What is the role of Long-Duration Energy Storage (LDES)?

As the deployment of intermittent renewable generation accelerates, LDES becomes increasingly essential to ensure grid stability, flexibility, and cost-effectiveness over time. The domination of wind in GB will drive longer periods of excess or shortfall of renewable generation. While there are many shorter duration periods of excess generation/demand that can be resolved with short duration storage, we will see many continuous periods of excess generation/demand that are 24 hours, or even 48 hours. This means that GB has an acute need for longer duration storage technologies.

What is the LDES Cap & Floor?

It is a support mechanism for long-duration electricity storage projects, Ofgem’s first allocation window awarded “minded-to” contracts to 16 projects representing 7.65GW of capacity. The projects have an average nominal duration of 18 hours, with around half of the awarded capacity expected to come online by 2030.

What stage is the LDES Cap & Floor at?

Results were published on the 26th of June with Ofgem awarded contracts to 7.65GW of projects, slightly below the maximum amount they could award in this window of 7.7GW. The current set of results represents a “minded to” position on the part of Ofgem as to which projects should receive support. These results were open to “consultation” where stakeholders were able to submit responses on the proposed portfolio of projects and the assessment approach taken by Ofgem.

How does LDES affect short-duration BESS revenues?

Additional LDES can increase competition for electricity price spreads, reducing the arbitrage opportunities available to short-duration BESS. The scale of the impact depends on the amount of LDES already assumed in the market outlook, as well as the timing and location of new projects.

The role and impact of LDES on the GB system

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Exploring the role of Long-Duration Energy Storage (LDES) in the GB power system and the impact of the LDES Cap & Floor scheme on the wider storage market

As more renewable generation is added to the system, large-scale deployment of flexibility is needed to balance supply and demand. The dominance of offshore wind means the need for LDES is particularly acute in Great Britain.

LCP Delta analysis has shown that deploying LDES can support a cheaper and more decarbonised power system. Our report for government showed that deploying 20GW of LDES by 2050 could save up to £24bn in power sector system costs.

To support the deployment of LDES, the government launched the LDES Cap & Floor scheme. Administered by Ofgem, the scheme provides revenue certainty for investors by providing a guaranteed revenue floor should returns from operating assets fall below an agreed level. It also offers protection to consumers by placing a cap on revenues, with revenue above the agreed cap returned to consumers.

Our LDES analysis

LCP Delta has been analysing the role of LDES and the development of the Cap & Floor scheme since the government first consulted on the mechanism in 2024.

Our work spans the system value of LDES, the economics of individual projects and the potential impact of additional LDES deployment on other storage technologies.

LDES Cap & Floor Impacts

Read the latest report on Spark

LDES will play pivotal role in providing the necessary flexibility needed in the GB power system, as shown by our analysis for government. The cap & floor scheme is needed as it provides LDES projects with a way to de-risk revenues and secure investment.

We supported many projects with their cap & floor scheme applications providing revenue forecasts and system benefits assessment of projects. This included 7 of the 16 projects that have given a successful ‘minded-to’ decision by Ofgem. New LDES projects will have wider impacts on the system as well and our latest analysis now looks at the impact that the LDES cap & floor projects will have on short-duration projects revenues and IRRs.

George Martin Principal and Lead Author

Latest analysis: The impact of LDES Cap & Floor on short-duration revenues

Ofgem’s first LDES Cap & Floor window has awarded “minded-to” contracts to 7.65GW across 16 projects, close to the top of its indicative range.

The results will accelerate the deployment of LDES in Great Britain and change the wider storage landscape.

Our latest analysis assesses what the Window 1 results could mean for short-duration electricity storage (SDES), using LCP Delta’s modelling to quantify the potential impact on energy arbitrage revenues and project returns for a 2-hour BESS coming online in 2030.

The analysis shows that the impact depends on the amount of LDES already assumed in the market outlook. Against a scenario with no new LDES, the example BESS sees a 2.7 percentage-point reduction in IRR over 2030–50. Against LCP Delta’s existing Central Scenario, where significant LDES deployment was already anticipated, the impact is much smaller at 0.5 percentage points.

