The UK’s energy transition is no longer constrained by how much renewable power can be generated, but by how effectively it can be stored and deployed when it is needed. As wind and solar capacity continue to expand, the ability to manage prolonged periods of surplus and deficit is becoming one of the defining challenges of the energy system.
Long Duration Energy Storage (LDES) - technologies that enable energy to be stored for hours, days or longer and released when needed - is emerging as a critical solution. As this asset class moves from policy ambition to infrastructure priority, it draws on many of the same commercial, regulatory and delivery principles seen in other forms of regulated energy infrastructure. With investment requirements estimated at £13.7bn by 2035 and projections of up to £75bn by 2050, the sector is moving rapidly from policy ambition to infrastructure priority. At the same time, recent volatility in energy prices and increasing concerns around security of supply have reinforced the need for resilient, flexible systems capable of balancing intermittent generation.
To accelerate investment in these assets, the UK Government has introduced a Cap and Floor support regime for LDES, drawing on the established regulatory model used for electricity interconnectors and administered by Ofgem. The scheme establishes a defined revenue range: a minimum “floor” to protect against prolonged underperformance and a maximum “cap” to limit excessive returns. Its purpose is twofold: to provide revenue stability sufficient to unlock private finance, while ensuring value for consumers.
While the framework reduces merchant exposure, it does not remove delivery complexity. The focus is no longer simply on whether projects are viable, but whether they demonstrate credible cost, risk and delivery strategies from the outset. For developers, the central question is no longer whether support exists, but how to progress through successive gateway stages with demonstrable control.
This article explores how developers and investors can move from uncertainty to control within this evolving environment. Drawing on G&T’s experience advising on regulated energy infrastructure - including interconnector projects delivered under Cap and Floor - we highlight how integrated commercial, programme and risk expertise can strengthen project readiness and improve outcomes.
LDES explained: the backbone of a resilient, renewable energy system
LDES refers to a group of technologies capable of storing energy for extended durations, typically from eight hours through to days or even weeks. Unlike short-duration batteries designed to manage short-term fluctuations, LDES enables power systems to respond to prolonged periods of low renewable output or sustained surplus generation.
Electricity cannot be stored directly. Instead, it is converted into another form of energy, such as mechanical, thermal or chemical, and then converted back into electricity when required. Technologies such as pumped hydro storage, lithium-ion batteries, vanadium and zinc flow batteries, and thermal storage systems each provide different capabilities depending on duration requirements, geography and system needs.
As renewable generation becomes the dominant source of electricity in the UK, the importance of LDES is increasing rapidly. Installed wind and solar capacity is expected to grow significantly by 2030, exposing the system to greater variability driven by weather conditions. Periods of low wind or reduced solar output can persist for days, while periods of surplus generation can result in curtailment and inefficiency.
LDES provides the missing link. By storing excess energy and releasing it when generation is low, it enhances system resilience, reduces curtailment, stabilises prices and supports a more efficient energy system. Without scalable long-duration storage, increasing renewable capacity risks driving higher system costs, greater volatility and continued reliance on conventional generation.
Through our work supporting developers and investors, including battery storage portfolios and pumped storage developments, we have seen first-hand how the technical, commercial and delivery challenges of LDES are evolving as the market matures.
The reality of LDES - long life, early decisions, limited certainty
LDES projects are expected to operate for a default term of 25 years under the Cap and Floor regime. Decisions taken during the earliest phases of development including technology selection, site choice and engineering approach, lock in costs, risks and performance characteristics for decades. Once these decisions are embedded, making material changes later in the project lifecycle becomes increasingly difficult and costly, with significant implications for programme, capital expenditure and regulatory compliance.[1]
“Long Duration Energy Storage is moving from policy ambition to delivery reality. The projects that will succeed are those that recognise early that this is not simply a technology challenge, but a programme and governance challenge. Establishing credible cost, risk and delivery strategies from the outset is essential if LDES is to scale at the pace the energy transition requires.”
