The long awaited publication of the National Energy System Operator’s (NESO) connections reform timetable has arrived. It is clear we are now in the ‘eye of the storm’ for all developers who have projects with existing signed connection agreements in place with NESO or (where affected by the reforms) with their Distribution Network Operator (DNO).
All such developers must now apply for a Gate 2 offer if they wish to receive terms that include an identified connection location and energisation date for their project. Failing to apply now, or applying and failing to meet the readiness and strategic alignment criteria, means the project will receive a Gate 1 offer. This is essentially a holding position, pushing the project into a ‘waiting room’ until the first opportunity to apply again for a Gate 2 offer opens up, which is anticipated to occur at some stage later this year or in 2026.
For transmission connected developers, the window for applying for a Gate 2 offer opens on 8 July and closes on 29 July. For distribution connected developers, most DNOs are already accepting applications and that window will also close on 29 July.
We are receiving queries from developers about a wide range of issues impacting their individual projects and helping them to navigate this process. While the readiness criteria (relating primarily to land) are well set out in the various Ofgem and NESO papers, applying standard criteria to specific land arrangements will always raise some challenging questions.
Queries on a wide range of issues – such as the treatment of sensitive confidential information, the impact of a ‘minded to’ grant planning decision with an outstanding section 75 agreement, the treatment of an asset sale during the process, through to how executries that affect land rights should be dealt with – are now crossing our desks. The good news is that there is some flexibility built into the process, with NESO encouraging developers to explain the specifics for their individual projects in relevant cases.
Looking forward to how this process will play out over the summer, we can all see that NESO (and DNOs) are moving at pace to implement an entirely new set of reforms that are of crucial importance to individual projects and developers. Transmission connected projects should receive their first confirmation that they are (or are not) eligible for a Gate 2 offer in September 2025 and distribution connected projects should receive theirs in October 2025. There is very limited time allowed to iron out any questions that NESO or the DNOs have about an application (essentially early August is earmarked for this) and therefore making your application as straightforward and easy to accept as possible will be the key to success.
If an individual transmission connected project is not accepted as eligible for a Gate 2 offer there will be an opportunity to dispute this finding with NESO. However, we have some concerns about how useful that process is likely to be.
Under the reforms, there is provision for a formal escalation and meeting to discuss the dispute but, if that does not resolve the process, it is to be referred to arbitration for resolution. This could be a lengthy process that would not be particularly helpful as a mechanism to ensure that a project is reinstated as eligible for a Gate 2 offer in time for this one-off Gate 2 to Whole Queue process for existing users. For distribution connected projects, there is even less clarity on the appropriate dispute resolution mechanism, with this likely to be addressed with each DNO under their own dispute processes.
The aim of these reforms is clear – it should benefit well-developed, mature projects. Projects that are essentially holding capacity but not progressing should be pushed back into the Gate 1 ‘waiting room’ until they are ready to move forward to a Gate 2 position in the queue.
How the reforms are now implemented in practice matters. This current Gate 2 to Whole Queue process is the single biggest administrative exercise we have ever seen impacting grid agreements. Developers and their advisers will need to be clear, accurate, and speedy in addressing any queries raised by NESO and the DNOs over this crucial summer period.
If you need assistance in these matters, please contact our Clean Energy team.