Battery Storage Expansion and Revenue Optimisation in GB: What Changed This Week — 17-23 Dec 2025

The GB battery storage market is undergoing transformative shifts, with 6.8 GW of operational capacity achieved by the end of 2025 and significant regulatory and project developments shaping the sector's trajectory. This week, Ofgem's reforms, large-scale project commitments, and new balancing mechanisms dominated the landscape. Here's what you need to know and why it matters.

Key Developments

1. Ofgem Approves £28 Billion in Grid Investments

Ofgem has approved a £28 billion grid infrastructure package, part of a £90 billion investment push through 2031. This investment aims to reduce renewable curtailment costs by £3–6 billion annually by enhancing transmission capacity (The Guardian, 19 Dec 2025). Three 'electricity superhighways' will connect Scottish offshore wind to demand centres, alleviating bottlenecks that have driven significant negative pricing events.

Implications: Battery operators should anticipate reduced curtailment arbitrage opportunities in Scotland but increased locational value in regions where distribution network upgrades lag. Developers must prioritise projects near demand centres or within constrained zones that maximise locational marginal pricing benefits.

2. RWE Moves Forward with £350 Million Pembroke Battery Project

RWE announced its final investment decision for the 350 MW/700 MWh Pembroke Battery Storage project, the UK's largest single-site BESS to date (RWE, 19 Dec 2025). Construction is set to begin in H1 2026, with operations slated for H2 2028. The 2-hour duration system targets wholesale arbitrage and reserve markets while capitalising on its strategic location near interconnector landing points.

Implications: This deployment signals confidence in longer-duration systems optimised for both energy and ancillary services markets. Smaller developers must differentiate via faster timelines or co-location with renewable assets to remain competitive in a market increasingly dominated by utility-scale players.

3. National Grid ESO's Open Balancing Platform Gains Traction

The National Grid ESO's phased rollout of the Open Balancing Platform (OBP) continues, promising full integration by 2027 (National Grid ESO, 23 Dec 2025). OBP allows sub-50 MW battery systems direct access to balancing services, creating a structural shift in revenue opportunities for distributed assets.

Implications: Bulk dispatch capabilities lower transaction costs and improve price discovery, potentially intensifying competition in ancillary service markets. Operators should integrate OBP participation into project planning and optimise revenue stacking strategies to capture these new opportunities.

4. 6.8 GW of Battery Storage Capacity Now Operational

GB's operational battery storage capacity reached 6.8 GW/10.5 GWh by December 2025, with 1.4 GWh added in H1 2025 alone (RenewableUK, 19 Dec 2025). The average system duration of 1.54 hours highlights the market's focus on short-duration assets optimised for frequency response and arbitrage.

Implications: Increasing capacity heightens competition in ancillary services, compressing Dynamic Containment and Regulation revenues. Developers should pivot to 2+ hour systems to capture evening peak arbitrage and capacity market opportunities, differentiating from the crowded 1-hour segment.

5. Masdar's £1 Billion UK Storage Commitment Begins

Masdar's initial 20 MW/40 MWh Stockport project became operational this week, the first of a £1 billion UK storage portfolio (Arabian Business, 19 Dec 2025). The 2-hour system signals institutional capital's favouring of flexible, multi-service assets over commodity 1-hour systems.

Implications: Masdar's focus on urban areas like Greater Manchester positions it to capture ancillary service premiums. Developers must anticipate heightened competition for grid connections and urban sites as institutional players scale their portfolios.

6. Grid Connection Reforms Accelerate Deployment

Ofgem's overhauled grid connection process prioritises 'ready' projects, potentially reducing timelines from 5+ years to as little as 18–24 months (Osborne Clarke, 19 Dec 2025). Speculative applications will now face penalties, creating a clear advantage for shovel-ready developments.

Implications: Battery storage developers must secure planning consent, financing, and other milestones upfront to benefit from expedited connections. The reforms will likely accelerate capacity additions between 2026–2028, compressing ancillary service margins but expanding wholesale arbitrage opportunities.

Why This Matters

The GB battery storage market is evolving rapidly, with regulatory clarity and project scale catalysing deployment. However, this growth comes with increased competition and changing market dynamics that stakeholders must navigate carefully.

- Regulatory Tailwinds: Ofgem's grid investment and connection reforms provide the certainty needed to unlock large-scale projects. However, developers must adapt to shifting curtailment and locational pricing dynamics as grid upgrades reduce major bottlenecks.

- Market Saturation Risks: The 6.8 GW operational capacity underscores the need for longer-duration systems and sophisticated optimisation strategies. Revenue stacking across ancillary services, wholesale arbitrage, and capacity markets will be critical as competition intensifies.

- Institutional Capital Influx: Masdar's £1 billion commitment and RWE's Pembroke project highlight the sector's attractiveness to institutional investors. Smaller players must innovate through co-location, faster timelines, or hybrid configurations to compete.

- Technological Integration: The Open Balancing Platform and grid connection reforms signal a shift towards accessible, automated participation in balancing markets. Operators must invest in advanced control systems to maximise these opportunities.

The GB battery market is at an inflection point. Stakeholders must balance near-term revenue optimisation with strategic positioning for a maturing, competitive landscape.

Picking Take

When 6.8 GW of battery capacity operates in a market, it's not just growth—it's a structural shift. With £28 billion in grid upgrades and RWE's 700 MWh Pembroke project on the horizon, the race is on for locational and technological advantages. Developers ignoring longer durations and hybrid assets risk being left behind in a market where sophistication, not scale, defines success.