Case study: Long-duration energy storage (LDES) — a city or utility pilot and the results so far

The California Independent System Operator (CAISO) reported that during a 10-day heat wave in September 2025, the state's 4-hour lithium-ion battery fleet was fully depleted by 8 PM each evening, leaving grid operators scrambling to avoid rolling blackouts during the remaining hours of peak demand that stretched past midnight (CAISO, 2025). That vulnerability catalyzed what has become one of the most closely watched long-duration energy storage pilots in the world: the Moss Landing Energy Storage Expansion in Monterey County, California, where a combination of iron-air batteries, compressed air energy storage, and flow batteries is being tested alongside the existing lithium-ion installation to deliver 8 to 100+ hours of discharge capacity. As of early 2026, the pilot has deployed 400 MWh of LDES capacity across three technology platforms, displaced an estimated 62,000 metric tons of CO2 annually by reducing natural gas peaker plant dispatch, and attracted $1.2 billion in combined public and private investment.

Why It Matters

The transition to a grid powered predominantly by variable renewable energy creates a storage duration problem that lithium-ion batteries cannot solve alone. Solar generation peaks at midday and drops to zero by evening. Wind output fluctuates unpredictably across multi-day weather patterns. The US Department of Energy's 2023 Pathways to Commercial Liftoff report estimated that achieving 90% clean electricity by 2035 will require 225 to 460 GW of energy storage, of which 80 to 160 GW must provide discharge durations of 8 hours or longer (DOE, 2023). Today, less than 1 GW of non-lithium LDES capacity exists in the United States.

The economic case is equally compelling. Natural gas peaker plants, which currently fill multi-hour supply gaps, operate at capacity factors below 15% while incurring capital costs of $800 to $1,200 per kW. These plants are increasingly uneconomic as carbon pricing mechanisms expand: California's cap-and-trade allowance prices reached $41 per metric ton in Q4 2025, adding approximately $18 per MWh to peaker plant operating costs. LDES technologies that can deliver 8 to 100+ hours of discharge at levelized costs below $150 per MWh would displace the majority of peaker capacity while simultaneously reducing grid emissions and improving reliability during extended weather events.

For investors, the LDES market represents one of the largest addressable gaps in the clean energy value chain. BloombergNEF estimates the global LDES market will reach $3 to $5 billion in annual investment by 2030, up from under $500 million in 2024. However, technology risk, uncertain revenue streams, and unproven commercial-scale performance have constrained capital deployment. The Moss Landing pilot is designed to produce the operational data needed to de-risk subsequent investment decisions.

Key Concepts

Understanding the Moss Landing LDES expansion requires familiarity with several technical and market concepts that differentiate long-duration storage from conventional battery deployments.

Discharge duration categories: The industry generally classifies energy storage into short-duration (1 to 4 hours, dominated by lithium-ion), medium-duration (4 to 12 hours, where multiple chemistries compete), and long-duration (12 to 100+ hours, encompassing mechanical, electrochemical, chemical, and thermal approaches). The Moss Landing pilot tests technologies across the medium and long-duration spectrum.

Iron-air batteries: These cells use reversible oxidation of iron as the storage mechanism. During discharge, iron pellets oxidize (rust), releasing electrons. During charge, electricity reverses the process, reducing iron oxide back to metallic iron. The key advantage is that iron is abundant, inexpensive, and non-toxic. The tradeoff is lower round-trip efficiency (approximately 45 to 50%) compared to lithium-ion (85 to 90%), and slower response times measured in minutes rather than milliseconds.

Compressed air energy storage (CAES): During periods of excess renewable generation, electricity drives compressors that force air into underground caverns or above-ground pressure vessels. When power is needed, the compressed air is released through turbines to generate electricity. Advanced adiabatic CAES systems capture and store the heat of compression, improving round-trip efficiency from the 40 to 50% range of conventional CAES to 60 to 70%.

