Long Duration Electricity Storage Systems

Tuesday 20th October 2026 Westminster Hall

10:59

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I beg to move,

That this House has considered long duration electricity storage systems.

It is a pleasure to serve under your chairship, Sir Christopher. I am glad to have been able to bring forward this debate on long duration electricity storage systems. I would like to focus on pump storage and the cost-benefit of hosting that technology in the highlands of Scotland.

The highlands and islands hope to benefit from the new Prime Minister’s growth in every postcode plan, however we do not have a defence, artificial intelligence, tech or financial industry to rely on. Our major industry is tourism, which suffers from a short season and low pay in hospitality. It is a struggling industry.

I recently wrote to the Prime Minister and laid out some harrowing facts. Remote Scotland has a 30% higher cost of living and a 10% lower income than urban Scotland. We have seen a dramatic drop in school rolls and a 71% increase in the number of people over the age of 75. I represent Inverness, Skye and West Ross-shire and it would be difficult to find another part of the UK with a greater interest in renewables.

[Jim Shannon (Strangford) (DUP)]

To give the hon. Gentleman encouragement, we see the incredible potential for this in Northern Ireland, where a £100 million joint venture on Islandmagee is set to build a massive 150 MW storage facility capable of powering 36,000 homes. Does the hon. Member agree the Government must aggressively support those multi-day storage systems right across the United Kingdom, working hand in hand with devolved nations to modernise our grid infrastructure?

[Mr MacDonald]

The hon. Gentleman has hit the nail on the head. There is not enough in it for the communities to benefit from. Pump storage seems to be as good a way of providing electricity that we could find.

In the highlands, we have the wind, water and geography that make the area so important for our national energy system. We have been producing hydroelectricity for the rest of the country for generations and we now have the opportunity to store much more of it. The highlands already generate 12 times the amount of electricity they need, but we have one of the highest levels of fuel poverty in Britain. Go figure, as my children would say.

When Alex Salmond was First Minister of Scotland, he declared that Scotland could become the “Saudi Arabia of renewables”. Yes, the hills of Scotland are covered in wind turbines, but they are manufactured abroad and are often owned by overseas utilities. From a multi-billion pound industry, Scotland’s communities got only £30 million of community benefit last year and the highlands got only £7 million. That is just £30 per head of population in the highlands.

The highlands already generate almost 8 GW of renewable electricity per year; roughly a third from hydroelectricity and two thirds from onshore wind. Even before factoring in pump storage, we play an important role in the electrification of the UK. I have said in this House before that I want the highlands to properly benefit from the enormous value of their natural resources. I was hopeful about onshore wind investment and the jobs and opportunities it could bring, but in practice that has been minimal. The proposed pump storage projects are now the only remaining chance I can see to bring proper money into my left-behind part of Britain.

Why does electricity storage really matter? Long duration storage has an important role in our energy future and the highlands have a particular ability to help deliver it. We need to be able to store electricity when there is plenty of it and to use it when we need it. Batteries play an important role in managing shorter periods, but we need technology that is capable of supplying electricity for much longer stretches.

Pump storage is a proven technology, capable of providing large amounts of electricity for long periods. These are long-life infrastructure assets, which are expected to operate for more than a century. They use electricity to pump water from a lower reservoir to a higher reservoir; when electricity is required, water is released through the turbines. As people can imagine, with our geography the highlands is very well placed for these assets. Our lochs, hills and mountains allow us to create the height differences that pump storage requires. The technical term is hydraulic head. In simple terms, the greater the height difference between the reservoirs, the more energy that can be produced with the same amount of water.

This summer, Ofgem announced that it has provisionally approved three pump storage sites in the highlands: Coire Glas, near Invergarry; Loch Kemp, near Loch Ness; and Lochan na h-Earba, which is quite near Newtonmore. These three sites will produce a collective 4 GW of electricity, which is three times as much electricity as Greater Manchester uses. The development costs will be over £5 billion, which will make the entire scheme by far the biggest ever infrastructure investment ever seen in the highlands. There are also three more pump storage sites that are keen to get Ofgem’s go-ahead: Loch Fearna, near Invergarry; Loch Ericht; and Loch na Cathrach, on Loch Ness.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

The hon. Member mentioned Lochan na h-Earba, which is in my constituency. The number of projects included in the Ofgem list at the moment, which he mentioned, and the number of projects that we could build and get benefit from differ quite significantly. And in addition to the possible projects in the highlands, there are some in the lowlands as well, in Dumfriesshire and other areas, which could benefit from Government investment, time and effort to get them onstream. Does he agree that we absolutely need to maximise the use of the extremely reliable and extremely well-tested technology of hydro?

