The British Hydropower Association (BHA) and Scottish Renewables have urged the UK Government to adopt a ‘cap and floor’ mechanism to support long duration electricity storage (LDES) projects, including pumped storage hydro (PSH).
In a joint letter to Ed Miliband, the Secretary of State for Energy Security and Net Zero, Ian Murray, the Secretary of State for Scotland, and Jo Stevens, the Secretary of State for Wales, the trade bodies highlighted the importance of this mechanism in delivering over 9GW of PSH capacity, with several projects ready to begin immediately.
The ‘cap and floor’ mechanism aims to encourage investment by providing revenue certainty while capping excessive returns.
This approach balances commercial incentives and mitigates risks for developers.
The industry representatives emphasised that implementing this mechanism could play a crucial role in meeting the UK’s net zero targets and securing the country’s clean energy future.
Claire Mack, Chief Executive of Scottish Renewables, said: “As a well-established technology with a multi-gigawatt pipeline and several ‘shovel ready’ projects, PSH is a key technology to smoothly integrate the increase in generation we require, help reduce system costs and deliver huge economic benefits across the country.
“However, despite the extensive benefits of these projects being clear, the lack of policy support has meant that no new PSH capacity has been built in the UK for over forty years.”
The Scottish Renewables report, ‘The Economic Impact of Pumped Storage Hydro,’ projects that six PSH projects currently in development could generate £5.8 billion in gross value added (GVA) and create approximately 15,000 jobs by 2035.
Kate Gilmartin, Chief Executive Officer of the British Hydropower Association, said: “By prioritising the urgent delivery of a cap and floor mechanism, we can send positive signals to international investors and trigger large-scale capital projects and job creation.”
A Department for Energy Security and Net Zero spokesperson told Energy Live News: “We are taking immediate action implementing our long term plan to make Britain a clean energy superpower – boosting our homegrown supply by radically increasing the deployment of onshore wind, solar and offshore wind.
“Alongside this, we will ensure we have the long term energy storage the UK needs to make the most of clean, homegrown power.
“We are embracing the future of energy production and storage and will lay out further plans on this in due course.”