Capacity market revenue stacking: LDES projects in California can stack revenues from multiple sources: resource adequacy contracts (payments for guaranteed capacity availability), energy arbitrage (buying electricity at low prices and selling at high prices), ancillary services (frequency regulation, spinning reserve), and renewable integration credits. The ability to stack four or more revenue streams is critical to achieving investment-grade returns.

What's Working

The Moss Landing LDES pilot has generated operational data that is reshaping assumptions about long-duration storage economics and performance.

Multi-Day Reliability During Extended Weather Events

The pilot's most significant test came during the September 2025 heat dome, when CAISO declared Stage 2 grid emergencies on three consecutive evenings. While the existing 400 MW/1,600 MWh lithium-ion facility at Moss Landing discharged fully by approximately 8:30 PM each evening, the LDES assets continued delivering power through the overnight hours. The 75 MW/600 MWh iron-air battery installation, developed by Form Energy, sustained output from 8 PM to 6 AM across all three critical nights, providing 10 consecutive hours of discharge that directly avoided activation of the grid operator's load shedding protocols. Pacific Gas and Electric (PG&E), the local utility, estimated that the LDES discharge during this single event prevented approximately $45 million in economic losses from avoided blackouts affecting 380,000 residential and commercial customers (PG&E, 2025).

Cost Trajectory Is Following the Lithium-Ion Curve

The installed capital cost for the iron-air battery component was approximately $20 per kWh of storage capacity, compared to $250 to $300 per kWh for the adjacent lithium-ion system. While round-trip efficiency is lower, the dramatically reduced capital cost per unit of energy stored makes iron-air batteries economically superior for applications requiring 8+ hours of discharge. The pilot's compressed air storage component, a 50 MW/500 MWh advanced adiabatic system developed by Hydrostor, achieved an installed cost of approximately $180 per kWh with a projected 40-year asset life, compared to 15 to 20 years for lithium-ion. On a levelized cost of storage (LCOS) basis, the Hydrostor system is delivering energy at $92 per MWh over its projected lifetime, competitive with new-build natural gas peaker plants at $110 to $150 per MWh in California's carbon-priced market (Hydrostor, 2025).

Revenue Stacking Is Proving Viable

The pilot has demonstrated that LDES assets can generate bankable revenue across multiple market products. In calendar year 2025, the combined LDES portfolio earned revenue from four sources: resource adequacy contracts ($42 per kW-year, generating $7.6 million annually for the 180 MW of LDES capacity under RA contracts), day-ahead energy arbitrage (average spread of $65 per MWh between midday solar surplus and evening peak, generating $11.2 million), ancillary services ($3.8 million from spinning reserve and frequency regulation), and a Clean Peak Standard premium ($2.1 million). Total annual revenue of $24.7 million against approximately $18 million in annual debt service and operating costs yielded a positive operating margin in the first full year, an outcome that most financial models had not projected until year three.

Supply Chain Uses Domestically Available Materials

Unlike lithium-ion batteries, which depend on lithium, cobalt, and nickel sourced primarily from Australia, the Democratic Republic of Congo, and Indonesia, the iron-air batteries at Moss Landing use iron pellets sourced from Minnesota's Iron Range. The compressed air system relies on standard industrial compressors and turbines manufactured in the United States. This supply chain profile reduces exposure to the geopolitical risks and price volatility that have disrupted lithium-ion procurement chains, a factor that several institutional investors cited as a key reason for participating in the project's financing.

What's Not Working

Despite encouraging results, the pilot has surfaced significant challenges that constrain LDES deployment at scale.

Round-Trip Efficiency Losses Are Material

The iron-air battery system's round-trip efficiency of 47% means that for every 100 MWh of renewable electricity stored, only 47 MWh is delivered back to the grid. In an energy-constrained system, this loss is economically significant: at California's average wholesale electricity price of $55 per MWh, the efficiency penalty adds approximately $62 per MWh to the effective cost of delivered energy. The compressed air system performs better at 64% round-trip efficiency but still trails lithium-ion's 87% by a substantial margin. For applications where the grid has abundant surplus renewable energy (California routinely curtails 3 to 5 GWh of solar on spring days), the efficiency penalty is less consequential. But for grids without structural overgeneration, the energy loss may undermine the economic case.

