Ofgem has launched a consultation on introducing a new financial commitment fee for battery energy storage projects in Britain’s electricity connections queue. The proposed mechanism aims to reduce oversupply by requiring developers to pay a security to retain their grid connection positions, ensuring the queue reflects viable projects rather than speculative placeholders.
Oversubscribed Grid Capacity
The British energy regulator notes that around 90 gigawatts of battery capacity is currently operational or retained in the reformed connections queue. This figure significantly exceeds the projected system requirements, which estimate a need of approximately 24 gigawatts by 2030 and 29 gigawatts by 2035 to support clean power targets.
Despite recent connections reform removing forty percent of grid-level battery capacity, 83 gigawatts of projects still hold prioritised positions. This excessive pipeline complicates network planning, as transmission owners must prepare infrastructure like substations and transformers for speculative schemes that may never actually reach physical construction on site.
Proposed Financial Commitment Fee
Ofgem is minded to approve the Oversubscribed Technologies Commitment Fee through a code modification known as CMP470. Under the proposal, affected battery projects must demonstrate a minimum financial commitment starting at three thousand pounds per megawatt. This amount could rise progressively to a maximum of twenty-five thousand pounds per megawatt if oversubscription persists.
The National Energy System Operator will monitor oversubscription levels to determine when the financial mechanism is triggered or escalated. Projects can provide the required security through existing user commitment arrangements using instruments such as letters of credit, bank guarantees, or cash collateral to retain their positions.
Industry Consultation And Next Steps
The code modification was originally proposed by Field Energy Limited in March 2026 and is being progressed under an urgent timetable. Ofgem opened the consultation on 17 September 2026, inviting industry stakeholders to share their views on the fee structure and implementation concerns until 1 October 2026.
The regulator expects to publish its final decision later in 2026, with the mechanism likely coming into force in July 2027. Funds collected through cancellation charges from projects leaving the queue without energising would ultimately be returned to consumers through transmission network use of system charges.
Key Takeaways
Ofgem proposes a new financial commitment fee to clear the oversubscribed battery connections queue in Great Britain.
The current queue holds around 90 gigawatts of battery capacity, far exceeding the 29 gigawatts projected for 2035.
The proposed fee starts at three thousand pounds per megawatt and could rise to twenty-five thousand pounds per megawatt.
The National Energy System Operator will monitor oversubscription levels and manage the financial securities for these projects.
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