RheEnergise and Mercia Power Response welcome the opportunity to engage with DESNZ on this consultation on Long Duration Energy Storage (LDES). It is fantastic to see the engagement with industry and key stakeholders producing actionable insights for key energy policy, such as the proposed Cap & Floor regime. This consultation is a great start in the discussion of what will be needed for LDES, and we are hopeful that the outcome will be hugely beneficial in supporting bankability of LDES projects, for both established and emerging technologies.   

Our three key asks for the Cap & Floor policy are that it meets the following criteria:

1. Broad technology support: It is critical to ensure that policy supports a diverse range of technologies which can provide a diverse range of system services and durations of storage.
2. Target the right capacity needs: We propose a reduction to the minimum thresholds for each of the streams to 10MW for TRL8 and 20MW for TRL9 to ensure policy supports rapid build out of projects to provide maximum system benefit.
3. Establish clear and robust framework for financing: Ensure that any proposed policy change enhances the existing regime to effectively cap the revenue risk and enable financial support from UKIB and other pioneering finance providers. 

The finance challenge is crucial. RheEnergise is developing a critical new asset class to support the energy transition, targeting delivery of our technology at scale (and roll-out of many projects) in a short timescale. Projects require a large amount of capital to execute (£100m for a 50MW, 6-hr project), and are a natural fit to for project finance and pension funds. However, in the long-term, it will also be crucial that the other key players in infrastructure financing, across grants, equity, mezzanine, debt, insurance and guarantees, are motivated to participate.

We would like to underline how delighted we are to see the publication of this consultation and extend our thanks to government for their ongoing engagement with industry on this subject. We are confident that, if designed correctly (to support a range of technologies, which can be deployed in diverse locations, and provide varying durations of storage) we will see large volumes of LDES coming on to the system in years to come. 

Yours faithfully, 

RheEnergise & Mercia Power Response

If you would like to read our response to the consultation in full, please get in touch.