Ofgem has opened the first application window for Long Duration Electricity Storage (LDES) projects under the UK government’s new cap and floor regulatory scheme. This follows the March 2025 Technical Decision Document published in collaboration with the Department for Energy Security and Net Zero (DESNZ). Ofgem expects to approve the first eligible projects by the second quarter of 2026.
The cap and floor model aims to support investment in large-scale long duration electricity storage by offering a minimum revenue level (floor) to manage high upfront costs and a maximum level (cap) to protect consumers. Ofgem, appointed as the scheme regulator due to its experience with electricity interconnectors, is overseeing the process.
Developers must submit full applications by 9 June 2025. To plan ahead, Ofgem asks interested parties to indicate their intent to apply by 22 April 2025 by emailing LDES@ofgem.gov.uk with project name, location, technology type, and preferred application track.
Projects eligible for consideration should aim to be operational by 2030 or 2033, aligning with the government’s Clean Power 2030 goals. Ofgem will assess applications through a cost-benefit analysis (CBA), developed in consultation with the National Energy System Operator (NESO). A draft framework for this analysis will be open for public input in the second quarter of 2025, with a final version expected in the third quarter.
Ofgem may split the CBA process into separate tracks based on delivery timelines, prioritising projects that can be delivered by 2030. Developers will be required to provide detailed cost data later this year, with submission templates and guidance expected in Q3.
Ofgem is also considering using competition to set the revenue cap rate, asking applicants to propose their target rate of return. A consultation on this and other financial model details is planned for June 2025. If competitive bids offer better value than a set administrative rate, Ofgem may proceed with a competition-based approach.
Applicants passing the eligibility stage will move on to the CBA stage. Not all eligible projects are guaranteed to proceed. Ofgem aims to provide an update in early 2026 on the timing of a second application window, which may be aligned with the Strategic Spatial Energy Plan (SSEP) or opened independently.
Further details, including the application form and guidance, are available on Ofgem’s website. Developers are expected to respond promptly to any requests for information and notify Ofgem of major project changes.
For questions or more information, developers can contact the LDES team at LDES@ofgem.gov.uk.
