The UK government announced today the launch of a new scheme aimed at helping to build long duration energy storage capacity by enabling investment in critical infrastructure.

Energy storage forms one of the major building blocks for the rapidly expanding clean energy transition, given the intermittent generating nature of many sources of renewable energy, such as wind and solar, and the need to satisfy round-the-clock energy demand, while ensuring that energy is not wasted.

Long duration energy storage (LDES), including technologies such as pumped storage hydro, liquid air energy storage, compressed air energy storage and flow batteries, enable increased use of renewable energy, by storing energy and releasing it onto the grid and into homes when needed. Despite typically having low operating costs, however, high upfront costs act as a barrier to the development and deployment of the technologies.

The announcement follows a consultation held earlier this year which proposed a cap and floor scheme to encourage LDES investment. The scheme would provide revenue support to developers if the difference between the revenues from selling electricity back to the grid, and the cost of charging were to fall below a set floor, offering confidence to investors that operators will still be able to meet debt payment obligations if revenues fall below expectations. In return for underwriting the risk, a revenue cap is put in place with LDES asset owners required to share profits above a certain level.

UK Energy Minister, Michael Shanks, said:

“With these projects storing the surplus clean, homegrown energy produced from renewable sources, we can boost our energy security by relying less on fossil fuels, protect household bills, and help deliver our key mission to make Britain a clean energy superpower.”

The UK’s Office of Gas and Electricity Markets (Ofgem) will design the investment support scheme, which is anticipated to be split into separate application routes for mature technologies and new innovations. The scheme’s first round is expected to be open to applicants next year.

Beatrice Filkin, Director of Major Projects at Ofgem said:

“We are pleased to see the government’s publication today on its plans for long duration electricity storage. Unlocking investment in this important technology is another significant step towards decarbonisation of the power system.”