On October 10th, the UK Department for Net Zero Emissions and Energy Security (DESNZ) confirmed a new plan aimed at stimulating investment in the country's Long Term Energy Storage (LDES) sector.

According to government departments, the new support plan adopts a "upper and lower limit" mechanism to "eliminate obstacles that have hindered the construction of new energy storage projects for nearly 40 years". The first round of upper and lower limit mechanisms for LDES technology was designed and implemented by the UK energy regulatory agency Ofgem. The specific details of the mechanism have not yet been announced, and it is confirmed that it is expected to be open to applicants in 2025.

This announcement was made after a consultation period held at the beginning of the year. This mechanism will provide investors with income certainty by ensuring income above the agreed minimum limit, and protect consumers by limiting income to the agreed upper limit. The investment support program will be divided into two application channels, one focusing on mature technology and the other on innovation.

UK Energy Secretary Michael Shanks stated that we are reversing the 40 year tradition of no new LDES, taking measures to unleash private investment in existing and new technologies, and emphasizing that the new plan will help the Labour government achieve its goal of building the UK into a 'clean energy superpower'.

It is worth noting that the current long-term energy storage in the UK mainly consists of four pumped storage (PHES) projects in Scotland and Wales, with a total installed capacity of 2.8 GW. PHES is not the only LDES technology expected to be promoted in the UK market. In fact, the UK government has listed liquid air energy storage, compressed air energy storage, and flow batteries as innovative technologies that will benefit from investor support.

According to DESNZ's analysis, if 20 GW of LDES are deployed, the power system can save £ 24 billion ($31 billion) between 2025 and 2050, which will reduce household energy costs as more affordable renewable energy can be used to meet peak demand and reduce dependence on expensive natural gas.

The introduction of the "upper and lower limits" mechanism has been warmly welcomed by the UK LDES industry, with many agreeing that it will provide much-needed support that PHES has lacked for many years: Roderick MacLeod, Energy Director of Glen Earrach Energy, the developer of the 30 GWh PHES project at Balmarkain Estate in Scotland, said that the company fully supports the government's initiative to adopt a limit and lower limit mechanism;

UK energy storage developer Field has so far focused on short-term battery energy storage system (BESS) projects, and the company also welcomes the news of the "upper and lower limit" mechanism. CEO Amit Gudka said it will provide greater revenue certainty for LDES developers, but success will depend on the details of the design, and the mechanism must "avoid suppressing existing market prices or creating a double subsidy environment - for example, eligible long-term energy storage systems can simultaneously receive lower limit revenue and capacity market revenue".