This analysis and our wider LDES research will be relevant to:

Storage developers and asset owners
Assessing the changing revenue outlook for short- and long-duration storage.
Investors and infrastructure funds
Evaluating storage project economics and investment returns.
Power traders and optimisers
Considering how additional storage capacity could affect energy arbitrage and balancing opportunities.
Utilities and energy companies
Assessing the implications of LDES for existing and prospective storage portfolios.
Policy and market participants
Seeking to understand the wider market impacts and role of LDES in the GB power system.

Key findings from the latest analysis

7.65GW

LDES capacity awarded “minded-to” contracts across 16 projects
-2.7pp

Reduction in IRR for an example 2030 2-hour BESS versus a no-new-LDES scenario over 2030–50
-0.5pp

Reduction in IRR versus LCP Delta’s Central Scenario over 2030–50
£10/kW

Average reduction in energy arbitrage revenues versus a no-new-LDES scenario
£1/kW

Average reduction in energy arbitrage revenues versus LCP Delta’s Central Scenario

LDES Cap & Floor Impacts

Read the latest report on Spark

Explore our previous LDES analysis

The system benefits of long-duration energy storage

LCP Delta and Regen were commissioned by the Department for Energy Security and Net Zero (DESNZ) to assess the role of LDES in the GB power system.

The analysis found that LDES can reduce emissions and system costs, with the value increasing with longer storage durations. The study modelled more than 1,000 scenarios and found that deploying 20GW of LDES could save up to £24bn in power sector system costs between 2030 and 2050.

Read the report Read our analysis
The value of long-duration BESS to the GB power system

In 2025, LCP Delta worked with a consortium of BESS developers to reassess the role of long-duration BESS in meeting GB’s future storage needs.

The analysis found that long-duration BESS could deliver £17.8bn in total system cost savings by 2050 compared with alternative LDES technologies, while also highlighting how Cap & Floor design could affect investment across different storage durations.

Read the report
Ofgem’s LDES Cap & Floor decision

Following Ofgem’s Window 1 announcement, LCP Delta analysed the initial awards, including the scale and location of successful projects and what the decision could mean for the future GB storage market.

The initial decision awarded around 7.6GW across 16 projects, close to the top of Ofgem’s original range, with a significant proportion of capacity located in Scotland.

Read our reaction
What happens next for LDES?

This analysis looks at the implications of the Cap & Floor Window 1 outcome and the likely next steps for the scheme, providing further context for how the awards could affect the GB storage market.

Read on Spark (subscribers only)

Planning your next storage investment?

Understand how changing LDES deployment, market competition and location could affect storage revenues and investment returns.

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Your questions answered

: As the deployment of intermittent renewable generation accelerates, LDES becomes increasingly essential to ensure grid stability, flexibility, and cost-effectiveness over time. The domination of wind in GB will drive longer periods of excess or shortfall of renewable generation. While there are many shorter duration periods of excess generation/demand that can be resolved with short duration storage, we will see many continuous periods of excess generation/demand that are 24 hours, or even 48 hours. This means that GB has an acute need for longer duration storage technologies.

: It is a support mechanism for long-duration electricity storage projects, Ofgem’s first allocation window awarded “minded-to” contracts to 16 projects representing 7.65GW of capacity. The projects have an average nominal duration of 18 hours, with around half of the awarded capacity expected to come online by 2030.

: Results were published on the 26th of June with Ofgem awarded contracts to 7.65GW of projects, slightly below the maximum amount they could award in this window of 7.7GW. The current set of results represents a “minded to” position on the part of Ofgem as to which projects should receive support. These results were open to “consultation” where stakeholders were able to submit responses on the proposed portfolio of projects and the assessment approach taken by Ofgem.

: Additional LDES can increase competition for electricity price spreads, reducing the arbitrage opportunities available to short-duration BESS. The scale of the impact depends on the amount of LDES already assumed in the market outlook, as well as the timing and location of new projects.