Ofgem has shortlisted 16 long-duration energy storage (LDES) projects under its new cap-and-floor support scheme, as Solar Power Portal reports. The regulator aims to back an ‘appropriate mix’ of technologies, from pumped hydro to liquid air and flow batteries, to store renewable electricity for hours or even days. The list includes projects with capacities ranging from 50MW to 1GW, totalling over 10GW of potential storage, enough to power millions of homes during peak demand.
What the cap-and-floor scheme does
The cap-and-floor mechanism, as detailed by Power Technology, is built to de-risk investment in long-duration storage. Developers get a guaranteed minimum revenue (the floor) if market prices fall, but must share excess profits above a cap. This model has already worked for interconnectors and offshore wind. It encourages private capital into a sector where upfront costs, often hundreds of millions of pounds, are prohibitive without government backing.
The catch is that the scheme does not fund storage itself. Instead, it underwrites revenue, meaning developers still need to raise finance. But with 16 projects shortlisted, including some that could be operational by 2030, the pipeline is real. Yahoo Finance notes that the shortlist includes a mix of established pumped hydro schemes and novel technologies like liquid air and vanadium flow batteries.
What it means for a typical 3-bed semi
For the average homeowner, this is not about direct grants. The Boiler Upgrade Scheme and ECO4 remain the main routes for heat pumps and insulation. But LDES matters for your electricity bill in two ways.
First, cheaper grid storage reduces the cost of balancing supply and demand. National Grid pays gas plants to turn on when wind drops, costs that land on your standing charge. The more storage capacity, the less gas backup is needed. The cap-and-floor scheme could shave £10–£20 a year off the average household’s grid balancing costs by the early 2030s, according to industry estimates.
Second, it makes solar-plus-battery installations more viable. If the grid can store excess solar from summer afternoons and release it in winter evenings, the case for rooftop solar strengthens. Homes with batteries already benefit from time-of-use tariffs; grid-scale storage amplifies that effect by smoothing wholesale prices.
Who qualifies, and who doesn’t
The cap-and-floor scheme is for large-scale projects only, think 50MW and above. Small community batteries or home storage units are not eligible. But the knock-on effect is real: more grid storage means less curtailment of renewable generation, which could lower wholesale electricity prices. Ofgem’s own modelling suggests a 5–10% reduction in wholesale costs by 2035 if LDES deployment hits 20GW.
Homeowners considering solar should know that battery storage at home remains unsubsidised. The Smart Export Guarantee pays for exported power, but not for storage. However, with grid-scale storage growing, the risk of solar panels being ‘wasted’ during sunny periods falls. Pairing a battery with your solar array, typically £4,500–£6,000 for a 5kWh unit, becomes a better bet when the grid can absorb surplus.
Next steps for homeowners
There is no grant to apply for here. But the LDES shortlist signals that the UK is serious about long-duration storage. Homeowners should:
- Check if your energy supplier offers a time-of-use tariff that rewards off-peak battery charging. Octopus Flux and similar tariffs can cut charging costs by half.
- Consider a solar-plus-battery quote if you have a south-facing roof and an EPC rating of D or below. The upfront cost is high, but payback periods are shortening.
- Monitor Ofgem’s final investment decisions on these 16 projects. If they proceed, expect grid balancing costs to fall gradually.
- Contact a certified Microgeneration Certification Scheme (MCS) installer for a solar assessment. The current VAT rate on solar and batteries is 0% until 2027.
Households on standard variable tariffs will not see immediate savings. But those who can shift consumption to off-peak hours, via a battery or smart charging, will benefit most as grid storage expands.
Frequently Asked Questions
No. The scheme is for large-scale projects (50MW+), not home batteries. Homeowners can still benefit from cheaper grid balancing costs and better solar-plus-battery economics over time.
Not immediately. But as LDES projects come online, they could lower wholesale electricity prices and grid balancing costs, potentially cutting standing charges by £10–£20 a year by the early 2030s.
More grid storage reduces curtailment of solar generation, meaning your panels are less likely to be 'wasted' on sunny days. This improves the case for adding a home battery and can shorten payback by 1–2 years.
