TL;DR:
- Ofgem shortlisted 16 long-duration energy storage (LDES) projects on July 1, 2026, under its new cap and floor support scheme
- The scheme guarantees a revenue floor when wholesale prices are low and takes a share of returns when prices are high — reducing investment risk without full government subsidy
- Long-duration storage is critical for keeping the grid stable when the wind isn’t blowing and the sun isn’t shining, filling a gap that lithium-ion batteries cannot economically cover
Britain has plenty of short-duration battery storage now. The problem is what happens after the first two to four hours. When a period of low wind and low solar extends overnight, or across a cloudy, still winter week, the grid needs storage that can sustain output for eight, twelve, or even hundreds of hours. That capability barely exists yet. On July 1, 2026, Ofgem moved to start building it.
The regulator announced the shortlisting of 16 projects under its cap and floor scheme for long-duration electricity storage. It is the first structured government-backed revenue support mechanism specifically aimed at technologies that can store energy across timescales ranging from a full day to seasonal cycles.
What the Cap and Floor Scheme Is
Long-duration storage projects face a commercial problem that shorter-duration batteries do not. A two-hour lithium-ion battery can earn strong revenues by responding to daily peak demand spikes. A project designed to charge over weeks of low demand and discharge during extended high-demand periods might sit dormant for months, then earn significant revenues in a crisis period. That revenue profile is too lumpy and unpredictable for most private investors.
The cap and floor scheme addresses this by providing a revenue collar. When market revenues fall below a guaranteed floor, the government (via an intermediary) tops up payments to the developer. When revenues rise above a cap, the developer shares the surplus with the mechanism. Investors get downside protection; the public gets some upside participation during high-price periods.
This structure is similar to the Contracts for Difference model used for offshore wind, but adapted to the different operational profile of storage. Unlike a wind farm that generates predictably from new capacity, a storage project’s value comes from its flexibility — its ability to arbitrage across time. The cap and floor mechanism works with that profile rather than against it.
The 16 Shortlisted Projects
Ofgem has not published the full list of shortlisted projects, but the shortlist is understood to include a range of technologies beyond conventional lithium-ion. Long-duration storage covers several distinct technology families:
Flow batteries store energy in liquid electrolytes held in external tanks. Scale is limited by tank size rather than electrode surface area, making them viable for very large capacity at lower cost per kilowatt-hour for long durations.
Compressed air energy storage uses surplus electricity to compress air into underground caverns or vessels, releasing it through turbines when power is needed. Projects at the scale of hundreds of megawatts have been proposed for suitable geology in the UK.
Liquid air energy storage (LAES) compresses and cools air to liquid form during surplus periods, then re-expands it through turbines on demand. Highview Power’s CRYOBattery technology, already operating at a pilot site in Manchester, is among the approaches likely to be represented.
Pumped hydro remains the most proven long-duration technology globally and already provides the vast majority of global grid-scale storage capacity. New UK pumped hydro projects face planning and geography constraints, but several proposals exist.
Why This Matters for the Grid
The UK government has a target of running the electricity grid on clean power by 2030. That target is achievable in terms of generation capacity — offshore wind, solar, and nuclear together can produce sufficient output across the year. The challenge is matching supply to demand when generation dips.
The National Grid Electricity System Operator (NESO) has modelled that achieving the 2030 clean power target requires significant long-duration storage to manage multi-day weather events. Without it, the grid would need to keep more gas peaker plants on standby as backup, which both emits carbon and inflates electricity prices.
Short-duration battery storage cannot solve this. A lithium-ion system that charges and discharges daily is economically optimised for that cycle. Extending it to multi-day or weekly discharge either requires enormous and expensive battery banks or degrades the economics of the whole project. Long-duration storage is a structurally different product that requires structurally different investment support — which is what the cap and floor scheme provides.
What Comes Next
Shortlisting is not yet contract award. Selected projects will move into a due diligence and negotiation phase with Ofgem and DESNZ (the Department for Energy Security and Net Zero). Not all shortlisted projects will reach financial close, and timelines for construction vary considerably by technology.
The earliest projects reaching operation under this scheme would likely come online in the late 2020s, with the main wave following around 2030. That aligns, somewhat tightly, with the government’s clean power target.
For homeowners and small businesses, the relevance is indirect but real. Long-duration storage at grid scale is one of the factors that determines how much backup gas generation the grid needs in any given year, and therefore how exposed retail electricity prices are to wholesale gas market swings. An Ofgem report in April 2026 estimated that a fully built-out LDES fleet could reduce the need for gas peaker plant by 60% by 2035, which would have a meaningful effect on bill volatility.