Insights into the LDES tender results and licence terms, is it all systems go? 9 July 2026

On 26 June 2026, Ofgem published for consultation its ‘minded to’ decision for projects which are selected for the LDES cap and floor regime.

Award overview

Out of 73 projects that reached this stage of the tender, 16 projects have been selected, amounting to just over 7.6 GW of storage capacity.

Just over 5 GW are based in Scotland, one in Wales and none in the South West of England. The majority of the projects are spread between lithium-ion battery energy storage system (“Li-ion BESS”) and pumped storage hydropower (“PSH”) technologies, alongside one compressed-air energy storage (“CAES”) and one vanadium redox flow (“VFB/Zn”) project.

The capacities range from 50 MW to 1800 MW. The storage duration ranging from 8 to 18 hours for the Li-ion BESS and VFB/Zn projects and 15 to 32 hours for the PSH and CAES projects.

Ofgem believes this mixture of technologies, spread across the UK supports their aspiration of flexibility and resilience across the system.

Ofgem also anticipates that there will be a certain amount of attrition, however, they have not inflated the capacity awarded to take this into account.

It is notable that on the PSH side of the awards, the projects with longer durations (i.e. 15 hours or more), and – in the case of Coire Glas and Earba PSH, a later date scheduled first operation of 2033 (per the track 2 process) – were more successful at this stage.

Assessment

The assessment of the project submissions was derived from a spread of different factors, namely economic, financial and strategic, drawing on outputs from the cost assessment and modelling analysis.

This was a challenging task for Ofgem. There were so many different variables, including the complexities of comparing different types and size of technologies and performance characteristics.

Ofgem’s decision was reached in accordance with their published decisions and methodology, including the MCA Framework, however, at their discretion they did introduce a number of amendments to the methodology where they deemed it necessary to address material deficiencies in assessment inputs and outputs.

A snapshot of some of these amendments include:

• as different projects made different assumptions as regards exchange rates, Ofgem applied the exchange rates as of the submission date – 18 November 2025 (notwithstanding changes that have occurred since then);
• Ofgem applied a standard benchmark for the Decommex value as different approaches were taken as regards Decommex cost estimations across projects in the Conventional Battery and Novel Battery technology groups;
• energy capacity was treated as a fixed project characteristic over the asset life and minimum and maximum state of charge assumptions were also standardised; and
• there was a change in position as regards the use of balancing mechanism outputs in the economic assessment.

The economic assessment combined a monetised assessment with non-monetised components. The components were comparatively assessed and then relative weights were assigned based on their perceived importance, with the benefit cost ratio having a 40% weighting and the other weighting ranging from 1 to 19%.

Ofgem applied standardised and technology-specific economic life assumptions based on project submissions and specialist advice (reflecting the point at which a project would be expected to require significant further capital investment to continue operating). Ofgem assumed that Li-ion BESS, VFB/ZN and CAES would all have a 25 year and PSH 40 year economic life.

45 projects requested a non-zero residual value, of which 41 were accepted and four rejected (on the basis that they linked residual value to negative decommissioning costs).