Experience from complex infrastructure delivery consistently shows that when project concepts are fixed early, approaches to risk, cost and delivery can become inflexible, even while uncertainty remains high and scope continues to evolve. For LDES, this challenge is amplified by the relative immaturity of the market. Excluding pumped hydro, long duration storage represents only a small proportion of global energy storage use. Limited benchmarking data, long lead times, immature supply chains and reliance on constrained materials all increase the difficulty of accurately quantifying risk and forecasting long‑term performance.
These conditions frequently create a disconnect between early‑stage business case optimism and later delivery and operational realities. Large‑scale infrastructure studies have repeatedly demonstrated that optimism bias and the embedding of flawed assumptions during early development are major drivers of cost and schedule overruns. [2] Recognising how and why these issues arise is essential if LDES projects are to make better early decisions and adopt risk management approaches capable of adapting as uncertainty resolves.
From constraint to control
The introduction of Cap and Floor fundamentally reshapes how risk is managed in LDES projects. While exposure to wholesale market volatility is reduced, the focus shifts decisively towards the quality of early decisions and the ability to demonstrate robust delivery discipline.
The mechanism establishes financial boundaries that protect investors from sustained underperformance while ensuring consumers are not exposed to excessive returns. However, these boundaries should not be mistaken for targets. Projects designed simply to sit within the cap and floor risk embedding weak assumptions, distorting early decision making and eroding long term value. Cap and Floor provides structure, but not certainty. Control within that structure must be actively established.
“The Cap and Floor regime in the interconnector market, provides stability, but it does not compensate for weak assumptions or under-developed delivery strategies. Projects that anticipate regulatory scrutiny, rather than react to it, are far better placed to progress through successive windows with confidence.”
For LDES projects, control is not static. While design and technology choices are often locked in early, approaches to managing risk, cost and performance must evolve as projects mature. Early estimates that appear robust because they fall within the Cap and Floor range are frequently underpinned by assumptions that will change over time. Unplanned events, evolving technical standards, supply‑chain pressures and operational degradation are often under‑represented in early models, leaving contingencies insufficient and exposing projects to later shocks.
Successful projects recognise that Cap and Floor does not replace the need for disciplined governance and risk management. Instead, it shifts the focus away from pure market exposure towards the quality of early decision making, adaptive control and the ability to demonstrate resilience under regulatory and investor scrutiny.
Early risk management - where outcomes are shaped
The majority of project outcomes are determined long before construction begins. Early decisions have a disproportionate influence on cost, schedule and delivery success because they commit projects at a point when uncertainty is highest and information is least complete. This is a key reason why regulators and lenders increasingly expect greater maturity, clarity and evidence at early stages of development.
Risk in LDES projects evolves as they progress. At concept stage, emerging risks dominate. These include policy evolution, market dynamics, technology selection and stakeholder alignment. While identifiable, these risks are highly uncertain and require active monitoring, scenario testing and flexible strategies rather than premature optimisation.
As projects move into front‑end engineering design, more defined risks relating to grid integration, civil works complexity and system interfaces come to the forefront. By the time projects approach final investment decision, contractual and delivery risks become central, requiring robust validation of performance guarantees, supply‑chain capability and cost and schedule assumptions.
Clear alignment of risk ownership early in development is particularly critical in Cap and Floor projects, where regulatory scrutiny increasingly focuses on the credibility of risk allocation and delivery strategy. Sponsors are typically best placed to manage market and regulatory risk, while contractors should carry construction and technical risks where they control the means of mitigation. Interface risks, which are particularly acute in complex energy infrastructure, require clear allocation and disciplined management. Risk‑informed procurement strategies are critical in translating early risk understanding into delivery structures that support control rather than defer uncertainty.
Gaining control in uncertain environments
In complex LDES projects, uncertainty is inevitable. Technologies evolve, assumptions change and external conditions shift. The challenge is not avoiding change, but identifying and responding to it in a controlled and structured way. Traditional control approaches often struggle in this environment, particularly where early baselines are treated as fixed commitments rather than evolving reference points.
