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Released June 18, 2025 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Drax has pulled the plug on one of the U.K.'s largest proposed pumped-storage hydro (PSH) projects.
The company, which runs the existing Cruachan hydroelectric facility inside Ben Cruachan in Argyll, Scotland, has put its planned £500 million (US$678 million) Cruachan II expansion project on ice, blaming rising costs. As a result, it has withdrawn from the government's first long-duration energy storage (LDES) cap-and-floor support scheme. Constructed adjacent to the existing underground facility, known as "Hollow Mountain,"' the new pumped-storage hydro plant would have more than doubled the site's total generation capacity to more than 1 gigawatt (GW). The 600-megawatt (MW) plant formed part a wider £7 billion (US$9.5 billion) strategic investment plan by Drax in clean energy technologies between 2024 and 2030, which includes long-duration storage and its Bioenergy with Carbon Capture and Storage (BECCS) project at the massive Drax biomass power station in Selby, England. The project has completed its initial design and engineering phase, but Drax indicated that the proposed government support scheme did not provide a clear path for return on investment.
"The projected cost of Cruachan II has risen over the past two years, whilst at the same time the recoverability of all capital invested in the project remains unclear," the company told investors. "Therefore, Drax will not participate in this first phase of the cap and floor scheme but will retain the option for potential future development, subject to an appropriate balance of risk and return."
Industrial Info is tracking 11 Drax projects in the U.K. worth an estimated US$1.5 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. Work to refurbish the existing Cruachan facility will continue unaffected, according to Drax. The company previously earmarked £80 million (US$108 million) to boost the the generating capacity of two of the plant's four units by a total of 40 MW, bringing total capacity to 480 MW.
The company's decision comes just months after the government granted the green light to the country's largest pumped hydro project at Loch Earba in the Scottish Highlands. With an estimated budget of US$2.5 billion, the Earba PSH project will have an installed capacity of 1.8 GW and a storage capacity of 40 gigawatt-hours (GWh). It will be capable of delivering 22 hours of storage at full power. For additional information, see April 14, 2025, article - Green Light for U.K.'s Largest Pumped-Storage Hydro Scheme.
Industrial Info is tracking 12 major U.K. pumped-storage hydro-related projects worth more than US$15 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. The government committed at the start of the year to removing the barriers to the rapid expansion of the LDES sector in the U.K.. In March it confirmed that it was going ahead with introducing a "cap and floor" investment regime for LDES projects. Electricity and gas market regulator Ofgem stated that the capacity range for has been set at between 2.7 GW and 7.7 GW out to 2035.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company, which runs the existing Cruachan hydroelectric facility inside Ben Cruachan in Argyll, Scotland, has put its planned £500 million (US$678 million) Cruachan II expansion project on ice, blaming rising costs. As a result, it has withdrawn from the government's first long-duration energy storage (LDES) cap-and-floor support scheme. Constructed adjacent to the existing underground facility, known as "Hollow Mountain,"' the new pumped-storage hydro plant would have more than doubled the site's total generation capacity to more than 1 gigawatt (GW). The 600-megawatt (MW) plant formed part a wider £7 billion (US$9.5 billion) strategic investment plan by Drax in clean energy technologies between 2024 and 2030, which includes long-duration storage and its Bioenergy with Carbon Capture and Storage (BECCS) project at the massive Drax biomass power station in Selby, England. The project has completed its initial design and engineering phase, but Drax indicated that the proposed government support scheme did not provide a clear path for return on investment.
"The projected cost of Cruachan II has risen over the past two years, whilst at the same time the recoverability of all capital invested in the project remains unclear," the company told investors. "Therefore, Drax will not participate in this first phase of the cap and floor scheme but will retain the option for potential future development, subject to an appropriate balance of risk and return."
Industrial Info is tracking 11 Drax projects in the U.K. worth an estimated US$1.5 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. Work to refurbish the existing Cruachan facility will continue unaffected, according to Drax. The company previously earmarked £80 million (US$108 million) to boost the the generating capacity of two of the plant's four units by a total of 40 MW, bringing total capacity to 480 MW.
The company's decision comes just months after the government granted the green light to the country's largest pumped hydro project at Loch Earba in the Scottish Highlands. With an estimated budget of US$2.5 billion, the Earba PSH project will have an installed capacity of 1.8 GW and a storage capacity of 40 gigawatt-hours (GWh). It will be capable of delivering 22 hours of storage at full power. For additional information, see April 14, 2025, article - Green Light for U.K.'s Largest Pumped-Storage Hydro Scheme.
Industrial Info is tracking 12 major U.K. pumped-storage hydro-related projects worth more than US$15 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. The government committed at the start of the year to removing the barriers to the rapid expansion of the LDES sector in the U.K.. In March it confirmed that it was going ahead with introducing a "cap and floor" investment regime for LDES projects. Electricity and gas market regulator Ofgem stated that the capacity range for has been set at between 2.7 GW and 7.7 GW out to 2035.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
