Business Lift

Advisory in Energy, Innovation and Business

The British government has taken the excellent step of realising that sufficient Long-Duration Energy Storage (LDES) won’t be built unless appropriate contracts and/or support is offered. They are consulting on a (cap and) floor regime, which would do the job well, provided that:

  • There is either no cap (which maximises the effect of the markets) or at most ⅓ of Gross Margin is deducted above the cap (which enables markets to operate, though not quite as well, and would maximise recovery for the government);
  • Lead times and contract durations are long enough;
  • The regulatory system for it is lightweight, relying on market forces and monitoring rather than on bureaucratic second-guessing of businesses, financiers and engineers; and
  • Various other considerations are taken into account.

This link is my full response to the consultation. Please feel free to echo as many points as you wish in your responses to it.

It’s not the perfect solution: that would be to change the regulatory and contracting regime so that no special mechanism is needed – and I refer in my response to ways to achieve that. But this proposal (with provisos) is the next best option.