The British energy regulator Ofgem has opened a consultation on a new commitment fee for battery storage projects seeking to connect to Great Britain’s electricity grid. The proposal would start at £3,000 per MW and could reach a maximum of £25,000 per MW if oversaturation persists.
Currently, around 90 GW of battery capacity is operational or included in the reformed connection queue. This figure contrasts with a projected need of approximately 29 GW by 2035, representing nearly three times the system’s anticipated capacity.
A Battery Fee to Reduce the Connection Queue
In this context, Ofgem believes that the high number of projects makes it difficult to identify which ones have a realistic chance of being built. It also complicates the planning of the electricity infrastructure needed to meet future demand.
The so-called Oversubscribed Technologies Commitment Fee (OTCF) aims to introduce an economic signal to differentiate projects with a firm intention to proceed from those that maintain reserved capacity without clear connection prospects.
According to the proposal, the financial commitment would start at £3,000 per MW. The amount could progressively increase to £25,000 per MW if the technology remains significantly oversubscribed.
Thus, a 100 MW BESS project would initially face a commitment of £300,000. At the maximum level proposed by the regulator, the amount would rise to £2.5 million.
Battery Capacity Far Exceeding 2035 Projections
Battery storage will play an important role within an electricity system with greater participation of renewable sources. However, Ofgem believes that the current volume of applications may tie up connection capacity for projects that ultimately do not materialize.
Eleanor Warburton, Ofgem’s Director of Energy System Design and Development, explained that Great Britain has three times more battery capacity in the connection queue than is expected to be needed by 2035.
The queue must reflect real projects, not mere space reservations.
Warburton stated when presenting the proposal.
Therefore, the regulator intends for developers to demonstrate a minimum level of financial commitment. At the same time, the mechanism seeks to incentivize an early exit for projects with low probabilities of achieving connection.
Reform to be Implemented via CMP470 Mechanism
The OTCF fee would be introduced through a modification to the Connection and Use of System Code (CUSC). The regulatory proposal is linked to CMP470, a code modification initially put forward by the industry.
Under this scheme, the National Energy System Operator (NESO) would be responsible for monitoring oversaturation levels. It would also determine when to activate or increase the financial commitment and manage the guarantees provided by projects.
These guarantees could take various forms, including letters of credit, financial guarantees, and cash deposits.
Likewise, the measure is part of a broader program to remove speculative, unviable, or stalled projects from the queue and prioritize those considered ready and necessary for the British electricity system.
Ofgem Consultation to Remain Open for Two Weeks
Ofgem will keep the consultation open for two weeks to receive feedback from battery developers and other stakeholders on the mechanism’s structure, impact, and implementation. The regulator expects to publish its final decision before the end of 2026.
If the proposal moves forward, the fee would add a new financial requirement to retain capacity within a connection queue that continues to show a strong concentration of BESS projects. For Ofgem, the objective is to have a more representative portfolio of projects that could actually be built and to facilitate more accurate grid infrastructure planning.
Source: Ofgem
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