This report does not constitute a rating action. Ofgem's cap-and-floor mechanism provides long-term revenue stability. The energy storage sector in the U.K. reached a milestone in June 2026, when Ofgem published preliminary decisions on the first cap-and-floor awards under the inaugural Window 1, with the final award decisions expected in autumn 2026. 16 projects with a capacity of 7.65 gigawatts have been provisionally selected. This mechanism directly addresses one of the main credit concerns--revenue volatility in uncontracted battery energy storage systems (BESS)--for these 16 projects. Here, we discuss the differing implications of the mechanism for its primary beneficiaries, which are lithium-ion and hydro technologies. This report reflects Ofgem's July 2026 consultation draft of the LDES special license conditions and related
