On 10th October 2024,  the Government announced an investment scheme to support investment in Long Duration Energy Storage with the aim of removing barriers which have prevented the building of new storage capacity for nearly 40 years.

The REA has campaigned for this support for several years, alongside members, going back to our 2021 report on Long Duration Energy Storage.

In addition, the Long Duration Electricity Storage Consultation: Government Response was published. The Consultation Response outlines plans to support investment in Long Duration Electricity Storage (LDES) technologies, which are critical for balancing the grid as the country transitions to more renewable energy sources. This was published alongside a scenario deployment analysis.

Key highlights from the response include:

Cap and Floor Mechanism: The Government confirmed plans to introduce a cap and floor system to support investment in LDES projects. This approach offers a revenue floor to protect investors from losses while also placing a cap to protect consumers from excessive costs. This model has successfully been used for electricity interconnectors before and the REA argued for its adoption.

Two Application Streams:
Stream 1: Established technologies such as pumped hydro storage (minimum 100 MW capacity, 6-hour duration).
Stream 2: Novel technologies such as liquid air and compressed air energy storage (minimum 50 MW capacity, 6-hour duration).

Eligibility: Lithium-ion batteries are excluded from the scheme unless they are novel iterations that cannot otherwise secure market-based revenues.

Potential Benefits: LDES is seen as crucial for the UK’s energy security, as it will allow the storage of surplus renewable energy (e.g., solar, wind) for use during periods of low generation. Analysis suggests that 20 GW of LDES could save the UK energy system £24 billion by 2050.

Next Steps: As expected, Ofgem will oversee and administer the scheme, and the Government expects to open applications for LDES projects by 2025​.

This support must be seen as an essential part of broader efforts to reach net-zero emissions and ensure long-term energy resilience. To read the REA’s positive response to the announcement, please click here.

If you have any questions, please contact [email protected].