The UK Department for Energy Security and Net Zero has announced a new investment support scheme aimed at facilitating the construction of long-duration energy storage (LDES) facilities, including pumped storage hydro. The cap-and-floor scheme follows a consultation conducted earlier this year, with Ofgem designated as the regulator and delivery body. The first round of applications for the scheme is expected to open next year.
Ofgem will develop the support framework, which will feature two distinct application routes—one targeting mature technologies and the other focused on innovation. Currently, Great Britain has an existing capacity of 2.8 GW of LDES, primarily from four pumped storage hydro facilities located in Scotland and Wales. The government also acknowledges other LDES technologies, including liquid air energy storage, compressed air energy storage, and flow batteries.
Energy Minister Michael Shanks emphasized the need for enhanced energy storage capabilities, stating, “We are wasting no time in unlocking Britain's vast renewable potential by expanding wind and solar power. But we also need to increase our ability to store this energy for when the sun isn't shining or the wind isn't blowing.” He added that the initiative aims to rectify a 40-year gap in new long-duration storage projects and to encourage private investment in both established and emerging technologies.
The new cap-and-floor scheme is modeled after similar arrangements used for electricity interconnectors that connect Great Britain with neighboring countries. The government estimates that deploying 20 GW of LDES could lead to savings of GBP 24 billion (USD 31.4 billion/EUR 28.7 billion) for the electricity system between 2025 and 2050. Additionally, the National Electricity System Operator predicts a need for 11.5 GW to 15.3 GW of LDES by 2050 to achieve net-zero emissions.
The Association of Renewable Energy and Clean Technology (REA) expressed support for the new scheme, with Deputy Director of Policy Mark Sommerfeld stating, “Long-duration energy storage is essential for meeting future low-carbon energy demands in a cost-effective way while ensuring the security of supply. Today's announcement finally confirms a scheme the REA long advocated for to unlock private investment in several ready-to-go projects, allowing construction to begin.”
