacentre-specific financial commitments but preferred refundable deposits tied to delivery milestones over non-refundable fees, and cautioned against extending charges to small businesses and low-margin sectors without affordability checks.
Respondents also stressed the importance of whole-system coordination and argued that demand-side reform must align across transmission and distribution and coordinate with water, land and, in some cases, gas infrastructure, rather than shifting bottlenecks elsewhere.
On aligning datacentre connections with regional infrastructure targets, half of the 137 respondents to that question agreed, a third were neutral, and 13% disagreed. Proponents said alignment would improve coordination between the grid operator and government, reduce unnecessary reinforcement and lower curtailment.
The government said it will take forward capacity reallocation, reservation and in-batch acceleration using Planning and Infrastructure Act powers, in time for the next grid application window. Strategic alignment of datacentre connections will follow post-2030, tied to regional infrastructure targets. Auctions for demand capacity remain under consideration, but the government said it is not committing to that at this stage.
Alongside the response, Ofgem is consulting on a datacentre commitment fee of between £237,500 and £712,500 per megawatt of contracted capacity – equivalent to 2.5% to 7.5% of average project capital expenditure – to deter speculative demand.
Flexibility measures, including alternative connection agreements and voluntary flexibility services, will continue through the Connect workstream, along with a possible last-resort mechanism to curtail demand in security-of-supply emergencies. The government will also work with the National Energy System Operator (NESO) to identify locations with spare capacity before 2030.
Taken together with the datacentre covenant and the draft National Policy Statement, the response completes a coordinated push during Budget week to clear the connection queue of speculation and steer scarce grid capacity towards the datacentres the government deems strategic.
