Connections reform and battery capacity update
Summary
Ofgem and DESNZ confirm 221 GW has been removed from the connection queue under the new Gate 2 / Phase 1 process, with self-selection into Gate 1 filtering out additional capacity. Battery storage has progressed to Gate 2 at a materially higher level than planned: 14.8 GW above the Clean Power 2030 Action Plan range and 61.7 GW above projected 2035 system need. Protection measures for projects with planning consent, Capacity Market agreements or near-term offers, combined with batteries' faster consenting speed, are named as the cause.
Why it matters
The reform has cleared the dead weight — 221 GW gone — but retained protections that favour projects able to move quickly through planning. Batteries clear planning faster than most other technologies, so the protection rules have systematically advantaged them. The letter signals the authorities are now considering whether only battery projects with a revenue support scheme should qualify in future windows, which would insert a new gate ahead of the market's own attrition mechanism. An urgent code modification offering a financial attrition measure has been granted urgency status, meaning a price-based exit signal is being considered alongside potential administrative filtering. Whether queue discipline is achieved through prices (market attrition) or administration (eligibility filters) is the live question.
Key facts
- •221 GW removed from main queue under new process
- •Battery surplus: 14.8 GW above CP2030 Action Plan range for 2030
- •Battery surplus: 61.7 GW above projected 2035 system need
- •CP2030 target for grid-scale batteries: 23-27 GW by 2030
- •Additional 8-20 GW of Gate 1 battery projects could qualify for next Gate 2 window
- •Code modification proposing financial attrition measure granted urgency
- •Authorities considering disapplication of Clause 3a/3b protections — only batteries with revenue support scheme eligible in next window
- •LDES Cap and Floor agreements would keep those projects as 2030 priorities
Areas affected
Related programmes
Memo
What this is about
Ofgem and DESNZ have published a joint open letter confirming the results of the first connections queue reform and flagging an unintended consequence: battery storage has overwhelmed the prioritised queue. The Gate 2 / Phase 1 process removed 221 GW of dead capacity — projects that were not needed for 2035 or had stopped progressing — plus additional self-selection out via Gate 1. That is a genuine achievement. The queue is shorter, more credible, and closer to what the system actually needs.
The problem is batteries. 14.8 GW more battery capacity has progressed to Gate 2 than the top of the Clean Power 2030 Action Plan range, and 61.7 GW more than projected 2035 system need. The cause is structural: protection rules designed to shield well-advanced projects (those with planning consent, Capacity Market agreements, or near-term connection offers) have systematically favoured batteries because batteries clear the planning system faster than any other technology. The protections were technology-neutral in design but technology-selective in effect. The authorities now face a choice between letting the market price out surplus capacity or imposing administrative filters to cap it.
Key points
221 GW removed, but the queue is still oversized for batteries. The reform has done what it was supposed to do for most technologies — capacity in Gate 2 broadly matches the 2030 ranges. Batteries are the outlier. The surplus is not marginal: 14.8 GW above the 2030 range ceiling and 61.7 GW above 2035 system need means roughly three times more battery capacity is queued than the system requires.
Protection rules created the surplus. Projects with planning consent, CM agreements, or near-term connection expectations were shielded from the filtering process. Batteries secure planning consent faster than wind, solar, or thermal projects — typically months rather than years. The letter explicitly names this speed advantage as the cause. The protections were intended to maintain investability; they have instead created a new queue congestion problem specific to one technology.
A financial attrition mechanism has been granted urgency. An industry-proposed code modification would impose a financial cost on holding a queue position, forcing projects without viable business cases to exit. This is a price signal — it makes the free option on grid capacity expensive enough that speculative positions get surrendered. The letter notes this has been granted urgency status, meaning the code panel and Ofgem consider the problem time-critical. The letter also emphasises that non-viable projects must leave before network companies commit capital expenditure on connections and reinforcement that may never be needed.
