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CEPA, working with ESP Consulting, advised on the design of the proposed Cap and Floor (C&F) scheme for Long Duration Electricity Storage (LDES). The work focused on the following workstreams. The team:

• assessed potential gaming risks under the C&F scheme, their materiality, and possible mitigations for the risks. In this context, we defined gaming risks as actions which seek to exploit the design of the C&F contract to obtain unwarranted profits by acting against the intention of the C&F regime;
• developed and evaluated approaches for setting cap and floor levels within the C&F regime and designing the overall C&F contract;
• advised on the revenue stack for LDES assets, assessing the drivers of LDES revenues and how that may expect to change over time; and
• advised on the overall financial policy framework for the C&F regime.