'Major milestone': UK reveals details of energy storage scheme
Rollout of energy storage such as pumped hydro facilities crucial to saving renewable energy from wind and solar farms for when it is needed
The UK has passed a “major milestone” in its net zero journey as the government sets out details of a scheme to support energy storage facilities critical to backing up wind and solar generation – although questions remain over its “overall attractiveness”.
The government yesterday released details of the new “cap and floor” scheme to support long duration energy storage (LDES) projects in the UK.
The first application window for projects will open next month and the government aims to secure between 2.7GW and 7.7GW of capacity by 2035.
The government had in October confirmed its decision to use a cap and floor investment framework to support the deployment of LDES facilities, such as pumped hydro.
The renewables sector has said such a scheme is critical to spur a new generation of LDES facilities capable of storing variable green power from wind and solar farms.
The cap and floor model being introduced provides a guaranteed minimum income for developers, in return for a limit on revenues.
William Stephenson, senior research associate at consultancy Aurora Energy, said that developers will be “given a choice between floors set administratively or by a competitive debt-raising process.”
The “cap” will meanwhile be “soft,” which he said means that extra revenue is shared between developers and consumers.
“The soft cap balances incentives for the best optimisation of the operational assets against value to consumers which has perhaps never been so important.”
Cap and floor levels won’t be finalised until projects are built, which Stephenson cautioned raises "questions about revenue certainty and the scheme’s overall attractiveness."
RenewableUK senior policy analyst Yonna Vitanova said the scheme is a “critical means of catalysing investment in an underdeveloped area and supporting the UK’s ambitions for a clean power system by 2030.”
“No new LDES technology has reached commercial deployment in the UK in the last 40 years, so today’s confirmation of the design of the cap and floor scheme brings welcome clarity to industry and investors alike.”
“The accelerated timeline to award projects with a 25-year cap and floor regime in Q2 2026 brings much needed certainty,” she said.
Mark Wilson, CEO of energy storage developer ILI Group, said the announcement “marks a major milestone” in the UK's net zero journey, providing “much-needed clarity and certainty for investors and developers.”
Pumped hydro energy storage will he said play a “pivotal role in ensuring a reliable and sustainable energy system” through its “unparalleled grid-balancing capabilities.”
Analysis has found that deploying 20GW of LDES could save the electricity system £24bn ($31bn) between 2025 and 2050, partially by cutting reliance on expensive natural gas.
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