A new era for renewable energy storage has begun in the UK, as Ofgem unveils a scheme aimed at accelerating the development of long-duration electricity storage (LDES) projects for the first time in four decades. The scheme, described as a “cap and floor” investment support model, is expected to unlock billions of pounds in funding to develop storage facilities that are essential for balancing the renewable power system.
LDES technologies, which include methods such as pumped storage hydro, liquid air energy storage, compressed air energy storage, and flow batteries, are designed to store excess electricity generated by renewable sources like wind and solar. The stored energy can then be released to the grid when demand peaks or when renewable output is low, ensuring grid stability and reducing the reliance on fossil fuel-based power sources.
Pumped storage hydro, which has been used for decades, works by pumping water to a reservoir at a higher elevation using surplus renewable electricity. When demand rises, the water is released to generate power, typically during periods when other electricity generation sources are more expensive.
Ofgem’s new scheme aims to provide financial security for investors by ensuring minimum revenue for operators, addressing the high initial costs and long construction timelines traditionally associated with LDES projects. At the same time, the scheme will protect consumers by capping profits, with any excess revenues being redirected to lower bills.
“Renewable energy is the key to securing Britain’s energy independence and driving down customer bills in the long term – so it’s vital that none of this precious resource goes to waste,” said Akshay Kaul, Ofgem’s director general for infrastructure. “By creating the confidence for investors to support new projects such as super-batteries, we can reduce the need to turn to fossil-fuelled power as back-up when the weather changes.”
The UK government, advised by the National Energy Systems Operator (NESO), has identified the expansion of LDES as a critical component of its strategy to achieve clean power by 2030 and reach net-zero emissions by 2050. NESO’s Future Energy Scenarios report suggests that the country should add between 2.7GW and 7.7GW of stored power by 2035, a goal that would at least double Britain’s existing reserve of 2.8GW from four pumped storage hydro schemes in Scotland and Wales.
Kate Gilmartin, chief executive of the British Hydropower Association, described the launch of the scheme as a “historic moment” for the UK energy sector. “We’ve not built a new pumped storage hydropower (PSH) facility in nearly 50 years, but with over 10GW and 200GWh of shovel-ready projects, the hydropower sector stands ready to deliver,” she said. “These infrastructure projects bring substantial economic benefits, supporting thousands of skilled jobs, bringing economic benefits across communities and securing investment in domestic supply chains.”
Yonna Vitanova, senior policy analyst at RenewableUK, also welcomed the announcement, calling it an “important milestone.” She emphasized the need for long-duration storage to complement wind and solar energy. “There are a number of shovel-ready projects across the country which could go forward under this scheme, and we would expect to see them come online by 2030 or soon after,” Vitanova added. “These are major infrastructure projects, bringing new jobs and investment to the UK at a time we need to stimulate economic growth.”
The introduction of this new scheme marks a significant step in the UK’s transition toward a clean energy future, with long-duration storage expected to play a central role in supporting grid reliability, reducing curtailment, and enabling the shift to net-zero emissions.
