Emboldening an Emerging Industry
In a promising development towards energy sovereignty and net zero, the UK government has launched an ambitious new scheme to embolden the Long Duration Electricity Storage (LDES) industry. Announced on 10th October 2024, the initiative introduces a "cap and floor" model that will unlock much-needed investment in energy storage technologies, marking the first major development in this area in almost 40 years.
LDES plays a crucial role in balancing the grid by storing surplus renewable energy, such as wind and solar when it’s abundant, and releasing it when demand requires. LDES technologies like pumped hydro, which can hold vast amounts of energy by pumping water uphill and releasing it when grid demand is high, are commonly said to be the key to unlocking a sustainable electricity system.
De-risking investment in ambitious capital projects, especially in emerging sectors such as LDES, is where government intervention is welcome. The scheme will help scale up the UK’s current 2.8 GW of LDES capacity, with an aspiration of reaching 15.3 GW by 2050, key to achieving the UK’s net zero ambitions.
The cap and floor model ensures developers a stable income, reducing the financial risk that has stifled investment in these innovative projects. It offers a guaranteed minimum income—the "floor"—to developers while capping excessive profits. The result will be a tangible benefits for both investors and consumers, promising billions in savings for the electricity system and more affordable bills for households.
Energy Minister Michael Shanks summarises: “We’re unlocking the future of renewable energy in Britain, building the storage capacity we need to keep the lights on when the sun isn’t shining, or the wind isn’t blowing. It’s about securing our energy future, lowering bills, and driving forward our mission to make Britain a clean energy superpower.”
The scheme will be open to applications in 2025, and with new projects expected to be operational by 2030, the UK is on track to play a world leading role in energy storage technology, bolstering energy security and reducing reliance on volatile fossil fuel markets. This is a vital step in the UK’s drive to not only reach net zero but also ensure a resilient, sustainable energy grid for future generations.
