The Energy Regulator of Geem from the VK has launched a new Cap and Floor Investment Support Scheme in an attempt to unlock billions in financing for new long -term electricity storage (LDES) projects.
The launch of the scheme is the end of a collaboration process between the Department for Energy Security and Net Zero (Desnz), the National Energy System Operator (NESO) and OFGEM, which started in October with the confirmation that that An arrangement that has been discussed in recent years It would be introduced to regulate the minimum and maximum profit with which LDES developers can be confronted for projects, in a comparable way as the scheme that is already present for interconnector projects.
A call for input in the scheme ran between December 2024 and January of this year, and a technical decision document about the scheme was published last month.
Developers who are able to deliver LDES projects by 2030 and 2033 to comply with the Clean Power 2030 target from the government, are now invited to register for the scheme, with applications that will be concluded on 9 June 2025. The first projects are expected to be approved by Q2 of 2026.
The aim of the CAP and floor regime is to encourage developers to build LDES projects to support the growing need for energy storage to balance a grid that is more prominent driven by variable sources of renewable energy.
Although Desnz and Neso have mentioned the expansion of LDE’s ‘crucial’ for the future of the Net Zero ambitions of the VK, no new LDES infrastructure has been built in the past four decades due to countless barriers, including high costs.
The Cap and Floor regime solves this by setting minimum and maximum income that can be achieved at LDES projects. The minimum turnover floor is expected to increase the trust of investors and therefore encourage private investments in LDES projects by offering minimal income for LDES operators to help manage starting costs and long build times.
In the meantime, the scheme provides for your money for British energy consumers by being able to participate only efficient projects with a storage time of more than eight hours and to make a maximum limit on profit, with surplus income that is returned through their accounts.
The technical decision document has clarified a number of important characteristics about the schedule, while it also made a number of changes from those proposed in the call for input launched last winter. With the income protection aspect of the scheme, all capital costs for LDES projects can be repaired between 20 and 25 years, essentially function as a subsidy for LDES projects that would otherwise not be viable. In particular, the update that was unveiled last month increased the minimum storage time of projects that are eligible under the scheme to eight hours and specified that this continuously nominal capacity should be to ensure that shorter endurance projects do not try to play the system in a smaller segment of their MW capacity.
Applicants of the system are subdivided into two streams – stream one for larger projects using technologies with a higher technology levelness level and two for smaller projects with a lower level of technology. Unlike earlier assumptions, Lithium-ion technologies of sufficient capacity are likely to be eligibleAs well as more traditional LDES technologies such as pumped Hydro Energy Storage (Phes), which is used for all currently operational LDES projects of the UK.
The government’s analysis has shown that the target with 20 GW from LDES, the British electricity system, could save no less than £ 24 billion between 2030 and 2050. Meanwhile, Neso’s Future Energy Scenarios report advised the government to add between 2.7GW to 7.7 GW of Save power by 203555, around Doubled Round Doubled Round Doubled Round Doubled Round Doubled Round Doubled Round Doubled Round Doubled Round Doubled. Pumped Hydro storage schedules in Scotland and Wales. A number of new LDES projects are currently under development or have recently received a building permit, including the Earba and Fearna projects from Gilkes Energy.
The industry of renewable energy has so far responded positively to the launch of the LDES cap and floor schedule. In commentary on the launch, the senior policy analyst Yonna Vitanova from Renewableuk noted that this was an “important milestone” for the ambitions of clean energy of the country. Vitanova added: “We need cheap wind and solar energy to supplement long-term storage systems, such as the pumped hydro plants that we have in Scotland and Wales, if we create an energy system that supplies electricity for Billpayers.
“There are a number of scoop -ready projects throughout the country that can continue under this scheme, and we would expect that they would come online online or shortly thereafter.”
