Ofgem opens first ever Long Duration Energy Storage cap and floor scheme

Overall, this is a positive and significant milestone in the introduction of a new market and revenue support mechanism for electricity storage in the UK. It is the culmination of a lot of analysis, industry consultation and detailed policy development.

In the letter, Ofgem have confirmed some key dates:

• 8 April 2025: Application Window 1 opens for Stream 1 (100 MW, 8hrs, TRL 9) and Stream 2 (50 MW, 8 hrs, TRL 8) LDES technology projects
• 22 April 2025: Applicants must notify Ofgem of intent to apply
• 9 June 2025: The deadline for applications to be submitted (noting that further information may be required in the run-up to this date)
• June 2025: Ofgem will also be consulting on the Cap and Floor financial model, (including approaches to introduce competition into the calculation of the cap)
• Q3 2025: The details of the proposed cost benefit analysis framework will be developed by Ofgem (with the support from the National Energy System Operator), consulted on in Q2 and finalised for publication (with accompanying guidance/templates) in Q3 2025
• Q4 2025: Applicants that pass eligibility assessment will be asked for detailed cost information in Q3/Q4, for assessment in Q4. The ‘by 2030’ and ‘by 2033’ twin-track approach may be applied to this detailed CBA assessment step
• Q1 2026: Alongside the eligibility assessment and CBA, Ofgem is also intending to advise on the timing for opening Window 2 of the scheme in Q1 2026. This will assess the LDES capacity that has passed Window 1 eligibility and CBA, advice from NESO and overall alignment with the SSEP.

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Ofgem have also published a ‘blow by blow’ guidance document about the application, eligibility and CBA assessment stages, as well as a deeper overview of the eligibility framework itself.

So lots to unpack! As ever, we will be digesting these documents, their impacts and engaging further with our Electricity Storage Network members. We will specifically be looking for further clarity around the nature of battery storage projects seeking to apply, and how the eligibility assessment criteria for this cap and floor scheme aligns with both the CP30 technology cap for battery storage and the definition of designated projects for LDES within NESO’s grid connections reform methodology.

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