Consultation on Long Duration Electricity Storage Financial Framework

Details of outcome

We asked for your views on our financial framework for LDES projects applying under the first application window of the cap and floor regime.

We received 35 responses to the consultation. Whilst most responses engaged positively with the proposals, they also raised important points for us to consider.  

After reviewing all the responses, we have made several changes to the financial framework. These include:

• changes to the competitive elements of the framework, reducing bid parameters from five to two
• revising the revenue sharing rate above cap from 10% to 30%
• applying pared-back cost and delivery incentives  
• updating our approach to inflation indexation

Read the full outcome

This should be read alongside the: 

• project assessment consultation decision
• eligibility assessment outcome
• project assessment multi-criteria assessment (MCA) framework
• financial framework guidance including the Cap and Floor Financial Model (CFFM) and the supporting handbook, which will be published shortly

Original consultation

Ofgem is seeking views on our proposed financial framework for Long Duration Electricity Storage (LDES) projects applying under Window 1 of the cap and floor regime. This consultation outlines our approach to setting cap and floor levels and designing incentive mechanisms to support timely project delivery and control costs. The consultation also sets out our proposed competitive approach to determining cap and floor levels, truth telling incentives, along with the financial model and its accompanying handbook, which explains how revenue levels are calculated and how project bids are assessed.   

This consultation is particularly relevant to LDES projects applying under the first application window, which opened on 8 April 2025. We also welcome input from stakeholders, including industry participants, energy experts, and members of the public. Your feedback will help shape a fair and effective assessment process that supports the Government’s Clean Power 2030 goals.  

To respond, please submit your views in a PDF document on headed paper, clearly identifying the responding organisation or individual. Send your response to LDES@ofgem.gov.uk with the subject line: Financial Framework Consultation Response from [company/individual name]. We encourage all interested parties to contribute their perspectives.  

The deadline for responses is 17 July 2025. We aim to publish the final Financial Framework in Q3 2025.