Energy Buzz: Ofgem approves TMO4+ reforms to enhance grid connections in Great Britian

Background and Need for Reform

Securing a grid connection has historically been a major hurdle for developers, including in the data centre sector. The previous "first to contract, first to connect" system resulted in protracted delays, with waiting times extending over several years. This inefficiency prompted Ofgem and the National Energy System Operator ("NESO") to devise a more streamlined approach, culminating in the TMO4+ reforms.

Introduction of a Two-Stage Connection Process

The TMO4+ reforms introduce a new two-stage connection process designed to enhance both transparency and efficiency. In the first stage, known as "Gate 1", developers receive an indicative offer and their position in the queue. Progression to the second stage, "Gate 2", where a definitive connection offer is made, requires developers to meet specific criteria related to readiness and strategic alignment.

Readiness Criteria

The readiness criteria are essential in determining a project's eligibility to advance to Gate 2 as developers must demonstrate secured land rights, which can be through outright ownership, a long-term lease, or an option to enter into a lease. The required acreage is assessed based on an "energy density" table, ensuring that projects are appropriately scaled. Moreover, a "planning" route is available for projects requiring compulsory purchase orders, such as Nationally Significant Infrastructure Projects.

Strategic Alignment Criteria

Strategic alignment is the second component of the Gate 2 criteria. Projects can meet this requirement through various pathways, including alignment with the Clean Power by 2030 Action Plan, designation by NESO, or by being deemed strategically aligned due to their technology type. Notably, demand projects like data centres, which connect directly to the transmission system, automatically meet the strategic alignment criteria under NESO's methodology.

Implementation Timeline and Ongoing Compliance

The implementation of TMO4+ is set to commence with the opening of the Gate 2 evidence submission window in mid-2025. Developers will be informed of their queue status by September 2025, with revised connection offers issued from Autumn 2025. All projects aiming for connection by 2030 are expected to have received a Gate 2 offer by early 2026. NESO will organise and perform annual reviews of its connection methodologies to ensure alignment with policy objectives.

Impact on Distribution Connected Generation and Demand

The new rules apply to a broad spectrum of projects, including transmission-connected generation, storage, and demand, as well as interconnectors and offshore hybrid assets. Larger embedded generation projects must satisfy the Gate 2 criteria to secure transmission system access. However, demand-only projects connecting directly to the distribution system remain outside the scope of TMO4+.

Future Considerations: Zonal Pricing and Planning Reforms

Alongside the TMO4+ reforms, the government and Ofgem are exploring other ways to improve the system's efficiency and resilience. These include introduction of zonal pricing to incentivise demand location closer to renewable generation sources. Additionally, the Planning and Infrastructure Bill seeks to streamline the approval process for infrastructure projects, reducing bureaucratic hurdles and expediting development timelines.

Conclusion

The approval of TMO4+ marks a pivotal step in modernising Great Britain's electricity grid connection process. By addressing the inefficiencies of the previous system and introducing a more structured approach, Ofgem and NESO are paving the way for a more resilient and sustainable energy future. These reforms not only facilitate the integration of new projects but also align with the broader objectives of achieving net-zero emissions and enhancing energy security.

Authored by Mahmoud Ben Rahuma.