Britain has announced a new funding model aimed at boosting investment in renewable energy storage projects, such as pumped hydro systems, to support its goal of decarbonizing the power sector by 2030. The initiative will provide developers with guaranteed minimum income through "cap and floor" contracts, allowing for a stable revenue stream in exchange for limits on earnings.

This approach is crucial for increasing renewable energy output from sources like wind and solar while ensuring reliable energy supply during periods of low production. Energy Minister Michael Shanks emphasized that this model would enhance energy security and reduce dependence on fossil fuels.

Several companies, including SSE, Drax, and Statkraft, have expressed support for the initiative, which they see as a key step in overcoming barriers to developing new pumped storage hydro plants. Drax plans to expand its existing Cruachan facility in Scotland, while SSE is working on a £1.5 billion hydro project in the same region. Other technologies eligible for this funding model include liquid air energy storage, compressed air energy storage, and flow batteries.