At the same time, the underlying risk profile of these projects is changing. Contractors are increasingly less willing to accept traditional risk allocations, particularly in areas such as technology performance, supply chain volatility and interface complexity. As a result, a greater proportion of risk is often retained by the client. This shift places increased emphasis on the client’s ability to actively manage risk, rather than relying on transfer through contracting structures alone.
Maintaining control requires adaptability without sacrificing rigour. Early‑stage baselines should be treated as indicative ranges, tightening progressively as design and procurement mature. Progressive baselining, integrated cost and schedule controls and disciplined change governance are central to maintaining control within Cap and Floor projects. When embedded early and evolved alongside design maturity, these approaches provide a credible and auditable basis for decision making at regulatory milestones.
The use of confidence ranges and scenario-based forecasting enables a more accurate reflection of variability. Rather than relying on single-point estimates, this approach supports more resilient planning and better-informed decision making.
Integrated cost, schedule and risk controls are central to maintaining alignment across the project. Where these disciplines are not fully integrated, inconsistencies can undermine confidence in delivery strategies and regulatory submissions.
Structured change governance is equally important. Proposed changes must be assessed consistently for their impact on cost, schedule, risk and regulatory position, with clear approval processes and documented decision-making.
The role of independent assurance and commercial leadership
Strong internal governance is essential for LDES projects operating under Cap and Floor, but internal processes alone are rarely sufficient. In complex, capital-intensive infrastructure defined by long asset lives, evolving regulation and material uncertainty, optimism bias and blind spots can persist without independent challenge. Independent assurance and strong commercial leadership therefore play a central role in establishing and sustaining control.
Independent assurance provides objective scrutiny of key assumptions, cost estimates, schedules and risk positions, particularly before regulatory submissions and investment decisions fix projects onto defined pathways. Effective assurance goes beyond compliance. It tests the credibility of business cases, stress-tests delivery strategies and challenges whether contingencies reflect genuine uncertainty in technology and supply chains.
From a regulatory perspective, early assurance strengthens submissions by ensuring they are evidence-led, internally consistent and aligned with Ofgem’s expectations. Experience across Cap and Floor and price-control regimes shows that clarity of narrative and robustness of cost justification are critical to progressing through successive assessment windows.
Commercial leadership complements this by bringing structure and discipline to scope definition, risk allocation and cost management across the lifecycle. In projects moving through multiple regulatory gateways, this helps avoid decisions taken for one window inadvertently constraining flexibility or value in later stages.
How G&T can help
G&T’s Infrastructure Management team brings extensive experience supporting sponsors and developers across the energy sector, helping to establish control early and sustain it through successive Cap and Floor assessment windows. We combine cost, programme and risk expertise with a deep understanding of regulated infrastructure delivery, enabling confident decision making in uncertain and evolving environments.
We work with leading organisations across the energy transition landscape, supporting utility-scale battery storage portfolios, pumped storage developments and wider regulated infrastructure programmes, across both private and publicly funded organisations. Our focus is on helping clients establish control at the outset and maintain it as projects develop and mature.
From early concept through to regulatory submission and delivery, we challenge assumptions before they become embedded, align technical ambition with commercial realism and support the development of robust, evidence-based business cases.
Our experience across Cap and Floor and price control regimes, including UK interconnector projects, provides a clear understanding of how regulators assess cost credibility, risk allocation and delivery maturity. We support clients in preparing submissions that are aligned with these expectations and capable of withstanding detailed scrutiny enabling expected return on investment.
By embedding integrated controls and transparent change management from the outset, we help clients protect financial integrity, maintain regulatory confidence and improve the likelihood of progressing successfully through approval and into long term operation. In a market where scrutiny is increasing and competition intensifies, disciplined infrastructure management is not simply a compliance requirement, it is a strategic advantage.
