Ofgem announced on 26 June 2026 that it has moved its long‑duration electricity storage (LDES) programme in Great Britain from eligibility assessment to the next stage of project selection. Sixteen projects spanning pumped‑storage hydro, compressed‑air storage, lithium‑ion batteries and vanadium‑redox flow batteries were provisionally selected for support under the regulator’s cap‑and‑floor scheme, a step that could shape future grid reliability and capital planning for utilities and developers.
Ofgem’s Minded‑to‑Decision List and Selected Technologies
The regulator released a “Minded‑to‑Decision” list identifying 16 projects that will enter the final selection phase for LDES support. The portfolio comprises four technology classes:
- Pumped‑storage hydro (PSH) – the only mature large‑scale LDES, already operating at 2.8 GW across Scotland and Wales.
- Compressed‑air energy storage (CAES) – projects under development that store compressed air in underground caverns.
- Lithium‑ion batteries – modular systems capable of eight‑hour or longer discharge.
- Vanadium redox flow batteries (VRFB) – a selected project in north Wales adds geographic diversity.
The projects are distributed across Scotland and England, with the sole Welsh entry being a VRFB facility. Ofgem expects the portfolio to reduce costs by easing pressure on transmission and distribution networks and by limiting the need for new infrastructure or constraint‑management payments.
Policy Context and the Cap‑and‑Floor Support Scheme
The LDES programme stems from the UK government’s October 2024 decision to introduce an investment‑support scheme, modeled on the successful electricity‑interconnection framework. The cap‑and‑floor mechanism provides a revenue ceiling (the “cap”) and a guaranteed minimum revenue (the “floor”) for participating projects. If a project’s revenue exceeds the cap, the surplus is returned to consumers; if revenue falls below the floor, consumers cover the shortfall. This structure aims to deliver “down‑side protection” while ensuring any upside benefits are shared with ratepayers.
The first application window opened in April 2025, with projects screened against published eligibility criteria. Those meeting the criteria submitted detailed bids, which were evaluated to produce the current Minded‑to‑Decision list. Ofgem will now seek stakeholder feedback on the list until 7 August 2026, after which final determinations are expected later in the year. Unsuccessful projects may re‑apply in future windows or pursue merchant‑only development.
Market Relevance for Grid Operators and Investors
LDES systems, defined as storage capable of eight hours or more of discharge, are positioned to balance intermittent wind and solar generation, especially during periods of low renewable output. By providing flexible, dispatchable capacity, the selected projects could:
- Lower the need for costly new transmission or distribution upgrades.
- Reduce constraint payments to wind‑farm operators by mitigating curtailment.
- Offer system services such as frequency response and black‑start capability.
For investors, the provisional inclusion in the cap‑and‑floor scheme offers clearer revenue expectations, potentially unlocking private capital for large‑scale storage. For utilities and grid operators, the announced geographic spread signals where future flexibility resources may become available, informing long‑term network planning and procurement strategies.
Key Takeaways
- Ofgem published a Minded‑to‑Decision list on 26 June 2026, provisionally selecting 16 LDES projects for cap‑and‑floor support.
- The portfolio includes pumped‑storage hydro, compressed‑air storage, lithium‑ion batteries and a vanadium‑redox flow battery project in north Wales.
- Stakeholder consultation runs until 7 August 2026, with final project determinations expected later in 2026.
EnergyInsyte's Take
The announcement gives utilities and investors concrete visibility into which large‑scale storage projects may receive regulated revenue support, a factor that could influence grid‑capacity planning and financing decisions. However, final eligibility remains subject to stakeholder feedback and the regulator’s later determinations, so market participants should monitor the August consultation outcomes and any subsequent design changes to the cap‑and‑floor scheme.
Source: Ofgem
