Ofgem backs 16 long-duration storage projects, including three pumped-hydro schemes

Ofgem has provisionally backed 16 long-duration electricity storage projects, including three pumped-storage hydro schemes in Scotland, in one of the UK’s clearest signals yet that it wants more flexibility on the power grid.

The regulator said the projects were selected under its cap-and-floor framework, a mechanism designed to support investment in very large storage schemes by offering developers a minimum income while limiting excessive profits. The portfolio totals 7.645GW of capacity, according to reporting on the announcement.

The decision matters because Britain is increasingly relying on wind and solar power, which can leave the system exposed when generation is low and demand is high. Long-duration storage is meant to absorb surplus electricity when supply is abundant and return it later, helping to reduce pressure on the grid and on fossil-fuel backup.

What Ofgem approved

The 16 projects span a mix of storage technologies, including pumped-storage hydro, compressed-air energy storage, lithium-ion batteries and vanadium redox flow batteries. Ofgem said the scheme is intended to help secure supply during cold, hot, still or cloudy weather, when wind or solar output can fall away.

Three of the projects are large pumped-storage hydro schemes in northern Scotland: Statera Energy’s Loch Kemp, SSE’s Coire Glas and Gilkes Energy’s Earba project. Coverage said the three hydro projects together account for nearly 4GW of capacity, making them the largest single element in the portfolio.

That makes the announcement a notable policy signal for a part of the energy system that has struggled to attract investment at scale. Large pumped-hydro projects are capital intensive and slow to build, but they can provide many hours of storage and system support that shorter-duration batteries cannot always match.

Why it matters for pumped hydro

The Guardian reported that the Scottish schemes would be the first major hydropower projects in Great Britain in more than 40 years. The last major pumped-storage plant to enter service in Great Britain, Dinorwig in north Wales, began operating in 1984.

That history gives the Ofgem decision unusual significance. Britain has added plenty of batteries in recent years, but it has not seen a major new pumped-hydro buildout in decades. If the projects proceed, they would mark a step-change in the country’s approach to long-duration storage.

Pumped-storage hydro works by using excess electricity to pump water uphill into a reservoir. When power is needed later, the water is released through turbines to generate electricity. The technology is old, but it remains one of the most established ways to store large amounts of energy for many hours or even longer.

For the UK, that capability is valuable as more of the grid is supplied by weather-dependent renewables. The aim is not only to move energy across the day, but also to help the system manage longer periods of low wind or low sun without relying as heavily on gas-fired generation.

Timing and policy stakes

The Financial Times reported the approval came as the grid faced heatwave-related strain, underscoring the broader reliability pressures that can build when demand rises and the power system has less flexibility than it needs. The projects are therefore about more than decarbonisation: they are also a reliability and resilience measure.

Ofgem and ministers have framed long-duration storage as a way to lower system costs over time by easing pressure on transmission and distribution networks and reducing the need for expensive backup generation. The potential benefit is not limited to investors or developers; it could also affect consumer bills if the cap-and-floor regime succeeds in bringing forward large projects at lower risk.

Akshay Kaul, Ofgem’s director-general for infrastructure, and energy minister Michael Shanks are among the key figures tied to the policy debate around the announcement. The British Hydropower Association and developers including Statera Energy, SSE, Gilkes Energy and Field are also central as the market tries to translate policy support into financed projects.

What happens next

The approval is provisional rather than final. Ofgem will run a consultation on the minded-to list before the scheme moves to final awards later in 2026, with final decisions expected in the autumn.

That means none of the projects is fully locked in yet. Developers still need to work through financing, permitting and construction before any capacity reaches the grid, and the final portfolio could still change if projects fall away or need to be reshaped.

Even so, the decision is a clear signal that the UK wants a broader storage mix than short-duration batteries alone can provide. The 16-project portfolio suggests Ofgem is willing to back multiple technologies at once in order to build a more resilient electricity system.

Further storage rounds may follow if the cap-and-floor approach proves workable. For now, the announcement marks one of the strongest official endorsements yet for new pumped-hydro development in Britain and for long-duration storage more broadly.