Ofgem opens funding window for new large battery projects in Britain

Britain is poised to enhance its renewable energy storage capabilities through a new funding scheme initiated by the regulator Ofgem. This move follows decades without significant developments in long-duration energy storage, particularly since no new pumped storage hydropower sites have been constructed in over 40 years. Currently, Britain operates four such facilities located in Scotland and Wales, with notable ones including Electric Mountain at Dinorwig. The lack of new sites has hindered the country's ability to store excess renewable energy effectively, despite rising demands and the government's commitment to achieving net zero carbon emissions by 2050. To address this issue, Ofgem has introduced a cap-and-floor financing model aimed at lessening the risks associated with large-scale energy storage projects. This model ensures that developers receive a guaranteed income floor while capping the maximum revenue potential. By creating an environment more attractive for investors, Ofgem aims to foster the development of 'super-batteries' that can store energy during low-demand periods and release it when necessary, especially as the reliance on fossil fuels is intended to decrease. Energy Minister Michael Shanks emphasized the importance of this initiative, noting that the advancement of energy storage technology is crucial for building a sustainable energy infrastructure. Despite the challenges posed by the costs associated with developing new hydropower sites, which have previously deterred investors, the long-term benefits to consumers and the economy are expected to be significant. This includes not only job creation but also a reduction in energy bills as the country moves towards greener energy solutions. As the first application window for the new funding scheme has recently opened, Ofgem anticipates that a selection of projects could be approved as early as the first half of 2026. The plans aim to bolster Britain's clean energy sector and ensure energy independence moving forward, ultimately leading to less volatility in electricity prices and enhancing the use of renewable sources like wind and solar power whenever conditions are favorable for energy generation.