The Energy Transition | NESO announces greater transparency on connection offers in Britain

This week we look at increased transparency on connection offers, round 12 of the Heat Network Efficiency Scheme, and National Grid's launch of the new curtailment estimator tool.

NESO increases transparency on connection offers and removes advancement fees

The National Energy System Operator (NESO) has provided a connections reform update aimed at improving transparency around its progress, including the introduction of a cross-industry dashboard developed by the Energy Networks Association. NESO has confirmed that the dashboard will be made available soon, with the aim of providing "a consistent view of progress across transmission and distribution."

At the time of the update, approximately 88% of "Gate 2 to Whole Queue" protected offers had been issued. NESO confirmed that the remaining offers will be issued by the published deadline of mid-April for transmission offers and mid-May for distribution offers. This first tranche includes direct offers to protected transmission-connecting projects and contractual instructions to distribution network operators enabling them to issue offers to protect distribution-connecting projects.

NESO also confirmed that approximately 1,000 Gate 1 offers have been issued, and that the next phase of delivery will involve phase one projects with pre-2030 offers.

Finally, NESO confirmed that advancement fees will no longer be charged to customers that submitted evidence as part of the Gate 2 to Whole Queue process, irrespective of whether they received a Gate 1 or Gate 2 outcome. 

Heat Network Efficiency Scheme round 12 opens for applications 

The Department for Energy Security and Net Zero (DESNZ) has announced round 12 of the Heat Network Efficiency Scheme (HNES) is open for applications until 22 May.          

Like the Green Heat Network Fund, the HNES is available to organisations in the public, private and third sectors in England and Wales. It provides capital grant funding to support performance improvements for existing district or communal heating projects operating and delivering below optimal levels.

This latest round forms part of the broader £107 million HNES programme, up from £77 million, which runs from the financial year 2023-24 to the financial year 2029-30 and is a core element of the government's Heat Network Transformation Programme. Round 12 opens at a particularly active time for the heat network sector, following a series of significant regulatory and policy developments this year.

Prospective applicants should contact hnes@talan.com to request an application form; further guidance on the application process can be found here. 

National Grid launches curtailment estimator for potential connections

National Grid's Distribution System Operator (DSO) has launched its cloud-based curtailment estimator to provide live updates on network connection constraints.

Previously, customers choosing flexible or curtailable connections had limited visibility over the extent to which their projects may be curtailed. The new tool is designed to improve customers' understanding of potential curtailment severity and risks before making significant investments in projects. 

Live reports

The platform generates a live report for a connection site, covering five elements.

A summary table gives a high-level overview of the curtailment analysis, including installed capacity and fuel types, the contractual maximum import and export capacity of the project, the active network management (ANM) scheme in which the project participates, its overall position in the queue of connections – expressed as a last-in, first-out position (LIFO) – and the estimated annual output figures before and after curtailment is applied, indicated by a capacity-factor ratio.

The heatmap is a visual representation of curtailment across the analysis period, with periods of high curtailment shown in red, and low curtailment periods shown in green.

A megawatt (MW) graph shows five separate curves illustrating the impact of curtailment: site export capacity, pre-curtailment mean, pre-curtailment maximum, post-curtailment mean and post-curtailment max. The difference on the MW graph between each pair of curves shows when and how much curtailment has occurred.

A LIFO queue provides aggregate details of other non-firm distributed energy resources ahead of the site in the queue and their contribution to the distribution and/or transmission constraints.

The constraint summary covers the top five constraints and an explanatory breakdown, including a delineation between distribution and transmission to reflect potential changes to curtailment if one or more were resolved.

The methodology guidance caveats that any estimated curtailment applies to network access limitations caused by ANM and not curtailment caused by other systems. It notes that not all constraints will be listed in the report and the tool "does not come with any contractual guarantee". 

Pilot stage

The DSO estimator tool is currently in its pilot stage and is available only for projects that have received a Gate 2 offer from NESO as part of its connection reform process. Future versions are in development and will allow the tool to run on new sites prior to applying for a connection.

Ofgem consults on 13 proposed changes to Capacity Market rules

Ofgem has opened a statutory consultation on 13 proposed changes to the Capacity Market (CM) rules. The consultation was published on 10 April and closes to responses on 24 May, with a decision expected on 26 June. Unless stated otherwise, changes are expected to apply from the opening of the 2026 Capacity Market prequalification round.

Two of the 13 proposals are of particular note for those operating in the CM and navigating the connections reform process.

Energy regulator looks to clarify termination events at multi-Capacity Market unit sites 

Ofgem's change proposal (CP) 384 has identified ambiguity in the current CM rules concerning the requirement to maintain sufficient transmission entry capacity (TEC) at sites where multiple Capacity Market units (CMUs) share a single connection agreement.

The existing drafting is not clear as to whether the reference to "any other CMUs" includes only those CMUs with effective CM agreements or also CMUs without obligations. This raises concerns that a reduction in TEC to reflect the termination or transfer of one CMU's agreement, could inadvertently trigger the termination of other otherwise remaining and operational CMUs at the same site. Even where those CMUs hold valid CM agreements.

The proposal is to limit the application of these termination provisions to only those CMUs that are "capacity committed"; that is, subject to a capacity obligation for the relevant delivery year. This aims to prevent the unintended loss of operational CMUs holding valid agreements from the market.

Ofgem has indicated that it is minded to approve the proposal on the basis that it improves market administration, avoids the unnecessary removal of viable capacity, and permits connection capacity to be released where appropriate.

Conditional prequalification proposed by Ofgem for projects affected by connections reform 

Ofgem has set out a proposal to update conditional prequalification rules that is likely to be of most immediate interest to those parties navigating the connections reform process.

CP394 extends the conditional prequalification arrangement that was introduced for the 2025 prequalification round into 2026, enabling projects that have not yet received a formal connection offer – those with "pending" offers as a result of the connections reform process – to participate in Capacity Market auctions in 2027, for the 2030-31 delivery year.

Qualification window

The 2026 prequalification window is expected to run from early August to the end of September. Ofgem notes that some projects may still be awaiting outcomes of the connections reform process, and advancement under CMP435. Without an extension, projects may seek to enter the Capacity Market before being notified of their outcome and before the 2026 prequalification window closes.

The proposal extends from 16 to 22 working days the period within which applicants must submit their revised grid connection agreement to the delivery body, aligning this requirement with the timeframes that apply to other conditional prequalification obligations.

Ofgem is minded to approve the proposal. It notes that the arrangement is limited to the 2026 prequalification round and acknowledges that a longer-term and more permanent solution will be required once the enduring connections process is more established.

Other proposals

The remaining 11 proposals cover a range of technical and administrative matters.

• CP382 Independent technical expert definition updates and report templates
• CP385 Update to load following capacity obligation calculation inputs
• CP386 Alignment of metering test processes, demand-side response delivery periods, and terminology
• CP387 Metering assessment deadlines
• CP389 Connection capacity review
• CP390 Simplifying reporting and monitoring provisions
• CP392 Amendments to enable asset metering and ensure delivery assurance
• CP393 Full review of exhibits
• CP396 Total project spend review, changes beyond DESNZ "housekeeping"
• CP397 Temporary financial commitment milestone grace period
• CP398 Enabling capacity providers to utilise their own meter operator agent

Responding to the consultation

Ofgem says that it welcomes views particularly from CM participants. Responses should be structured by proposal reference and submitted by email to EMR_CMRules@ofgem.gov.uk by 24 May.

This article was written with the assistance of Alice Smith, Maggie Hudson and Elise Hill, trainee solicitors.