UK LDES cap-and-floor auction attracts 171 bids in first window

The UK government’s new cap-and floor scheme for long-duration energy storage (LDES) attracted 171 bids in its first application window, according to Ofgem. Great Britain’s energy sector regulator will now consult with industry stakeholders on a financial framework for projects in the scheme.

An Ofgem spokesperson confirmed to ESS News that the 171 project applications suggest there “should be sufficient capacity” to meet any potential LDES targets set by the National Energy System Operator (NESO) when it publishes its in its Strategic Spatial Energy Plan, is expected in early 2026.

Cap-and-floor schemes work by providing revenue support to developers should their annual gross margin – the difference in revenues from charging and selling electricity to the grid – fall below a set floor level. The UK scheme is designed to support LDES assets capable of providing power for eight hours or more.

Ofgem is now seeking views on the detailed design of the financial parameters for the scheme. These include how the levels for the price cap and floor will be set, how capital and operational costs will be treated, and what incentives and protections will be built into the regime to ensure value for consumers while supporting investment in LDES. The consultation is open until July 17 and Ofgem aims to publish a final version of the scheme’s financial framework later in 2025. Project approval decisions are expected in the second quarter of 2026.

The UK government first announced it would introduce a cap-and-floor scheme to support the rollout of LDES in October 2024, and the window for applications opened on April 8, 2025. Technologies eligible for support through the LDES cap-and-floor scheme have been split into two tiers. Established technologies, such as lithium-ion battery energy storage systems (BESS), with a minimum power output of 100 MW are categorized as “stream 1” technologies. Less mature technologies, such as liquid-air energy storage (LAES) and compressed-air electricity storage (CAES), with a minimum power output of 50 MW, are assessed as “stream 2” technologies.