Long-duration energy storage: House of Lords Committee report and plans for a new scheme

Approximate read time: 10 minutes

In March 2024 the House of Lords Science and Technology Committee published a report on energy storage: ‘Long-duration energy storage: Get on with it’.^[1] The report will be debated in the House of Lords on 9 January 2025.

1. What is long-duration energy storage?

Supply from renewable energy sources is variable, for example solar power is generated during daylight hours and wind power generation decreases on still days. Sometimes, the amount of energy generated is higher than needed at that time. Energy storage systems store energy for later use so that power from renewable sources can be made available consistently. Long-duration energy storage (LDES) systems can store energy for hours, days or even weeks so it can be used when needed.

Types of LDES include:^[2]

• Thermal. Energy is held in a material as heat or cold, which is released when needed (for example cold thermal energy storage can reduce the electricity consumption of refrigeration systems at peak times).
• Mechanical. Physical movement releases stored power, for example in ‘pumped hydro’ systems, water is moved to a higher place when energy is available and released later to generate power.
• Chemical. Electricity is converted into fuels like hydrogen that can be stored and converted back to energy.
• Electrochemical. Improvements in battery technology enable energy to be held for longer.

The UK currently operates 2.8GW of LDES, largely through pumped hydro schemes in Scotland and Wales.^[3]

2. What did the House of Lords Science and Technology Committee say about long-duration energy storage?

The committee concluded that large-scale roll out of LDES was “not being treated with sufficient urgency”.^[4] It said large-scale implementation would allow more renewable power to be available, potentially lowering the overall cost of electricity for consumers. Storing power would, the committee said, make the grid more flexible and avoid the waste that currently happens when renewables have to be curtailed due to excess supply or congestion on the grid.

The committee recommended the government should:^[5]

• commit to a strategic reserve of LDES for energy security
• urgently make key decisions and coordinate the delivery of its energy system plan
• set an explicit minimum target for LDES
• set out the details of its LDES business model
• clarify the role of hydrogen in the future energy system and deliver investments in hydrogen production and storage
• reduce timelines for grid connection and planning delays
• engage and communicate with the public to ensure support for hydrogen and electricity infrastructure

At the publication of the report, committee chair Baroness Brown of Cambridge (Crossbench) said LDES was crucial to the UK achieving a net zero energy supply and therefore action was urgent:

[LDES] facilities can take 7–10 years to build, so action is needed now to ensure the private sector sees a clear case to invest and to slash planning delays and grid connection queues if we are to have the required infrastructure in place by 2035.

Our report highlights the clear benefits of investing in long-duration storage, including energy and economic security, avoiding waste of renewable electricity, and allowing us to deploy more cheap renewable power, reducing customer bills. However, time is running out for the UK to secure that brighter future.

3. How did the previous government respond to the committee’s report?

In a response published a week before the general election was called, the previous government recognised the importance of LDES.^[6] It said it would be working closely with the National Grid Electric System Operator to review storage requirements.

The government pointed to its December 2023 ‘Hydrogen transport and storage networks pathway’, including its ambition to support up to two hydrogen storage projects and associated regional pipeline infrastructure to be in operation or construction by 2030.

The government also said it had provided “significant support” to industry to further develop innovative storage techniques.

The government agreed with the committee’s comments relating to the need to reform the planning system to accommodate more energy assets. The government said it was working to reduce connection delays and overhaul the grid connections process.

In January 2024, the previous government opened a consultation on LDES.^[7] The consultation description acknowledged “evidence suggests that [LDES] faces investment challenges under current energy market frameworks, meaning it has struggled to deploy at scale at present”. The consultation set out an intention to develop a cap and floor mechanism to overcome barriers to investment. In a cap and floor regime, developers receive a guaranteed minimum income in return for a limit on revenues. The cap is intended to benefit consumers by limiting price rises.

4. What has the current government said about long-duration energy storage?

In its manifesto, the Labour Party said it would “ensure we have the long-term energy storage our country needs”.^[8] The Great British Energy Bill, currently being considered in the House of Lords, is intended to establish a new publicly owned company which would co-invest with the private sector in order to expand clean power. The bill sets out that one of the purposes of the company would be “facilitating, encouraging and participating in […] the production, distribution, storage and supply of clean energy”.

On 10 October 2024, the current government responded to the consultation the previous government had initiated in January 2024.^[9] It said it would introduce a cap and floor regime for investment in LDES assets. In a written statement accompanying the response, the government added:

LDES can help the UK move towards energy independence. Analysis commissioned by government found that in [a] central scenario 20GW of LDES resulted in electricity system savings of £24bn by 2050. This represents a saving to consumers of 3.5% of the total system costs.^[10]

The government announced energy regulator Ofgem would have an expanded role in regulating LDES assets, becoming the investment framework delivery body for LDES. The government said it was planning to publish a technical decision document “this winter”, along with documents by Ofgem as the LDES regulator and investment framework delivery body. It said its intention was for Ofgem to be able to open the investment support scheme to applications in 2025.

The government said the investment would “remove barriers which have prevented the building of new storage capacity for nearly 40 years” and create jobs.^[11]

At COP29 in November 2024 the government made an international commitment to move forward with energy storage. The ‘COP29 global energy storage and grids pledge’ commits signatories, including the UK, to a collective goal of deploying 1,500GW of energy storage globally by 2030.^[12]

On 13 December 2024, the government launched an action plan to achieve clean power by 2030.^[13] The plan said that LDES was a “key enabler to a secure, cost-effective and low carbon energy system”.^[14] It estimated that 4–6GW of LDES storage would be needed by 2030. As well as the cap and floor scheme, the government said it would engage with projects at advanced stages of technological readiness to explore financing options.^[15] It also said that grid connection and planning reforms would be key to the future of LDES.^[16]

5. Views on the government’s proposals for a long-duration energy storage cap and floor scheme

The renewable energy industry has generally welcomed the government’s proposals to introduce a cap and floor scheme for LDES, but has called for faster implementation.^[17] The British Hydropower Association said: “We urge Ofgem and the government to bring forward the mechanism at an accelerated pace. Swift action is crucial to maintain the UK’s competitive edge”.

The Association for Renewable Energy and Clean Technology, a not-for-profit trade association, also welcomed the announcement. It said: “The initiative will create high-quality jobs, enhance UK skills, and highlight the country’s world-leading expertise in this field. The inclusion of a revenue cap also ensures that the scheme will deliver value for money for us all”.^[18]

Law firm Norton Rose Fulbright said “significant” further detail about the policy is required and “key decisions regarding the calculation methodology [for gross margins] will significantly impact whether the regime is, in fact, investable and achieves its desired purpose”.^[19]

6. Read more

• Department for Energy Security and Net Zero, ‘Government sets out plan for new era of clean electricity’, 13 December 2024
• House of Lords Science and Technology Committee, ‘Long-duration energy storage: Publications’, accessed 12 December 2024
• House of Lords Library, ‘Great British Energy Bill’, 8 November 2024
• House of Commons Environmental Audit Committee, ‘Enabling sustainable electrification of the economy’, 24 May 2024, HC 278 of session 2023–24
• Royal Society, ‘Large-scale electricity storage: Policy briefing’, September 2023; and ‘Royal Society responds to House of Lords Science and Technology report on long-duration energy storage’, 13 March 2024
• Parliamentary Office of Science and Technology, ‘Longer duration energy storage’, 20 December 2022

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Cover image by Zach Rowlandson on Unsplash.