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Regen and the Electricity Storage Network have responded to Ofgem's open letter and call for input on the proposed design and implementation of the Long Duration Electricity Storage (LDES) cap and floor scheme. Our response follows a previous response to DESNZ in March 2024 and our report in partnership with LCP Delta for the government, which has informed policy.
The key messages in our response include that Ofgem should:
Provide some flexibility for planning given the challenges in the planning system and align with ongoing grid connection reform timeframes (updated offers due by the end of 2025).
Set an eight-hour duration eligibility criteria for the LDES cap and floor scheme, an overall target, and pots of requirements that align with system needs. This could ensure some alignment between Clean Power 2030 requirements and the capacities and durations being procured through the allocation windows of the LDES cap and floor scheme.
Confirm at the earliest opportunity that the cap and floor scheme is technology agnostic, and to clarify definitions of novel iterations of Li-Ion battery storage in Stream 1 applications.
Stepping out of the details of the mechanism, perhaps an overarching point coming through from this open letter, is around how much LDES we will actually need.
The recently published Clean Power 2030 plan by the UK government, included 4-6 GW of LDES capacity required by 2030 and a proposed minimum duration of 6 hours. This was noted to be a little different to NESO's original recommendations to the government, as taking their numbers of 5-8 GW of power capacity and 81-99 GWh of energy storage capacity, the range of duration required was closer to 12-16 hours. Ofgem have, in this open letter, proposed different requirements across the two streams of the cap and floor mechanism, currently aiming to assess applications based on:
This potentially reinforces the need for further clarity on the system needs for LDES, and the durations of balancing/system events in a future clean power system that LDES projects of various durations can look to support.
The topic of permitting lithium-ion battery storage to bid into the scheme has not been explicitly addressed in Ofgem's letter. Whilst it is clear that Stream 1 applicants must be at TRL 9, the previous government response document referred to enabling 'novel iterations' of lithium-ion battery storage projects to apply. Ofgem will need to provide more clarity on technology agnosticism as an aspect of the entry criteria through the TDD.
This is a strategic policy area for ESN that we track in the Innovation and Technology working group. The next working group meeting is online on 25 February. To talk to us more about our wider work and engagement around LDES, please contact Ray Arrell.
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