The Office of Gas and Electricity Markets (Ofgem), the UK’s independent energy regulator, has published a Technical Decision Document addressing the long-duration electricity storage (LDES) cap-and-floor scheme.
Ofgem released the document on behalf of the UK Government on 11 March, which explains the scheme’s eligibility requirements and rollout.
LDES scheme
LDES assets that provide continuous rated power for eight hours or more will be eligible for the scheme – an increase from six hours minimum proposed in earlier discussions due to industry feedback.
Notably, most storage projects deployed in the UK are lithium-ion BESS that run for between one to three hours.
The scheme will provide a safety net for LDES projects that might not be otherwise commercially viable, as eligible assets will receive cap-and-floor revenue protection for 20-25 years. Through this, all capital costs can be recovered.
Through the scheme – first announced in autumn 2024 – the UK Government aims to deploy 2.7GW – 7.7GW of LDES capacity by 2035.
The streams
The Technical document introduces several application rounds, with ‘stream 1’ calling for projects with a 100 MW minimum capacity and ‘stream 2’ following with 50 MW.
Established BESS technologies that meet Ofgem’s technology readiness nine (TRL9) criteria will be eligible for stream 1. These technologies are reputable, marketable products – such as lithium-ion batteries.
However, lithium-ion batteries will be assessed differently from lithium-ion battery storage due to the Government’s Clean Power 2030 plan. Ofgem has indicated that the battery applications will be “sufficiently similar” to battery storage.
For stream 2, TRL 8 technologies will be eligible. These include liquid air electricity storage (LAES), compressed air electricity storage (CAES), and flow batteries.
In Ofgem’s Project Assessment in Q2 of 2026, initial assessments of cost will be made and finalised cap-and-floor levels determined.
Applications
Applicants will need to demonstrate that a grid connection application has already been submitted, with planning consent enabling an online date of before 2030. The assessment phase is scheduled for Q3 2025, so projects must have planning permission in place before this.
They will additionally need to provide production cost estimates and proof of upfront engineering.
Applications will open in April 2025.
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