Ofgem cuts LDES list to 16 projects, backing pumped hydro over batteries
UK regulator's cap-and-floor list signals where storage investment will flow, reshaping price-setting dynamics in the power market.
Ofgem has cut its long duration electricity storage support list from 77 candidate projects to 16, a "minded-to-decision" that clears the way for cap-and-floor revenue support on a handful of UK schemes5. The regulator's shortlist includes three pumped storage hydro projects, one compressed air energy storage facility and a slate of other technologies, but it is the pumped hydro names that dominate the headline capacity.
The decision matters because it determines which storage assets will get the revenue certainty to reach financial close in a market where merchant price signals have proven too thin. Ofgem's cap-and-floor mechanism underwrites a minimum return, which developers say is the difference between bankable and speculative. The three biggest pumped storage schemes alone account for roughly 3.8GW of planned capacity5.
Gilkes Energy's 1.8GW Earba scheme leads the list, followed by SSE's 1.4GW Coire Glas project and Statera's 660MW Loch Kemp investment5. Gilkes said drilling rigs had arrived at the Earba site last month as ground investigation work continues, and the company's chief executive framed the Ofgem decision as a signal of long-term viability to the supply chain6.
The timing is not accidental. The UK power market has been under scrutiny since a nationwide blackout hit 1.1 million customers in early August, and National Grid Electricity System Operator published its final technical report into the incident this week (week of 2026-05-18)1. That report questioned whether the system holds enough reserve capacity, with estimates for procuring additional reserves ranging from £50 million to £250 million per year1.
Batteries played a critical role in that event. Around 475MW of operational battery storage was used to restore grid frequency within four minutes of the blackout, a performance that has pushed National Grid to reconsider its reserve requirements1. But batteries are short-duration assets, and the Ofgem list is a bet that the system needs something that can discharge for hours, not minutes.
The economics of that bet are visible in the price-setting data. In the first quarter of 2026, batteries set power prices nearly a third of the time, helping drive a 12% reduction in average wholesale electricity costs3. That is good news for consumers but a warning for storage developers, because batteries setting prices means low-priced hours are being capped, squeezing the arbitrage revenue that merchant storage relies on.
Pumped hydro operators face a different problem. Their projects take years to build and cost billions, which is why Ofgem's revenue floor matters more than the ceiling. Without the cap-and-floor mechanism, the three Scottish Highland schemes would struggle to attract the capital needed for construction periods that stretch past a decade.
The UK is not the only jurisdiction chasing long-duration storage. The US Department of Energy announced a goal in July to cut the cost of utility-scale long-duration storage by 90% within a decade, backed by federal research and domestic manufacturing incentives2. Deputy White House national climate advisor Ali Zaidi compared the effort to the SunShot Initiative, which drove solar costs down 75% after 20112.
Europe is also moving, though more slowly. Ore Energy is deploying 1 GWh of iron-air storage across its European portfolio, starting with a 400MWh first phase, after two grid-connected deployments of its technology4. The company's pitch rests on a simple numbers problem: Aurora Energy Research estimates that 72 TWh of mostly renewable electricity was curtailed across Europe in 2024 due to grid bottlenecks, at a cost of roughly €8.9 billion4.
The Ofgem list is not the final word. It is a minded-to-decision, meaning the regulator can still adjust the roster before final confirmation. The losers, including Zenobe after its legal challenge failed, will have to find alternative revenue models or walk away6. The winners now face the harder task of proving they can build on time and on budget.
For traders, the signal is in the dispatch profile these projects will eventually add. A 1.8GW pumped storage plant that can run for eight hours changes the shape of the electricity price curve in a way that 475MW of batteries cannot. The first real test will come when Coire Glas or Earba reaches financial close, and the market sees whether the cap-and-floor terms are generous enough to move steel.