Before April 2025, grid connections in the UK were allocated on a straightforward “first come, first served” basis. That approach worked reasonably well when the volume of applications was manageable. But as demand for connections surged, the system became increasingly congested, with major infrastructure projects facing significant delays before they could secure access to the grid.
A key issue was the rise of so-called “zombie” projects. These are developments that had secured positions in the connection queue but lacked the land rights or planning permissions needed to move forward. These stalled projects occupied valuable queue positions, preventing viable developments from progressing.
In response, and as part of the UK’s broader energy strategy, the National Energy System Operator (NESO) introduced the Target Model Option 4+ (TMO4+) reforms, which have been approved by Ofgem.
With the UK’s new grid connection reforms now reshaping how projects secure access to the network, developers face increasing legal and commercial risk if applications are delayed, downgraded or removed from the queue. As disputes over Gate 1 and Gate2 positions begin to emerge, understanding the available challenge and arbitration routes is becoming just as important as securing the connection itself.
What is TMO4+?
TMO4+ is a suite of decision and supporting documents to enable grid connections reform. It was published on 15 April 2025.
The reforms replace the old system with a “first ready and needed, first connected” approach for generation and storage projects. Under the new framework, projects must demonstrate that they are genuinely capable of progressing before they can obtain a confirmed connection agreement. In practical terms, this means developers must show evidence of land rights or planning consent in order to qualify for a firm connection offer.
A central objective of TMO4+ is to remove zombie projects from the queue. This is intended to free up capacity for developments that are ready to proceed and strategically important to the UK economy, including major demand projects such as data centres.
Gate 1 and Gate 2 offers
The new process introduces two stages: Gate 1 and Gate 2.
Gate 1 is an initial stage where a grid connection is not yet confirmed. Applicants may receive an indicative offer and a provisional queue position, but projects will only progress further if they satisfy the required readiness tests.
Gate 2 is the point at which eligible projects are provided with a confirmed connection date, a connection point, and a Gate 2 Queue position.
Criteria for Gate 2 offers
In order to be approved for a Gate 2 offer, developers must meet the Readiness Criteria, and the Strategic Alignment Criteria.
The Readiness Criteria
To meet the Readiness Criteria, the project must have secured land rights and planning progress.
The Strategic Alignment Criteria
For the Strategic Alignment limb, projects must meet one of the following criteria:
- Criterion A: eligible for relevant ‘protections’ which apply to projects with existing agreements
- Criterion B: aligned to the capacities within the Clean Power 2030 Action Plan as described in the Connections Network Design Methodology
- Criterion C: designated under the terms of the Project Designation Methodology
- Criterion D: a project not within scope of the Clean Power 2030 Action Plan and of a technology type listed in the table in section 6.3 of the Methodology
At present, all demand projects, including data centres, fall within Criterion D.
Demand projects focus on electricity consumption rather than generation. Data centres, for example, are regarded as critical demand infrastructure because they require significant capacity allocation and long-term strategic grid planning. As a result, they are automatically treated as meeting the Strategic Alignment Criteria.
The Gate 2 to Whole Queue exercise
The “Gate 2 to Whole Queue” exercise is the mechanism through which NESO will clear non-viable projects from the queue and prioritise projects that are both ready and strategically needed.
As part of this process, existing contracts may be amended. Projects that satisfy the Gate 2 criteria will receive a Gate 2 Modification Offer, resulting in revised connection agreements.
Projects that fail to meet the criteria will instead receive a Gate 1 Agreement to Vary, effectively moving them back into the Gate 1 stage.
Challenging Ofgem’s decision
Formal offers for projects aiming to connect between now and 2030 are currently being processed.
Developers do have routes to challenge decisions, and Ofgem has issued guidance for parties considering a dispute. The guidance is twofold:
- Determination of Disputes Gate 2 to Whole Queue Decision Document published on 15 April 2025
- Supplemental Ofgem Guidance on the Determination of Disputes: Gate 2 to Whole Queue published on 8 December 2025
Together, these documents set out Ofgem’s expectations for disputing parties, the types of issues on which Ofgem is prepared to make a binding determination, and the procedures it will follow when disputes arise from the Gate 2 to Whole Queue exercise.
Explore alternative dispute resolution
The guidance is very clear that parties must explore other means of resolving the dispute before Ofgem will exercise its determination function.
Deal with the relevant bodies directly
Where a developer believes that a Distribution Network Operator (DNO) or NESO has made an error, the first step is to raise the issue directly with the relevant organisation through its established complaints procedures.
Senior-level meetings
If those discussions do not resolve the matter, the next stage is a senior-level meeting between representatives of the parties involved.
LCIA arbitration
If the dispute is still unresolved, either party may refer the dispute to the London Court of International Arbitration (LCIA).
Ofgem also encourages parties to consider any other suitable forms of alternative dispute resolution before seeking a formal determination. The regulator has indicated that it expects to intervene only in exceptional circumstances, such as where NESO or a DNO has breached its regulatory obligations or failed to correct a clear error.
At Rahman Ravelli we represent developers and those involved in data centre projects. We are experienced in complex arbitration and alternative dispute resolution and can assist parties seeking to challenge unfavourable decisions.
