On 11 March 2025, Ofgem and DESNZ jointly published the Long Duration Electricity Storage (LDES) Technical Decision Document (the TDD), a pivotal moment in the evolution of the UK's energy infrastructure. Our previous briefings, Incentivising Long Duration Electricity Storage – Ofgem’s call for input and Facilitating investment in long duration energy storage) cover the broad premise of the proposals for a cap and floor regime for Long Duration Electricity Storage (LDES). However, the TDD now provides some of the much-needed detail of the scheme specifics and how it will operate in practice once implemented.

Implementation of the Cap and Floor Scheme

The LDES cap and floor regime will be legislated for under the Planning and Infrastructure Bill, which was introduced to Parliament on 11 March 2025 (see Introduction of the Planning and Infrastructure Bill: Energy implications for more information). The details of the scheme for projects granted a cap and floor regime will be outlined in the licences held by LDES operators.  In addition, Ofgem will implement separate modifications to broader industry frameworks to support the cap and floor regime, specifically the use of network charges to settle payments.

The timeline for these licence changes and related code modifications is due to be published by Ofgem in Q2 2025.

Application process

The TDD outlines the application window timelines and the process for selecting eligible projects, with the first two-month application window set to open in April 2025. 

Applications will be assessed through a multi-stage process:

1. Stage 1: Eligibility Assessment - Beginning in Q2 2025, Ofgem will evaluate the applications to confirm which projects meet the eligibility criteria (see below). This assessment will take approximately two months, with the eligibility decisions expected by Q3 2025. Only projects that pass this initial assessment will proceed to the next stage.
2. Stage 2: Project Assessment - In Q3 2025, projects that have passed Stage 1 will be required to submit detailed cost information. This information is essential for the Cost-Benefit Analysis (CBA) and project assessment, which will begin in Q4 2025. This information will inform the initial decision and award under the regime, expected by Q2 2026.

During Q1 2026, Ofgem will consult on its initial decision regarding which projects will be granted the cap and floor regime. If necessary, successful projects may be permitted to submit updated cost information in Q2 2026 to more accurately set the cap and floor levels. The final decision on the cap and floor levels, along with all relevant input parameters, will be made by the end of Q2 2026.

1. Stage 3: Monitoring and Post-Construction Review - Following award under the scheme, Ofgem will monitor the approved projects against set milestones. This monitoring will focus on how developers manage risks such as supply chain issues, costs, delays, and overall progress. The monitoring phase is expected to begin in Q1 2029.

Once an LDES project has been delivered, Ofgem will conduct a post-construction review (PCR) to set the final cap and floor levels. This review ensures that the projects meet the required standards and contribute effectively to the UK's energy infrastructure.

The TDD confirms that Ofgem will assess all projects in parallel but may use a 'twin track' approach if needed to manage and assess projects based on their deliverability timelines (Track 1 for projects deliverable by 2030 and Track 2 for those by 2033). The indicative capacity range confirmed in the TDD is 2.7 to 7.7 GW, with LDES assets to be subject to the cap and floor for a 25-year term (shorter terms of 20+ years may be negotiable).

Eligibility criteria

The TDD confirms the eligibility criteria set out in Ofgem’s December 2024 ‘Call for Input’ (see Facilitating investment in long duration energy storage), namely:

• Deliverability: Developers must provide all relevant information including FEED studies appropriate to the project's development stage, economic viability studies and detailed project and business plans
• Grid connection: Evidence that grid connection application has been submitted.
• Planning consent: Planning consents in place by Q3 2025 or evidence of submitted applications likely to be granted (for 2030 deliverable projects).
• Capacity and duration limits: An asset must be capable of discharge at full power for at least 8 hours, and full power must be at least 50MW or 100MW (depending on technology maturity).
• Extension and refurbishment: As previously proposed, significant refurbishments expanding capacity or altering purpose may be eligible; ongoing maintenance or minor refurbishments will not be.

By providing a structured framework for the cap and floor regime, the TDD lays the foundation for the development of LDES solutions that are essential for UK grid resilience and stability. However, to fully realise the potential of the initiative, further clarity is needed in areas such as the methodology for setting the cap and floor thresholds, integration with existing infrastructure, long-term policy stability, and environmental and social impact assessments. Addressing these gaps will be crucial in fostering a robust and investor-friendly environment, ultimately driving the UK towards a more sustainable and resilient energy landscape.