Certain Energy to bid in Ofgem cap-and-floor auction

Certain Energy has confirmed it will submit a bid in the next cap-and-floor auction for long-duration energy storage, a move the company’s executive chair believes will reduce revenue risk for asset owners. Mark Selby, who chairs the recently rebranded firm, stated that the company will definitely participate in the upcoming round administered by the regulator Ofgem. While the initial auction window was designed for mature technologies, Selby anticipates that subsequent rounds may become more specialised, offering opportunities for innovative solutions to compete alongside established methods such as traditional pump storage and lithium-based systems stretching into longer durations.

Selby, a former chief growth officer at electrolyser producer Ceres Power, offered a critical assessment of the government’s cap-and-floor mechanism, which was tabled in 2024. He argued that while the scheme effectively rewards innovation and fulfils the needs of regulators, it is not well aligned with Labour’s industrial strategy. According to Selby, such mechanisms tend to drive capital towards mature technologies overseas, potentially undermining the reindustrialisation goals championed by Energy Secretary Andy Burnham. He described the process as an allocation mechanism rather than a pure financial bidding process, noting that the government seeks to remove as many risk factors as possible to secure a guaranteed revenue stream for participants.

The company, an Imperial College spin-out that changed its name from RFC Power, recently raised ten million pounds from a consortium including the British Business Bank, Centrica, Ceres, and Temasek Trust’s C3H. Energy Minister Michael Shanks noted that the British Business Bank’s investment is helping to develop the long-duration storage required to store clean power and deliver a more secure energy system. Selby expects the company to develop its first prototype within the next 12 to 18 months, with plans to work on a commercial-scale energy storage park. He indicated that commercial and feasibility partners are expected to operate concurrently, supported by a strong commercial pipeline that helped secure the recent funding round.

Certain Energy is developing manganese-flow batteries, a technology that uses an abundant element in the Earth’s crust. Selby highlighted the economic advantages of manganese over vanadium, describing the latter as an astronomically expensive commodity that would create significant price issues if deployed at gigawatt scale. In contrast, he stated that manganese flow batteries achieve similar or higher efficiencies at a very small fraction of the cost. The company plans to develop a grid-connected megawatt-scale system in India and expand its UK research facility. Selby explained that the technology allows for easy scaling; whereas most long-duration storage technologies do not provide more than 16 hours of power, Certain’s system could enable users to access up to 100 hours of power if market design changes permit, simply by building additional tanks without new plumbing.

Selby drew an analogy between the technology and pumped hydro, describing a reactor that changes the chemical state of a liquid solution as the equivalent of a turbine. This design allows for the separation of power and energy, a key discriminator for long-duration storage. He noted that while gas peakers currently set the price in the wholesale market, long-duration storage technologies could eventually compete directly with them. Selby envisages a future where these technologies set the marginal price for power, provided there is sufficient capacity installed. He also suggested that higher efficiency levels, potentially reaching 70 per cent, would allow the asset to be used more aggressively in the arbitrage market, requiring smaller price spreads to deliver value compared to lower-efficiency systems.