Ofgem moves to free up grid capacity by tackling excess battery projects

Ofgem has today (17 September) launched a consultation on its minded-to position to approve the introduction of a new financial commitment for Battery Energy Storage Systems (BESS) in a major intervention to cut the oversupply of projects competing for space on Britain’s electricity grid.

The move comes as the battery queue has grown far beyond what is needed to deliver Clean Power 2030, with around 90GW of battery capacity currently either operational or in the reformed connections queue, compared with a projected requirement of around 29GW by 2035.

While battery storage has a vital role to play in a clean, flexible energy system, the scale of the queue makes it difficult to know which projects are genuinely likely to be built. This creates uncertainty for networks planning future infrastructure and risks scarce grid capacity being tied up by projects that may never connect.

The Oversubscribed Technologies Commitment Fee (OTCF) will help to ensure grid capacity is held by projects that are serious about progressing, helping networks plan with greater confidence and reducing the risk of consumers bearing avoidable costs.

Under the proposal, projects would need to demonstrate a minimum level of financial commitment, starting at £3,000 per MW and rising to a maximum of £25,000 per MW if the queue remains significantly oversubscribed.

The reforms are part of a wider package of measures from the regulator aimed at tackling speculative projects in the connections queue. In July, Ofgem published a consultation on introducing a commitment fee and clearer progress milestones for speculative data centres.

The steps also follow a joint warning from DESNZ and Ofgem in April that the battery pipeline remained heavily oversupplied, with projects in the queue far exceeding the capacity expected to be needed to deliver a clean power system.

Director for Energy System Design and Development, Eleanor Warburton, said:

“Britain has three times more battery capacity in the connections queue than the system is expected to need by 2035, which makes it harder to identify which projects are genuinely going to be built and what network infrastructure is actually required.

“The queue must reflect real projects, not placeholders. We are proposing approving the introduction of a new financial commitment to require battery projects to demonstrate they are serious about progressing, while encouraging those that are unlikely to connect to make that decision earlier.

“Britain needs the major deployment of large-scale battery storage to meet future electricity demand. These changes aim to create a more credible battery connections queue, so viable storage can connect, networks can invest with confidence, and consumers are not left paying for infrastructure that isn’t needed.”

The OTCF would be implemented using a code modification proposed by industry, giving NESO responsibility for monitoring oversubscription levels, determining whether and when it is triggered or escalated and managing projects’ financial securities, including letters of credit, guarantees and cash collateral.

It is the latest stage of Britain's ongoing grid-connections reform programme to remove speculative, unviable and stalled applicants and prioritise access for projects which are “ready” and “needed” - giving them a confirmed connection date, connection point and queue position.

Ofgem is consulting for two weeks and expects to publish its final decision later in 2026.

Notes to editors

• CMP470 is a proposed modification to the Connection and Use of System Code entitled Introducing an Oversubscribed Technologies Commitment Fee.
• Under the original proposal, the fee would activate when a technology exceeds its target requirement by more than 50 per cent and would cease to apply once oversubscription falls below 25 per cent.
• The mechanism would work through existing user-commitment arrangements. A project whose existing securities were already above the applicable fee level would not be required to provide additional security solely because of CMP470.
• Where a project leaves the queue, without energising, and the fee forms part of its cancellation charge, the money collected would be returned to consumers through Transmission Network Use of System charges. Projects that continue progressing would maintain the required financial security in line with the applicable arrangements.
• The consultation considers the original proposal and six Workgroup Alternative CUSC Modifications, known as WACMs. The alternatives vary the fee level, duration, application method and treatment of co-located projects.
• While NESO cut  40% of grid-level battery capacity from the connections queue, which failed to meet its strict criteria in 2025, 83GW is still prioritised on the new shortlist in addition to 7GW already operational. This is roughly three times the projected storage requirements over the next decade - 14.8GW above NESO’s 24GW estimate to meet the clean power target in 2030 and 61.7GW above the projected 29GW required by 2035.