• ‘Cap and floor’ scheme will encourage long-duration energy storage (LDES) investment.   

• Ofgem will act as regulator and delivery body and the scheme’s first round is expected to be open to applicants next year. 

• REA has long called for such a scheme to be implemented. 

In a major win for its members and the wider industry, the Association of Renewable Energy and Clean Technology (REA) welcomes DESNZ’s announcement that a ‘cap and floor’ scheme will be implemented to attract investment in long-duration energy storage (LDES).  

The announcement follows a consultation on proposals to enable investment in LDES which closed in March 2024 and call for Evidence in 2023. It also finally delivers on the scheme which the REA originally advocated for in our 2021 Long Duration Energy Storage Report. A similar cap and floor scheme is used for electricity interconnectors which connect Great Britain’s grid with other countries. 

Ofgem will design the investment support scheme and under these proposals, it will be split into two application routes, with one focusing on mature technologies, while another will be dedicated to new innovation. 

Mark Sommerfeld, Deputy Director of Policy, REA (Association for Renewable Energy and Clean Technology), said: 

“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. 

The initiative will create high-quality jobs, enhance UK skills, and highlight the country’s world-leading expertise in this field. The inclusion of a revenue cap also ensures that the scheme will deliver value for money for us all.  

We are also encouraged by the government’s initial focus on pumped hydro storage and pleased to see a clear pathway for other innovative long-duration storage solutions that are also ready for deployment and can deliver additional benefits to our power system. The REA looks forward to continued collaboration with the government to advance this important sector.”