The government has published its Technical Decision Document confirming the crucial aspects of the long duration electricity storage (LDES) cap-and-floor scheme, with an increase in minimum duration among the main updates.
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 between one to three-hour duration (very occasionally higher).
One of the most significant new details 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.
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 eight-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. Our sister site Energy-Storage.news just 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.
The structure of the scheme remains unchanged with two streams. Stream 1 will be for technologies with a technology readiness level (TRL) of 9 and will have a minimum size of 100MW, while Stream 2 will be for those with a TRL of 8 and will have a minimum size of 50MW.
The government is aiming for the scheme to support the deployment of between 2.7GW and 7.7GW of LDES capacity up to 2035, based on NESO’s Future Energy Scenarios (2024). With the 8-hour duration that means a storage capacity of 21.6-61.6GWh of LDES, potentially more after 2035.
Ofgem will conduct initial cost assessments and set preliminary cap and floor levels in its Project Assessment decision in Q2 2026. That quarter will also see the regulator set out progress milestones that
developers must meet to ensure timely delivery of projects.
Because of ongoing grid connection queue reforms, projects will only need to provide evidence that grid
connection application has been submitted and there will be flexibility on obtaining planning consent
within delivery timeframes to be online by 2030. The grid connections reform was discussed by Ofgem’s head of connections policy Alasdair MacMillan at the Energy Storage Summit EU 2025 in London last month, put on by our publisher Solar Media.
Ofgem also said it and NESO are exploring whether successful bids for the LDES cap and floor
which have lost their place in the queue because of the reforms will be able to re-enter.
The window for applying to the scheme opens in April. Read the full technical decision document from Ofgem here.
