The UK government has published a Technical Decision Document confirming crucial aspects of its long duration electricity storage (LDES) cap-and-floor scheme, which includes increasing the minimum duration required from six hours to eight.
The document, released by regulator Ofgem on 11 March, details the final overarching rules and requirements for the scheme as well as how it will be implemented, though significant detail still remains to be worked out.
The scheme will provide a cap-and-floor revenue protection for 20-25 years that will allow all capital costs to be recoverable, and is effectively a subsidy for LDES projects that may not be commercially viable without it. Most energy storage projects being deployed in the UK today are lithium-ion battery energy storage systems (BESS) of somewhere between 1-hour and 3-hour in duration (very occasionally higher).
One of the most significant new details of the scheme is that, following industry feedback, the minimum duration for projects to qualify has been increased from six hours to eight hours of continuous rated power.
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The ‘continuous rated power’ aspect prevents shorter duration projects from bidding in a smaller section of their MW capacity in order to act like an 8-hour system.
Another interesting detail pointed out by several commentators is that the cap is a ‘soft’ one, meaning it will allow extra revenue to be shared between developers and consumers. Exact details on the ratio are yet to be determined.
Lithium-ion looks set to be eligible with the government initially having suggested it would be excluded, when the LDES scheme was first proposed in January 2024.
Last week, we published a guest blog from lithium-ion OEM Envision where the firm argued that lithium-ion was now cost-competitive at up to 10 hours of discharge duration.
In a recent interview, a partner from Gore Street Capital, which manages the Gore Street Energy Storage Fund (GSF), said the firm was planning to bid in to the scheme with its numerous UK lithium-ion BESS assets (Premium access article).
See the full version of this article on our sister site Solar Power Portal.
