UK Rolls Out Funding for Projects to Store Renewable Power

(Bloomberg) -- The UK government is launching a new funding program to unlock investment in long duration storage, a key part of its drive to optimize the expansion of renewable energy.

Under the so-called cap and floor regime — already used for electricity interconnectors — energy storage developers will be guaranteed minimum revenues. That will ensure companies can at least make debt repayments, but a revenue cap means they must share profits above a certain level.

High upfront costs are a barrier for investors when building energy storage capacity, which is key to decarbonizing electricity grids. The technology works like giant batteries by storing renewable energy and releasing it onto the grid and into homes when needed.

This includes pumped storage hydro, which stores power by pumping water up a reservoir when there’s excess electricity, to be released later to drive a turbine.

The announcement comes before the International Investment Summit, where the new Labour government is keen to attract capital. As much as 15.3 gigawatts of long duration storage is needed to reach net zero by 2050, according to government analysis.

Long duration energy storage was defined earlier this year as technologies that can “continuously discharge at their maximum power output for at least 6 hours”. That can help reduce the burden on grids as well as the curtailment of wind farms, with potential savings of about £24 billion to the energy system between 2025 to 2030 if 20 gigawatts of long duration storage is deployed.

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