We are delighted to share that our Compressed Air Energy Storage (CAES) project, TeesCAES, has successfully passed the eligibility assessment stage of Ofgem’s Long Duration Electricity Storage (LDES) Cap and Floor regime. Of 171 applicants, 77 will proceed to the project assessment phase. TeesCAES is the only CAES project advancing to stage 2.
Why LDES Matters
As the UK transitions towards net zero, our energy system increasingly relies on renewable generation. Clean power is now a key contributor to the energy mix; this year, the nation has run for extended periods on 100% renewable power. Our energy infrastructure was built around fossil fuel generation, which responded to demand, producing energy whenever it was needed. However, since renewables like wind and solar are naturally intermittent, they only produce energy in the right conditions. Fossil fuels are phasing out, dropping to an all-time low of 26% of the energy mix in 2024. As a result, there is a widening infrastructure gap. Our energy system needs a way to bridge the difference between clean energy supply and demand.
This is why LDES is vital. LDES technologies store electricity when supply is high and release it into the grid when demand rises. This not only closes the supply/demand gap, but also reduces costs for consumers, reducing amount of curtailment and energy imports.
What is the LDES Cap and Floor Regime?
The Cap and Floor scheme is a framework designed to encourage private investment in LDES projects. It works by:
- Setting a minimum revenue (the floor): If revenues fall below this level, consumers make up the difference, helping to de-risk investment.
- Capping excess revenue (the cap): If revenues rise above this level, the surplus is returned to consumers, shielding consumers from excessive costs.
This model reduces investment risk, helping deliver the upfront capital required for LDES projects. It’s a tried-and-tested approach to driving investment in large infrastructure initiatives, having already been applied successfully to electricity interconnectors.
Storelectric’s Role in the UK’s Clean Energy Future
Our CAES project is an innovative and scalable approach to long-duration storage. It works by using surplus renewable electricity to compress air and pump it into underground salt caverns. When electricity is needed, the compressed air is released through turbines to generate power. This means we can store massive amounts of power over long durations, creating a secure dispatchable store of clean energy.
Ofgem, working with NESO, will now assess our project’s costs, benefits, and contribution to consumers. Final approvals are expected in Summer 2026.
Looking Ahead
The Cap and Floor scheme will unlock investment in storage technologies like CAES. This will scale storage infrastructure alongside Britain’s growing renewable generation capacity, supporting the government’s Clean Power 2030 ambition.
Advancing to the assessment stage as the only CAES project selected marks a significant milestone for Storelectric. We look forward to working with Ofgem, NESO, and stakeholders as our project moves forward.