Administrative filtering is also on the table. NESO's annual methodology consultation proposes disapplying the protection clauses (3a and 3b) so that only battery projects with a revenue support scheme — effectively, Long Duration Energy Storage Cap and Floor agreements — would qualify for future Gate 2 windows. This would filter out merchant batteries entirely from future rounds. An additional 8–20 GW of Gate 1 battery projects could qualify for Gate 2 in the next window, so without intervention the surplus grows.
The letter signals pragmatic network build. Network companies are told to reflect the surplus and likely attrition when planning reinforcement spending. This is an instruction not to build for a queue that will shrink — a sensible cost discipline, but one that requires network companies to make judgements about which projects are real, which is exactly the information problem the queue reform was supposed to solve.
Bay-sharing is being explored as a practical mitigation. Expanding shared use of substation bays could accommodate more projects without proportional network spend. This is an engineering workaround, not a structural fix.
What happens next
The urgent code modification is the near-term action. If approved, it introduces a price-based exit mechanism — projects that cannot justify the cost of holding their position leave voluntarily. The timeline for urgent modifications is compressed: expect a decision within months rather than the usual year-plus.
NESO's methodology consultation will determine future window rules. Responses will shape whether merchant batteries can enter future Gate 2 rounds at all, or whether only those with LDES Cap and Floor agreements qualify. This is a significant policy choice: it would effectively require government revenue support as a precondition for grid access, inserting an administrative gate ahead of the market.
Network companies must issue accurate Gate 2 offers. The letter sets an explicit expectation that offers enable final investment decisions. Delays or errors at the offer stage — which have already plagued the reform due to data quality issues — would compound the attrition problem by preventing viable projects from committing and non-viable ones from exiting.
The core tension is unresolved. A financial attrition mechanism lets the market decide which projects survive. An eligibility filter lets the regulator decide. The letter keeps both options open, but they reflect fundamentally different views of how queue discipline should work. The battery sector — merchant by nature, fast-moving by design — is now caught between a reform that rewarded its speed and a system that may penalise it for the resulting surplus.
Source text
The Office of Gas and Electricity Markets 10 South Colonnade, Canary Wharf, London, E14 4PU Tel 020 7901 7000 www.ofgem.gov.uk OFFICIAL OFFICIAL To interested parties Email: connectionspolicy@ofgem.gov.uk Date: 17 April 2026 Open letter from DESNZ and Ofgem on connections reform delivery Dear colleagues, Thank you for your continued engagement as we progress connections reform. Connections reform is a critical enabler for our clean power by 2030 ambition which is expected to bring forward £200 billion of investment in network and project build by 2030. Under the new process, 221 gigawatts (GW) of projects that applied for firm connection agreements but were not needed for 2035, or were no longer progressing, have been moved out of the main queue. Alongside this, many projects self-selected into Gate 1, meaning the total capacity filtered out is even higher. This has created a clearer and more credible pipeline for clean power delivery. Current queue outcomes indicate that most technologies have sufficient capacity in the prioritised (Gate 2 / Phase 1) queue to meet 2030 ranges. The programme has, however, faced significant delays due to data errors in historic connection agreements, and the need for NESO and network companies to rework network studies and planning. We have been clear that further slippage is not acceptable and have set expectations for a firm, coordinated response. This includes regular public reporting against the revised timetable so industry can track progress. We continue to work closely with NESO and the network companies to oversee delivery, using refreshed and enhanced governance. At this pivotal stage in the reform process, as projects begin receiving connection offers, proactive and timely communication between network companies, NESO and developers is essential to identify and escalate any issues. The queue formation outcomes also highlight emerging risks for certain technologies, in particular, a high volume of battery storage projects advancing to Gate 2 relative to the capacity ranges set out in the Clean Power 2030 Action Plan. The government and Ofgem strongly support the deployment of electricity storage, which plays a crucial role The Office of Gas and Electricity Markets 10 South Colonnade, Canary Wharf, London, E14 4PU Tel 020 7901 7000 www.ofgem.gov.uk OFFICIAL OFFICIAL in allowing the clean, low-cost energy generated by renewables to be used more efficiently over time, thereby reducing the reliance of the power system on unabated gas. We remain committed, as set out in the 2025 Clean Flexibility Roadmap, to