[Mr MacDonald]

I think that hydro is a far better source of electricity than wind. It has much less visual impact and it is available when we really need it; we have quite a lot of wind, but it is obviously dependent on the wind blowing.

The future energy scenarios report of the National Energy System Operator, or NESO, for 2025 suggested that Britain could need between 13.2 GW and 16.6 GW of long duration storage by 2050. The six sites in the highlands that I have mentioned will go a long way towards providing that storage.

The second point I wish to make is about the implication for the electricity market and the people paying their bills. One aspect of this is the way that the wholesale electricity market works. Excuse me for stating the obvious, but gas still sets the price for electricity when gas-fired generation is needed, even at a time when a great deal of electricity is coming from renewable sources.

Mains gas is 8p a kilowatt at the moment, whereas electricity is 26p a kilowatt, or more than three times as much. Broadly speaking, people in rural areas across the whole of the UK do not have mains gas. In my patch, only those people in Inverness city and Dingwall receive mains gas.

[Ms Julie Minns (Carlisle) (Lab)]

The hon. Gentleman makes a valid point about his constituents who are off-gas; likewise, I have a number of constituents in my Carlisle constituency who are off-gas. Recently the committee of a village hall—Hallbankgate village hall—came to talk to me about their ambition to move off the heating oil system and instal solar, but storing the energy—the heat—in a sand battery. I do not know whether he has come across that before, but does he agree that whatever the scale or technology—be it pump or small sand batteries—the Government’s long-term storage strategy needs to be technology-neutral, so that we maximise as many of these different technologies as possible?

[Mr MacDonald]

Until I received the hon. Lady’s email yesterday, I had never heard of sand batteries; sand is not one of the big features of my constituency. Nevertheless, I agree that we should consider all sorts of technologies. The bottom line is that Britain will not transition to electricity when it costs three times as much as carbon fuel imported gas does.

[Douglas Lumsden (Aberdeen South) (Con)]

The hon. Gentleman states that the electricity price is considerably higher than the gas price. He made the argument that gas is setting the price for electricity, but can he explain why the price of gas was so low compared to the price of electricity?

[Mr MacDonald]

I will briefly attempt to do so, but there is a much more eloquent gentleman here today—the Minister for Energy, the hon. Member for Rutherglen (Michael Shanks)—who would do better. [Laughter.] As I understand it, the tariffs and the distribution charges go on the electricity—the home-produced renewable electricity—and not on the carbon fuel imported gas, which in my opinion is the wrong way round. However, I am sure that the Minister will enlighten us and provide a bit more detail.

Another problem is constraint payments—when we are paying to stop renewable electricity being produced. When the electricity network cannot carry power from where it is being produced to where it is needed, the systems operator has to intervene. That means paying wind farms to reduce their output. The National Audit Office says that constraint costs reached £1.9 billion over the last year, with an expectation that the figure could be as high as £8 billion by 2030. That is a shocking waste of taxpayers’ money and hopefully pump storage will reduce it.

What is the opportunity for Scotland? Pump storage sites are very expensive to build and, historically, it has been difficult for developers to secure private finance, because future electricity market revenues are uncertain. The UK Government have introduced the cap and floor scheme to unlock investment in this type of infrastructure. The floor provides a minimum level of revenue certainty and, if a project’s market revenues fall below that agreed floor, support is provided to cover the gap, funded through consumer bills. The cap limits the excess revenue. If a project earns above the agreed level, excess returns are returned to the consumer through lower network charges.

