The consultation announcement, made by the Department of Energy Security and Net Zero (DESNZ), delivers on a commitment in last year's British Energy Security Strategy to have an appropriate policy in place to enable private investment in long-duration electricity storage projects by the end of 2024.
The move is a positive step forward in the continuing development by SSE Renewables of its landmark Coire Glas pumped hydro storage project at Loch Lochy between Fort William and Inverness in Scotland's Great Glen, where exploratory works are ongoing.
Welcoming the DESNZ 'minded-to' consultation on the design and implementation of a cap and floor investment framework, SSE said any such framework needs to be considered alongside broader reform of the electricity market. This should include the Capacity Market and flexibility markets to ensure the overall market design fully values the contribution of low carbon flexible assets such as pumped storage.
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Subject to being successful in the administrative allocation of an investable cap and floor mechanism, SSE Renewables hopes to make a final investment decision on Coire Glas in late 2025 or early 2026, allowing for main construction to commence in the second half of 2026. Construction is expected to last up to seven years, which means the project could be operating in 2032 and fully completed during 2033.
Finlay McCutcheonDirector of Onshore Europe, SSE Renewables, said: "Confirmation the UK Government is now consulting on an adapted cap and floor mechanism for long duration electricity storage assets is welcome news for the development of pumped hydro storage technology in the UK.
"Our engineers, development team and project suppliers have been making steady progress on exploratory works for our Coire Glas in the Scottish Highlands, which is undoubtedly one of the most ambitious and pioneering infrastructure projects the UK has seen in recent years.
"However, our ability to deliver a project of this scale hinges on reaching a positive final investment decision by late 2025 or early 2026 and will clearly rely on this consultation process yielding an investable cap and floor mechanism to be in place by the end of 2024. Given the time taken to reach this point, much work is now needed to ensure an effective mechanism is finalised and put in place as early as possible this year to enable projects such as Coire Glas to take final investment decisions and move into construction."
