UK's Long Duration Electricity Storage (LDES) Cap & Floor Scheme to Launch

March 12, 2025

The UK’s energy sector is poised for a significant transformation with the upcoming launch of the Long Duration Electricity Storage (LDES) Cap & Floor scheme. Jointly announced by Ofgem and the Department for Energy Security and Net Zero (DESNZ), this initiative aims to bolster the integration of renewable energy sources by supporting large-scale energy storage projects.

Key Features of the Scheme

Minimum Storage Duration: Projects must provide a minimum of eight hours of continuous rated power, an increase from the previously proposed six-hour threshold.
Project Capacity Requirements: Stream 1 targets well-established technologies with a minimum capacity of 100 MW, while Stream 2 caters to emerging technologies with a minimum capacity of 50 MW.
Revenue Assurance: The cap and floor mechanism ensures that projects receive a minimum revenue (floor) while capping maximum earnings, providing financial stability over a 20-25 year period.

Implications for Energy Storage Companies

The scheme is expected to have a profound impact on various stakeholders within the energy storage sector:

Invinity Energy Systems: The company’s vanadium flow batteries align with the scheme’s objectives, offering scalable solutions for long-duration energy storage.
ITM Power PLC: Specializing in green hydrogen production, ITM Power could see indirect benefits from increased grid stability and renewable energy storage solutions.
Gresham House Energy Storage Fund PLC: Focused on grid-scale battery storage, Gresham House is poised to expand its portfolio under the LDES scheme, supporting renewable energy integration.
SSE’s Coire Glas Project: The £1.5 billion pumped storage hydro project at Loch Lochy stands to benefit from the scheme, potentially doubling the UK’s storage capacity to 30 GWh.
Harmony Energy Income Trust PLC: As a specialist in large-scale battery storage projects, Harmony Energy is well-positioned to participate in the scheme, leveraging its expertise to enhance grid stability.

Environmental and Economic Benefits

By facilitating the deployment of long-duration storage solutions, the LDES Cap & Floor scheme aims to:

Enhance Grid Stability: Balancing supply and demand, particularly with the increasing integration of intermittent renewable energy sources.
Reduce Consumer Costs: Minimizing the need for expensive grid upgrades and reliance on fossil fuel-based peaking plants.
Promote Sustainability: Supporting the UK’s commitment to achieving net-zero emissions by 2050 through the adoption of clean energy technologies.

The scheme’s application window is set to open in April 2025, marking a pivotal moment in the UK’s transition towards a more resilient and sustainable energy system.

#EnergyStorage #LDES #RenewableEnergy #GridStability #NetZero