There is an opportunity for Scotland to develop a serious industry around pump storage. The benefits are not just the electricity stored at the end of construction. There is the civil engineer, the tunnel and the electrical equipment required—billions of pounds’ worth. Can we ensure that a significant amount of that supply chain work will remain in Scotland or even in Britain? Are we educating our young with the skills they need to be employed in these multi-billion pound infrastructures? I really do not believe we are.

I want to move on to community benefits. Do the communities impacted by wind farms and pump storage sites welcome them? They absolutely do not. I have attended hostile meetings of the convention of community councils with hundreds of attendees, and the Department for Energy Security and Net Zero and Scottish Government Ministers have declined to attend. There is very much a feeling in the highlands that this is being done to us. If locals had jobs at these projects, if legacy housing were built rather than temporary modular constructions, and if the communities got significant community benefit or, even better, were shareholders, I guarantee that there would be much better support.

When we ask communities to host major infrastructure, it should be beneficial to them. That is particularly important for the highlands, where our fuel costs are prohibitive, major developments can be very visible, the costs of providing public sector services are high, and we have a serious problem with the availability of housing and opportunities for young people to stop them emigrating to the cities. I welcome the Scottish Government’s recent proposal to bring pump storage hydro within its updated community benefit guidance, but I suspect that it will result in an underwhelming consequence.

Glen Earrach is a model case study. It has not yet received Ofgem’s provisional approval, but it is an example of the scale of opportunity we have. It has an expected operating life of approximately 125 years. It has 34 GWh of storage capacity and around 1.8 GW of generating capacity, and its hydraulic head of 500 metres makes good use of the geography of the site to store large amounts of electricity efficiently. The project is committed to putting 5% of its annual gross margin into a community wealth fund. The estimate is that the fund could receive £20 million a year. Compared with the highlands only getting £7 million, that is significant. The Highland Council said that the fund could be worth around £3 billion in today’s money over the 125-year operating period. Glen Earrach has bravely volunteered a model where its host community will share in its success. I strongly urge the Government to recognise it as a model that can be adopted by other developments.

[Gideon Amos (Taunton and Wellington) (LD)]

My hon. Friend is making a typically excellent and cogent argument for stronger community benefit from these projects. Does he agree that a cousin of pump storage technology is tidal range energy? The west of England has the second highest tidal range in the world, and it will be a missed opportunity if we do not exploit tidal range energy, just as it will be if we do not develop the community benefit programmes that he proposes.

[Mr MacDonald]

I have always believed that tide is probably the single best energy source, because it is entirely predictable and operates well in the estuaries where our cities are, so we do not need to transform it. I am not up to date, but it is something that we should really concentrate on.

[Graham Leadbitter]

There are also huge opportunities for geothermal energy, particularly in Aberdeenshire, but also in other parts of Scotland. The Government could focus more attention on geothermal and tidal stream. Does the hon. Gentleman agree with that sentiment?

[Mr MacDonald]

Hopefully, we will have all these different renewable energy sources coming through, but geothermal is a big one.

We have an enormous opportunity in rural Scotland to facilitate the electrification of Britain, and long-duration storage can help us make better use of the renewable electricity we generate. It can improve the security of supply and support a more efficient electricity system. Rural Scotland plays a role in enabling Britain to achieve its net zero ambitions. However, the impact on our communities is currently almost entirely negative. It is like telling the inhabitants of Norway or Aberdeen in the 1970s that there will be an oil and gas boom, but the locals should not benefit from it. As things stand, these multibillion-pound pump storage sites will produce few local jobs, no legacy housing and minimal community benefit for the people of the highlands. That is completely unacceptable.

Pump storage sites are an essential part of our national energy portfolio, and they are great for Britain. Let us make them great for the highlands, too.

11:17

[The Minister for Energy (Michael Shanks)]

It is a pleasure, as always, to serve under your chairship, Sir Christopher. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing the debate. He and I have talked about this issue many times, but I never tire of it. As he rightly said in his speech, it is an incredibly exciting opportunity for the highlands and an important opportunity for the country.

I always know that winter is coming when the hon. Gentleman’s jumpers make a reappearance. I am a big fan of them, and it is great to see him here today. He is a great champion of his constituency, which covers an enormous part of Scotland. However, having run the Arisaig to Mallaig half-marathon, I would say that he has a significant amount of very beautiful sand in his constituency.