maintaining a market environment that supports the deployment of 23-27 GW of grid- scale batteries by 2030, and welcome the sector’s work to bring forward so many mature projects. Although the reform process removed many non-viable battery projects and significantly reduced the queue, there is still 14.8 GW above the top of the Action Plan battery capacity range for 2030 and 61.7 GW above the projected battery system need in 2035. This outcome has been driven by the number of ‘protection’ measures in the connections methodologies for well-advanced projects, such as those with planning consent, Capacity Market agreements, or near-term connection expectations. The protection measures included in the reforms were introduced to provide fairness for developers and to seek to maintain investability of near-term projects. But we recognise that the effect of these protections, coupled with the speed with which battery technologies can typically secure planning consents relative to other technologies, has resulted in a materially higher level of battery progression to Gate 2 than anticipated. We are working closely with NESO and the network companies, as well as engaging with project developers, to understand the effects of the battery surplus, as part of our broader commitment to ensuring the reforms minimise costs for consumers and support the timely issuance of high-quality, robust connection offers for all technologies in delivering our clean power and growth missions. Our shared objective is to ensure that the connections process remains fair, robust and aligned to strategic needs, while safeguarding investor confidence and protecting the interests of consumers. We will continue to monitor the impact of the battery connection surplus on this objective and are considering options to safeguard the delivery of the connections process should significant risks be uncovered. As a first step, we have been engaging with network companies on practical mitigations, such as expanding the use of bay-sharing, and are supportive of steps that can help manage the effects of the surplus while maintaining a fair and efficient process. Given battery projects operate under a merchant business model without a dedicated support scheme, we recognise that some projects will likely leave the queue, and we note that some industry parties are already proposing measures via the code modification process to encourage this “attrition” through an additional financial measure, and that this modification proposal has now been granted urgency. It will be important to ensure that non-viable projects leave the queue before the network companies have committed significant capital expenditure, both for their connection and for any wider network reinforcement, and in good time to allow their capacity to be reallocated at the next connections window. The later non-viable projects leave the queue, the greater the risk of driving unnecessary network redesign, risking knock-on impacts for other projects, and increasing costs for bill-payers. We therefore encourage The Office of Gas and Electricity Markets 10 South Colonnade, Canary Wharf, London, E14 4PU Tel 020 7901 7000 www.ofgem.gov.uk OFFICIAL OFFICIAL project developers to review the viability of their project’s business case and to respond to their offer accordingly in a timely fashion. We equally wish to reiterate our expectation that Gate 2 offers will be issued accurately, enabling developers to reach final investment decisions swiftly and supporting a credible pipeline for 2030 and beyond. Once offers are issued, we expect network companies to take a pragmatic approach to network build in delivering connections, reflecting the current surplus and likely attrition, and to assess funding commitments accordingly. We note that NESO’s annual consultation on its connections methodologies sets out the possibility for the disapplication of protections under clauses 3a and 3b, such that only battery projects that have secured a revenue support scheme would be eligible in the next window. This would address further oversupply in future windows, as it is expected that an additional 8 to 20 GW of battery projects currently in Gate 1 could qualify for a Gate 2 offer. We also recognise that some Gate 1 battery projects may secure LDES Cap and Floor agreements, which would make them priorities for connection by 2030 to support delivery of Clean Power 2030 ambitions. The consultation invites wider views on whether further steps should be taken to address the surplus of battery projects. We encourage all stakeholders to respond with their perspectives. Both government and Ofgem remain committed to ensuring that the connections process is delivered efficiently and in a way that supports strategic priorities and maintains investor confidence. We will continue to work closely with all parties to monitor the impacts of the current battery connection surplus and to consider potential actions needed to support this process. Thank you once again for your continued collaboration and commitment as we work together to ensure the connections process remains aligned with our collective ambition to deliver Clean Power 2030. Akshay Kaul, Office of Gas and Electricity Markets Minister Shanks, Department for Energy Security and Net Zero