Introduction – What to do with a Gate 1 Offer?
The introduction of Connections Reform has fundamentally changed the outlook for many generation and storage projects across Great Britain. For a significant number of developers, receiving a Gate 1 offer has meant extended connection timelines, reduced export rights, or a prolonged period of uncertainty before firm network access can be secured. In many cases, a connection date as long as 20 years away means the projects that so much time and money have been poured into is no longer viable.
However, a Gate 1 offer does not have to mean an abandoned project.
Increasingly, we are seeing developers explore microgrid solutions such as private-wire demand co-location, Power-to-X or Data Centre co-location to salvage revenue, de-risk their projects, and retain optionality while awaiting Gate 2 progression. In many cases, the underlying site fundamentals (land, grid proximity, and energy availability) remain highly attractive. The questions to answer are: “What is right for each project?” and “How quickly can a solution be implemented?”
What is Power-to-X?
Power-to-X (P2X) is a catch-all term that refers to the concept of using generated electricity to produce something that isn’t electricity and that can be sold in a different market. Examples include:
- Power-to-heat, where heat is generated for local homes or industry.
- Power-to-hydrogen, where hydrogen gas is produced via electrolysis and then either used as a fuel or sold on to the chemicals industry as some hydrogen derivative such as ammonia.
- Power-to-fuel, related to hydrogen, but specifically targeting synthetic fuel production or refineries.
- Power-to-EVs, where power can be used for electric vehicle charging.
- Power-to-data, a new and exciting talking point surrounding the concept of co-locating data centres, especially given the context of AI development.
Not every energy development site will be suitable for all flavours of P2X as the feasibility of each option is highly location-dependent.
Power-to-X technologies convert electrical energy into alternative products, such as hydrogen, heat, or synthetic fuels, that can be stored, transported, or consumed locally. Crucially, many of these processes operate behind-the-meter, reducing reliance on export capacity and allowing value to be captured even when grid access is constrained.
For Gate 1 projects, this can unlock several immediate benefits:
- Revenue generation without a firm export connection.
- Reduced curtailment exposure.
- Improved loading for generation assets (less start-stop operation).
- A clearer investment narrative for funders.
Rather than waiting years for a full connection, projects can begin monetising energy much sooner.
Hydrogen: Beyond the Fuel Narrative
Green hydrogen is often framed narrowly as an energy vector, but its most compelling near-term strategic value lies in industrial supply chains where hydrogen is already a critical feedstock. In these sectors, decisions are driven by proximity to demand, cost competitiveness, and established industrial offtake, not speculative future markets.
Across the UK and Europe, hydrogen is used extensively in:
- Ammonia and fertiliser production
- Refining and petrochemicals
- Chemical manufacturing
- Steel and metals processing
These applications represent tangible, existing markets with predictable demand profiles.
A core challenge for green hydrogen is competing with grey hydrogen, which is typically produced from natural gas or coal using steam reformation and is thus cheaper to produce in bulk. One of the biggest cost disadvantages for green hydrogen today is transport and logistics: shipping hydrogen over long distances (whether as compressed gas, liquid hydrogen, or carriers like ammonia) adds significant costs that can make it economically uncompetitive with locally produced grey hydrogen. This issue reinforces the importance of co-locating electrolysers close to large industrial consumers or integrating them directly into existing chemical clusters, thereby minimising transport costs and potentially enabling direct displacement of grey hydrogen.
Other Power-to-X Options: Heat, E-Fuels, and Beyond
While hydrogen often leads the conversation, it is not the only P2X pathway worth considering.
Power-to-Heat solutions including industrial heat, district heating, or thermal storage can offer:
- High electrical demand with relatively simple plant
- Lower capital intensity compared to electrolysis
- Strong alignment with local authorities and industrial estates
Other emerging P2X routes, such as synthetic fuels or chemical intermediates, may also be viable depending on site location, grid conditions, and local offtakers.
The optimal solution is rarely generic. It depends on network constraints, operating profiles, and downstream demand all of which must be assessed early.
Data Centres
The UK government estimates that there will be an additional 3.3-6.3GW of data centre demand by 2030. By some estimates data centres alone could eat up 5% or more of newly installed generationcapacity by 2030 in the UK. In the EU, it is expected that annual energy consumption of data centres is expected to be 98.5 TWh by 2030 (Data centres in Europe – reporting scheme). As the business world opens up to AI and the excitement around that new industry, the demand for AI data centres will only increase. Many data centre developers are now stuck waiting for demand grid connection opportunities, delaying the implementation of their projects and costing them money and time. Private-wire and microgrid solutions for data centres is a key market for generation projects, and one that is seemingly overlooked by many.
Microgrid solutions for data centres are already being developed elsewhere. GE Vernova is set to deliver nearly 1 GW of power to data centres in the United States using a combination of gas turbines and renewable energy (LM2500XPRESS Powering Crusoe AI Data Centers | GE Vernova). In Europe, there is a trend in legislation surrounding data centres to ensure clean energy is used, such as in Germany where, as of 2024, data centres must show that 50% of electricity consumption comes from unsubsidised renewable energy sources. That figure is set to increase to 100% by 2027. From 2024 onwards all data centres >0.5 MW in the EU are now mandated to collect and report standard KPIs including energy use, renewables share, water usage, etc. with the intention of imposing further legislation in the near future (Data centres in Europe – reporting scheme). In the UK, data centres within the AI Growth Zone (AIGZ) in England will have fast-track planning and infrastructure report (Data centres: planning policy, sustainability, and resilience – House of Commons Library). The trend is that the demand for data centres is only going to increase, and the sustainability requirements for data centres will push developers towards renewable sources of energy. For renewable developers the market is there, and now is the time to start investigating potential solutions in the UK and Europe.
Timing Matters: Why the Window Is Now
As more developers pivot towards behind-the-meter solutions, competition for suitable sites, offtakers, and policy support will intensify. At the same time, network operators are increasingly scrutinising projects that remain dormant for extended periods.
For Gate 1 projects in particular, early action can:
- Preserve site momentum
- Strengthen the case for Gate 2 progression
- Demonstrate proactive use of constrained capacity
- Improve long-term project bankability
In many cases, waiting for clarity is the highest-risk strategy.
Our Power-to-X Experience
We have supported multiple projects exploring P2X integration, including design and feasibility work for a 50 MW electrolyser project, alongside broader grid connection, network constraints, and commercial assessments.
Our experience spans:
- Early-stage P2X feasibility and screening
- Grid and behind-the-meter connection strategies
- Curtailment and operational analysis
- Technical and commercial due diligence
Conclusion
Gate 1 does not have to be the end of the road.
For developers willing to rethink how and where value is captured, Power-to-X co-location offers a credible, near-term pathway to revenue, resilience, and strategic optionality. With grid constraints tightening and connection timelines stretching further into the future, the projects that act now will be best positioned to succeed.