This has been an interesting debate. I will come to the hon. Gentleman’s points about long duration energy storage, but we have also heard about its cousins, such as pumped hydro and sand batteries, which is about storing energy through heat rather than in more conventional ways. It is important to be agnostic about the new technologies that are coming forward all the time and becoming ever more developed. We need a significant amount of flexibility in our system to be able to store and utilise the clean power that we are generating when we need it most. We should be open to a whole range of technologies, so I am very happy to have more conversations about all of them.

The hon. Gentleman made a strong case for the importance of long duration electricity storage. Over decades we have built a significant amount of renewable energy generation across the UK, both offshore and onshore, but we have not kept pace with being able to store that electricity for when we need it most, which has meant that our electricity system cannot get the full benefit of the clean, cheap, secure power that is being generated every single day. In fact, as the hon. Gentleman said, we have to spend considerable amounts of money on constraining that renewable capacity, because we did not build the grid. We have not built the necessary storage, so our transition to being able to deploy clean power when we need it requires much more flexibility, which comes from long duration energy storage.

I recently visited the pumped hydro project in Cruachan, which follows a well-trodden path of technology that we have deployed for a very long time. Pumped hydro lasts for a long time, is an important part of how we deliver long duration energy storage and will play a critical role in balancing supply and demand. In June, Ofgem published its minded-to list for window 1 of the cap and floor scheme. That was a significant milestone for the sector. I agree with the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter)—there is a double act of Members with long constituency names——about the ambition on long duration energy storage, but I would also say that this is the first long duration energy storage we have built in Britain in 40 years, and it is a significant amount: 7.5 gigawatts of capacity is not nothing. We remain really ambitious. He is right to say that future scenarios require even more long duration energy storage, but this is a remarkable turnaround from a 40-year gap in building any of these projects anywhere in the country.

Ofgem has provisionally selected 16 projects. It has made minded-to decisions, but a consultation process is running. Three projects are pumped storage hydropower in Scotland, representing over half the LDES capacity. Ofgem will announce its final decision on those projects by the end of the year. When they are delivered, they will reduce costs for consumers by maximising our renewable energy generation to make it available when we need it at peak times and reducing our reliance on natural gas, which is the part of the constraints that is often misunderstood in the press. The cost does not come from turning off wind; it comes from turning up gas somewhere else in the country. If we deploy LDES in the way we intend to, we will be able to reduce that dependency on costly gas generation.

I understand that the hon. Member for Inverness, Skye and West Ross-shire agrees with me on the need for long duration energy storage—we have had this conversation many times—but he also rightly wants to make sure that his community benefits from these projects. Their construction in itself creates a significant number of jobs over several years. That is expected to begin by next year and continue into the early 2030s. One project that he mentioned, Loch Earba, will create approximately 600 jobs over its five-year construction period, including at least 30 new apprenticeships. It is estimated that another project, Loch Kemp, will create 370 jobs in the highlands at peak construction. It has committed £7.5 million to a community fund, and to investing in projects such as the Caledonian canal and local roads.

The hon. Gentleman also rightly made the point about local supply chains and making sure we are delivering as much of the economic benefit of those projects in local communities. The single most important thing my Department has been driving in two and a half years in relation to the construction of these projects is no longer to be agnostic about where we build things as a country, because we actually care about industrial strategy. I have been very clear with all developers that expect to receive public money that they should look at every single part of their procurement to ensure, even down to the smallest contracts, that they procure locally as much as possible. I recognise that that is a shift from where we have been for a long time as a country, but it is critical because that is where we get supply chain jobs right across the hon. Gentleman’s constituency.

[Mr MacDonald]

The Minister mentioned one of the pump storage sites and the £7.5 million investment, which is a one-off payment. For example, Glen Earrach is offering £20 million a year for 125 years, inflation-linked. That is what we have to move to: an amount of money being invested year after year that is agreed and controlled by the Government. What does the Minister think of that?

[Michael Shanks]

Let me come to that point, because we have discussed that before. My starting point is that communities who host infrastructure should feel the benefits of it, and they should be meaningful benefits. We consulted on how we will deliver both community benefits and shared-ownership opportunities for communities. We have put £1 billion pounds into Great British Energy to make sure that there is the financial capacity for communities to take up that shared-ownership offer. We will continue to push that.

