Policy support for long duration energy storage in the UK looks set to use a cap and floor model which we see as a positive move, helping to reduce funding uncertainty for projects going forward. The consultation identifies a need for long duration flexible electricity capacity of at least 30GW and up to 50GW by 2035, making this an important area of opportunity in the UK power market. The consultation closes on 5th March so we could see final policy being announced during 2024.

Key Takeaways:

Cap and Floor Mechanism Reduces Investment Risk
The UK government is proposing a cap and floor support scheme—offering top-up payments when revenues fall below the floor and clawbacks when above the cap—ensuring greater revenue certainty for long duration storage developers.

30GW–50GW of Capacity Required by 2035
The scale of need highlighted (up to 50GW of capacity) signals a major market opportunity for both proven and novel storage technologies.

Cruachan Project Set to Benefit
Drax’s 600MW Cruachan pumped storage expansion has already received development consent and is likely to be an early recipient of cap and floor support, underlining the viability of large-scale pumped hydro.

Support for Novel Technologies Like Flow Batteries
Companies such as Invinity, developing vanadium flow batteries, are positioned to benefit, with their classification as ‘novel’ technologies potentially opening up dedicated funding pathways.

Model May Be Replicated Beyond the UK
While Corre Energy is not actively targeting the UK, its compressed air energy storage technology could benefit from similar frameworks elsewhere in Europe if the UK model proves successful.

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