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Ofgem published its Curate consultation on 29 July 2026. It proposes two significant reforms for in-scope data centres seeking a grid connection in Great Britain: a new Data Centre Commitment Fee (DCCF), proposed as a returnable financial security required from offer acceptance to energisation, and additional queue management milestones requiring developers to demonstrate genuine project progression.
This article updates our previous article UK grid connections reform: impact on data centres and demand connections.
Key takeaways
- The measures are proposed to apply to data centre connections at both transmission and distribution-level and the data centre component of hybrid projects. They are relevant to those with an existing connection agreement or offer, future connection applications and projects changing their technology type to a data centre (e.g. from battery storage). Developers across these categories should assess their potential exposure now.
- Data centres of at least 40 MW would be required to secure £237,500 - £712,500 per MW of requested capacity at offer acceptance (equivalent to up to £71.3 million for a 100 MW project), with no refund until energisation. The proposed fee is significantly higher than equivalent fees in other jurisdictions and, for projects with later connection dates, could tie up security for almost 10 years (without accounting for any further connection delays). Investors and developers will need to factor this into project economics and financing structures.
- The DCCF will create further timing pressures for developers seeking to sell or obtain funding for powered land once a connection offer is received and connection terms are known. Developers will have a limited window to put in place significant financial security following offer acceptance, at a point when sale or funding arrangements may not previously have been finalised. Grace periods provide some relief for existing projects but will not eliminate this challenge.
- New queue management milestones will require data centre developers (Ofgem's preferred threshold for the new milestones is at least 10 MW rated IT load) to evidence compute offtake arrangements, procurement of long-lead electrical equipment, financial capability and technical readiness between offer acceptance and energisation. For developers not intending to self-operate, a non-binding compute offtake arrangement must be in place within just 6 months of offer acceptance; a tight deadline for developers in the early stages of project development. Failure to meet milestones risks termination of the connection agreement.
- The proposals are not yet final. Ofgem is seeking stakeholder views on the design, scale and implementation of the measures, including explicitly calling for input on key details such as the level of the DCCF. Stakeholders should consider engaging with the consultation before the 16 September deadline to ensure the reformed regime works for their business model.
1. Who do the reforms apply to?
The reforms are proposed to apply to data centre projects connecting to the transmission system, or to the distribution system (for the DCCF, if subject to a Transmission Entry Assessment (TEA)). Many distribution-connected data centres which have, so far, been out of scope of connections reform, will therefore be affected.
Projects must self-declare whether they meet the definition of "data centre service" under the Cyber Security and Resilience (Network and Information Systems) Bill.
2. DCCF – key features
Fee level: The DCCF is proposed to be a lump sum amount between 2.5% to 7.5% of the average data centre capex per MW. The average capex is assumed to be £9.5 million per MW, resulting in a proposed fee of £237,500 to £712,500 per MW. As the fee level is proposed to be tied to average capex, it will not vary depending on a project's actual projected spend.
Mechanisms are proposed to be introduced to allow NESO or Ofgem to review the level of the DCCF and the applicability threshold in future, with users having the ability to self-terminate without paying the DCCF if the fee is increased.
The proposed fee level is significantly higher than other jurisdictions requiring fees (Spain: €40,000/MW fee; Texas, USA: $50,000/MW fee in Texas; Georgia, USA: $70,000/MW). Ofgem's analysis concluded that the proposed fee range should not materially impact viable projects but the fee level is a critical point on which stakeholder feedback is sought.
Security: Projects will be required to provide security in respect of 100% of the DCCF in accordance with the existing CUSC security requirements (e.g. acceptable forms include a cash deposit, performance bond or LC) in addition to any other required securities.
The consultation assumes that CMP417 is approved. CMP417 is a code modification which proposes to move demand projects from the Final Sums methodology for cancellation charges to the User Commitment Methodology currently used for generation and storage projects, which is expected to reduce other financial securities required for data centres and other demand projects.
Threshold: The DCCF is proposed for data centres of at least 40 MW. For hybrid projects, the threshold would apply only to the data centre component of the project.
Timing: The DCCF is proposed to apply from acceptance of a connection offer (or the modification of a connection offer for another technology type to a data centre) until energisation. Security will be returned on successful energisation of the project.
Forfeiture: Security will be forfeited if the project terminates, reduces capacity or changes to another technology prior to energisation.
Exemptions and grace periods: It is proposed that projects whose energisation date is within 6 months of the DCCF being introduced will be exempt.
Grace periods are also expected to apply to existing projects: projects with a signed connection agreement would have 3 months from DCCF implementation to provide the required security and projects with an unsigned connection offer would have 2 months from DCCF implementation to provide security. On implementation, existing projects will be given the opportunity to self-terminate without paying the DCCF but Ofgem is still considering whether such projects would be still be required to pay other any other applicable cancellation charges.
3. Data centre queue management milestones – key features
Progression milestones: As Ofgem had previously indicated, it is not proposing to introduce further requirements for data centres to apply for a grid connection but is proposing new data centre-specific queue management milestones to apply in addition to the existing milestones between acceptance of a connection offer and energisation.
Threshold: Ofgem's preferred approach is to apply milestones to projects with a rated IT load of at least 10 MW, though it is also consulting on aligning with the 40 MW DCCF threshold or applying no threshold.
Pathways: Two developer pathways are proposed to reflect different data centre business models, which will determine which of the new milestone requirements apply:
- Self-operation pathway: the developer (or group company) intends to develop and operate the data centre; and
- Lease or sale pathway: the developer demonstrates a credible route to a tenant, purchaser or third-party operator.
Projects may switch pathway once only during their development, subject to providing any required evidence for the new pathway within 6 months of the switch.
New milestones: the proposed new milestones are:
| Milestone | Deadline | Requirement |
|---|---|---|
| Compute offtaker (non-binding) | 6 months after offer signature |
Self-operation: certificate of intended self-usage Lease/sale: evidence of genuine non-binding commercial arrangement (e.g. MoU, heads of terms) |
| Long-lead electrical equipment procurement | Existing M2 deadline (secured statutory consents/planning) | Evidence of genuine and material commitment to procure transformers, switchgear or other long-lead electrical equipment (e.g. purchase invoice, signed procurement contract or other binding supplier commitment) |
| Financial capability | Existing M6 deadline (agree construction plan) | Investment-grade credit rating or legally committed financial support (e.g. LC, cash deposit or collateral or other financial security) expressly committed to supporting the relevant project |
| Technical capability | Attainment of EN 50600, TIA-942 or Uptime Institute Tier Certification (Tier I, IV) | |
| Compute offtaker (binding) | Applicable only to the lease/sale pathway: binding compute capacity contract, Ofgem's minded-to position is ≥20% of compute capacity for ≥1 year |
Exemptions and grace periods: It is proposed that projects that have achieved all existing milestones up to M6 or beyond, and those energising within 6 months of implementation, will be exempt.
Grace periods are proposed for existing data centre projects. Where a connection offer has already been accepted, the developer will have an additional 6 months to comply with the new milestones applicable on implementation; where a connection offer has been received but not yet accepted, the developer will have an additional 6 months to comply with the first additional applicable milestone. Further milestones are expected to be met on time.
The consultation closes on 16 September 2026, with decisions expected later in 2026. Please contact us if you would like to discuss the implications for your project.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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