Mr Gray gave his backing to the industry while visiting Drax’s iconic ‘Hollow Mountain’ Cruachan Power Station near Oban in Argyll, where the renewable energy giant is progressing plans to build a new £500 million underground pumped storage hydro plant at the site.

Expanding the UK’s pumped storage hydro capacity is seen as crucial to integrating more wind and solar power onto the energy grid, enhancing the nation’s energy security while tackling climate change. Pumped storage plants act like giant water batteries by using reversible turbines to pump water from a lower reservoir to an upper reservoir which stores excess power from sources such as wind farms when supply outstrips demand. These same turbines are then reversed to bring the stored water back through the plant to generate power when the country needs it.

Despite the critical need for them, no new plants have been commissioned in the UK since 1984, with existing support schemes for other technologies unsuitable for the unique needs of these large-scale infrastructure projects. A report by KPMG found that a cap and floor mechanism, like the regime used to incentivise investment in cross-border interconnectors, could overcome the hurdles currently blocking investment in long duration storage technologies.

Ian Kinnaird, Drax’s Scottish assets director, said: “To achieve a safe and secure net zero power grid, we need to have a new generation of pumped storage hydro plants to balance our grid.

“As the UK increasingly relies on intermittent renewables to keep our lights on, there is a growing need for flexible power sources to plug the gap when the wind doesn’t blow, or the sun doesn’t shine. With its reversible turbines, Cruachan can also store excess power from Scotland’s wind turbines when they are generating more renewable electricity than we need, helping to stop valuable green power from going to waste.

“With the right support from the UK government, Drax will invest £500m to more than double Cruachan’s generating capacity and support almost 1,000 jobs across the supply chain during construction.”

Energy secretary Neil Gray MSP said: “Scotland is a global leader in the production of renewable energy, which will play an increasingly important role in the transition to a net zero electricity system by 2045.

“However, pumped hydro storage, an important low carbon technology, is currently ineligible for UK government support. UK government inaction on this issue represents a significant obstacle to progress and risks failing to secure economic benefits, such as creating thousands of good quality, green jobs.”

Earlier this year, a report commissioned by trade body Scottish Renewables found that a new generation of pumped storage hydro plants in Scotland could create almost 15,000 jobs across the UK, with Drax’s Cruachan expansion generating almost half a billion pounds for the UK economy.

Drax acquired Cruachan alongside the Galloway and Lanark hydro schemes in 2019, helping to make the company a leading provider of flexible, renewable power generation.