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30 October 2025

Will the LDES cap and floor scheme harm merchant BESS returns?

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Will the LDES cap and floor scheme harm merchant BESS returns?

29 GW of long-duration storage projects are currently competing for up to 7.7 GW of cap and floor contracts from Ofgem. The scheme aims to provide revenue certainty, bringing online projects that wouldn’t get built commercially.

But the storage industry is wary. Many fear that subsidised LDES could distort market signals, crowding out merchant battery projects and creating a “missing money” problem: government intervention that reduces spreads and undermines merchant investment.

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