UK Connections Reform – Battery storage over-capacity

DESNZ and Ofgem joint letter

On 16 April 2026, the Department for Energy Security and Net Zero (“DESNZ”) and Ofgem published a joint open letter addressing the delivery of the UK Connections Reform and, in particular, the over-capacity of battery storage projects advancing to Gate 2. The letter confirms that, while the connections reform process has successfully filtered out 221GW of projects, the volume of battery storage projects advancing to Gate 2 materially exceeds the capacity ranges set out in the Clean Power 2030 Action Plan (“CP30”). Specifically, there is an excess of 14.8GW of BESS project capacity above the top of the CP30 battery range for 2030, and 61.7 GW above the projected system need in 2035. The letter calls on developers to review the viability of their project’s business case, while DESNZ and Ofgem engage with network companies on “practical mitigations” to the effects of the surplus capacity, such as the use of bay-sharing.

DESNZ and Ofgem also identify other methods by which the proposed “attrition” may be achieved.  The letter references a code modification proposal that was granted urgency on 2 April 2026.  Connection Use of System Code (“CUSC”) modification proposal CMP470 proposes the introduction of an “Oversubscribed Technologies Commitment Fee” (“OTCF”) to encourage non-viable projects to leave the queue. This OTCF, if approved, would be a fully securitised fee that would apply to all projects in an oversubscribed technology type, in addition to the cancellation charge.  The final modification report is due to be submitted to National Energy System Operator (“NESO”) by 30 June 2026.

Notwithstanding the various methods suggested to reduce the surplus of battery storage projects advancing to Gate 2, DESNZ and Ofgem suggest that they remain committed to ensuring a market environment that supports 23-27GW grid-scale batteries by 2030, as set out in the 2025 Clean Flexibility Roadmap.

What should I do?

The open letter strongly encourages developers to review their positions and respond to connection offers in a timely fashion. Projects that are unlikely to proceed should exit the queue promptly; the letter warns that the later non-viable projects leave, the greater the risk of unnecessary network redesign, knock-on impacts for other projects and increased costs for bill-payers.

NESO’s annual consultation on its connections methodologies also raises the possibility of disapplying certain protections (under clauses 3a and 3b), so that only battery projects with a revenue support scheme would be eligible in the next connections window. This could affect an additional 8 to 20 GW of battery projects currently in Gate 1.  All stakeholders are encouraged to respond to NESO’s annual consultation, which invites views on whether further steps should be taken to address the battery surplus.

What else do I need to know about battery storage and connections reform?

The over-capacity issue has arisen in part because of the ‘protection’ measures built into the connections reform methodologies for well-advanced projects - those with planning consent, Capacity Market agreements or near-term connection expectations. Battery storage projects have been able to secure planning consents more quickly than other technologies, which has resulted in a materially higher level of battery progression to Gate 2 than was anticipated.

The letter also recognises that some Gate 1 battery projects may secure Long Duration Electricity Storage (LDES) Cap and Floor agreements, which would make them priorities for connection by 2030 in support of Clean Power 2030 ambitions.

Caroline Clapham, Partner in our Global Energy Group, comments:

“This joint letter sends an unambiguous message to the battery storage sector: with nearly 62GW of surplus battery capacity above projected 2035 system need still in the connections queue, developers without a genuinely viable business case should expect to be squeezed out through tighter eligibility criteria and increased financial commitments.  The prospect that future Gate 2 offers may be restricted to BESS projects with a revenue support scheme would significantly change the market for merchant storage and reshape the competitive landscape for new investment.”

Further reading on Connections Reform and Battery Storage

UK: NESO update timeline for Connections Reform offers
UK: Ofgem seeks views on LDES cap and floor licence conditions
Energy year in review