Ofgem Revises Long-Duration Storage Licence Conditions: Procurement Implications

What Ofgem published on July 21

Ofgem opened a call for input on its minded-to positions for special licence conditions that would apply to projects selected in Window 1 of Great Britain's long-duration electricity storage cap-and-floor regime. Responses are due by 23:59 on August 18, 2026. Ofgem expects final policy decisions after the cap-and-floor awards in autumn 2026, followed by a statutory licence-modification process.

The regulator says it revised the draft after reviewing 40 responses to its March consultation. The new material addresses the financial floor, cost classification, optimiser arrangements, gross-revenue reporting, availability, force majeure, financial resilience, co-location, performance testing, cybersecurity and operating obligations during periods of system stress.

Why the licence detail matters before equipment selection

A supported storage asset is more than a battery container and power-conversion system. Its revenue model, dispatch controls, metering boundaries, degradation assumptions and evidence trail must work together. Ofgem's treatment of market-related costs, marginal cycling costs and gross revenue illustrates why buyers should align technical specifications with the commercial model before freezing the bill of materials.

This is especially relevant where storage is co-located with solar generation or placed behind the meter. Project teams should define which meters establish charge and discharge quantities, how auxiliary consumption and losses are allocated, and how revenue from shared infrastructure will be attributed. Those decisions affect controls architecture, data retention and contractual responsibility as much as equipment sizing.

The evidence package storage suppliers should expect

The revised draft points toward auditable operating records rather than broad capability claims. Even projects outside this UK scheme can use the same discipline when qualifying a storage supplier or integrating batteries with solar-powered infrastructure.

• Availability definitions linked to measurable operating states and exclusions
• Documented degradation, cycling-cost and component-replacement assumptions
• Metering and settlement diagrams for co-located or behind-the-meter assets
• Cybersecurity responsibilities for controls, remote access and operational technology
• Performance-test procedures, acceptance thresholds and retained test records

Buyer impact: turn regulatory themes into contract schedules

Buyers should translate the relevant themes into tender schedules: required data points, sampling intervals, system boundaries, acceptance tests, alarm ownership, software access, spare-parts plans and evidence-retention periods. A supplier response should identify what is included in the equipment package, what depends on the optimiser or owner, and what must be provided by the grid or metering contractor.

The call for input is still open, so Ofgem's positions are not final. Procurement teams should avoid writing the draft wording into contracts as if it were settled law. The safer approach is to record regulatory assumptions, assign responsibility for monitoring changes and include a controlled process for updating compliance deliverables before financial close or commissioning.