I have spoken before about the need for us to balance that though; ultimately, all the costs of building these projects is borne by consumers across the country. The hon. Gentleman and I share the objective of bringing down bills as much as possible. There is a balance to be struck and I do not pretend that is easy because his community—he is right to champion them—will rightly want more and more community benefits. My job is to balance that against the cost of these projects. I need first to ensure that they are economical and will be built, because that is important for the national interest, and secondly that they are built as affordably as possible so that we can bring down bills for everyone. There is a balance to be struck, as I have said to the hon. Gentleman before.

I know that the hon. Gentleman will always want us to go further, but I would just say that the cap and floor scheme is designed to provide not huge public subsidy to make these projects happen, but just the right amount to make them viable. That is the key thing; the cap and floor scheme is designed to be a viability mechanism, so there is a risk that we end up using consumer bills to subsidise projects if we go too far. That does not mean that I do not share his ambition, and I have been very clear with developers that we should see genuine community benefits coming forward and that those should be meaningful for communities.

[Graham Leadbitter]

Very briefly, I am raising these issues with colleagues in the Scottish Government as well, but while DESNZ and Ofgem have a role in this, I think it is helpful for every organisation to be pushing the developers and saying, “What are you doing about the roads infrastructure? What are you doing about how you get people to and from the sites?” Projects represent big influxes of people into areas, while the local infrastructure can be just lane-and-a-half roads, with passing places and all that. Will the Minister commit to putting some pressure on those companies to invest in that?

[Michael Shanks]

I thought the hon. Member was going to conclude by asking whether I would commit to putting some pressure on the Scottish Government, which would be unlike him. But I agree with him, actually. I have had a number of really productive conversations with Stephen Gethins, Scotland’s Energy Minister, on exactly that topic of how we can make these projects work for local communities. If we can bring that local investment into roads and other infrastructure, it leaves that legacy that I think we all want to see in communities. It is also of benefit to the projects, which will need some investment in road infrastructure anyway.

In summing up, I want to pick out two issues. First, I really welcome the hon. Member for Inverness, Skye and West Ross-shire’s recognition of the importance of long duration energy storage for our system. The truth of the past few years has been a recognition that, for decades, we had a consensus on building renewables across Scotland and the rest of Great Britain, but we did not make the investment that we should have in building the grid to connect them. We are now paying the price for that.

Equally, storage is absolutely central to how renewables can work in the system, giving us the flexibility to deploy that energy when we need it most and making sure that we are genuinely bringing cleaner, cheaper power to homes and businesses when we need it, which is how we bring down bills. It also has to be the foundation of delivering economic growth. The hon. Gentleman rightly recognised the Prime Minister’s commitment to growth in every postcode. Energy policy does not exist in a vacuum; it is part of our industrial strategy.

We are building these extraordinarily important projects that will last for more than a century. There has to be some legacy for communities from those projects, and we have to bring people with us on this journey. I frequently say in this place in particular, but in the main Chamber as well, that we do need to build infrastructure as a country—that is important—but we should try to bring communities with us wherever we possibly can. Community benefits and real investment are a critical part of that.

The Scottish Government are clearly a key partner in this, given that planning decisions in Scotland are not for me but for the Scottish Government. I know that they share my ambition about the importance of both deploying long duration energy storage and community benefits. They have guidance on this matter, and we are working together on it.

Whether it is through community benefit funds, the bill discounts that we have announced in terms of electricity infrastructure, or our ongoing work to make sure that there is an industrial benefit from these projects, I hope that the hon. Gentleman recognises that, while we might not get everything quite to the extent that he would like, these projects are an opportunity for communities to benefit from construction, from community benefits and from—I hope—a genuine lasting legacy.

Importantly for us as a country, this is how we deliver the secure, home-grown clean power that we need in the system, bring down bills for people and continue the transition to net zero, which is so important. I commend the hon. Member for Inverness, Skye and West Ross-shire again, and I look forward to what I am certain will be further conversations on this in due course.

Question put and agreed to.

11:29

Sitting suspended.