The British Hydropower Association (BHA) and Scottish Renewables are urging the UK Government to implement a ‘cap and floor’ mechanism to accelerate investment in long-duration electricity storage (LDES), including pumped storage hydropower (PSH). They have addressed a joint letter to Ed Miliband, Secretary of State for Energy Security and Net Zero, Ian Murray, Secretary of State for Scotland, and Jo Stevens, Secretary of State for Wales.
The letter, co-signed by major pumped storage hydropower developers, highlights the UK’s pipeline of more than 9GW of capacity, including several ready-to-start projects. The proposed ‘cap and floor’ mechanism aims to balance commercial incentives with risk mitigation, providing revenue certainty for investors while capping excessive returns.
“With economic growth and renewable energy at the centre of the new government’s agenda, there is an opportunity to demonstrate a step-change in decision-making after years of delay and uncertainty,” said Kate Gilmartin, CEO of the British Hydropower Association. “By prioritising the urgent delivery of a cap and floor mechanism, we can send positive signals to international investors and trigger large-scale capital projects and job creation.”
Claire Mack, Chief Executive of Scottish Renewables, added: “The UK Government has set a bold and ambitious target of achieving clean power by 2030. To deliver on this target, it is essential that Long Duration Electricity Storage is deployed at pace alongside renewable generation.”
The industry is urging the government to:
- Publish its response to the 2024 LDES consultation by August.
- Establish a policy framework by the end of 2024 with a consultation on the scheme’s detailed design in early autumn.
- Open the first application window for LDES technologies by early 2025.
Ian Murray MP, at a recent BHA event, acknowledged the importance of the ‘cap and floor’ mechanism, calling it “key” to securing investment in new projects.
According to a report by Scottish Renewables, six pumped storage hydropower projects under development could deliver £5.8 billion in Gross Value Added (GVA) and create nearly 15,000 jobs by 2035. Additionally, the Department for Energy Security and Net Zero estimates system savings of up to £24 billion from deploying up to 20GW of long-duration electricity storage.
Despite the potential benefits, no new pumped storage hydropower capacity has been built in the UK for over forty years due to a lack of policy support. The BHA and Scottish Renewables represent developers with a combined pipeline of more than 9GW of new pumped storage hydropower projects, offering over 190GWh of storage capacity, many of which are ready to proceed pending the implementation of a cap and floor mechanism.
Earlier this month, Malcolm Turnbull, President of the International Hydropower Association (IHA), wrote an open letter to Keir Starmer, the newly appointed UK Prime Minister, advocating for a significant expansion of the UK’s hydropower capabilities.
