The UK government has released its consultation on the proposal to initiate investment into Long Duration Electricity Storage (LDES). LDES is a key step in the UK’s transition to net-zero, offering flexibility in a decarbonised energy system allowing a move away from unabated gas generation. The consultation proposes a cap-and-floor mechanism with two application routes, Stream 1 and Stream 2, for non-lithium-ion storage exceeding six-hour durations.

Cap-and-floor Mechanism

The cap-and-floor mechanism proposed is similar to the existing ‘Contacts for Difference’ (CfD) scheme deployed to support low carbon electricity generation. CfDs since 2014 have facilitated investments into 30GW of low carbon energy production. The proposed mechanism aims to stimulate growth in the area by overcoming barriers of revenue certainty, high upfront capital costs and long build times. This approach provides revenue certainty for investors by guaranteeing revenue should returns drop below an agreed floor.  Additionally, it offers consumer protection providing a cap on the revenue that operators can earn.

Dual Streamed Application Process

Applications to this mechanism will be…

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