Permitting and Interconnection Timelines Remain Excessive

The Hydrostor compressed air storage component required excavation of an underground cavern, triggering CEQA environmental review that added 28 months to the project timeline. The interconnection process with CAISO took an additional 22 months after the facility was physically complete, as the grid operator's queue management process was designed for generation assets and lacked protocols for multi-day storage resources. Total development-to-operation elapsed time was 5.5 years, a timeline incompatible with the urgency of grid decarbonization. Several subsequent LDES project proposals in California have cited permitting uncertainty as the reason for selecting above-ground technologies, even where underground CAES would be technically superior.

Performance Degradation Data Is Limited

The iron-air battery system has been operational for only 14 months, providing insufficient data to validate Form Energy's projected 20-year asset life and degradation curve. Lithium-ion battery degradation is well-characterized after a decade of commercial deployment, enabling precise financial modeling. LDES technologies lack equivalent operational track records, which forces lenders to apply risk premiums that increase financing costs by 150 to 250 basis points compared to lithium-ion projects. This financing cost penalty partially offsets the capital cost advantage of LDES technologies.

Market Design Does Not Adequately Compensate Duration

California's resource adequacy framework currently values storage capacity based on a 4-hour discharge standard. A 100 MW/400 MWh lithium-ion system and a 100 MW/1,000 MWh iron-air system receive identical RA capacity payments despite the latter providing 2.5 times the energy delivery capability. This market design flaw undervalues the reliability contribution of LDES and depresses project returns. CAISO initiated a stakeholder process in late 2025 to develop duration-differentiated capacity valuation, but revised tariff rules are not expected before 2028.

Key Players

Established Companies

• Pacific Gas and Electric (PG&E): The host utility for the Moss Landing LDES expansion, responsible for offtake agreements, grid interconnection, and rate recovery of storage procurement costs.
• Vistra Energy: Owner-operator of the existing 400 MW/1,600 MWh lithium-ion facility at Moss Landing, which provides the performance benchmark against which LDES technologies are measured.
• Hydrostor: Developed the 50 MW/500 MWh advanced compressed air energy storage system, the largest adiabatic CAES installation in California.
• Siemens Energy: Supplied the turbo-expander and heat exchange systems for the compressed air storage component.
• Mitsubishi Power: Provides long-term maintenance and performance guarantee contracts for the CAES turbine equipment.

Startups

• Form Energy: Developed and deployed the 75 MW/600 MWh iron-air battery system at Moss Landing, the company's first utility-scale commercial installation after a 1 MW pilot in Minnesota.
• ESS Inc.: Supplies iron flow batteries for a 10 MW/80 MWh supplemental installation at the site, targeting the 4 to 12 hour duration segment.
• Antora Energy: Testing a 5 MW solid-state thermal battery at an adjacent industrial site, converting stored heat to electricity via thermophotovoltaic cells for potential integration into the Moss Landing portfolio.

Investors and Funders

• US Department of Energy: Provided $150 million through the Long-Duration Energy Storage Demonstration Program, authorized under the Infrastructure Investment and Jobs Act.
• Breakthrough Energy Ventures: Lead investor in Form Energy's Series E round ($450 million), directly enabling the Moss Landing deployment.
• California Energy Commission: Awarded $85 million in EPIC (Electric Program Investment Charge) grant funding for the CAES and flow battery components.
• Generate Capital: Provided $200 million in project finance debt for the Hydrostor compressed air facility.

KPI Summary

KPI	Baseline (2023)	Current (2025)	Target (2028)
LDES capacity deployed (MWh)	0	1,180	4,000
Discharge duration capability (hours)	4 (Li-ion only)	10 to 100	10 to 150
Annual CO2 displaced (metric tons)	0	62,000	210,000
Peaker plant dispatch avoided (GWh)	0	280	950
LCOS for iron-air ($/MWh)	N/A	$78	$55
LCOS for CAES ($/MWh)	N/A	$92	$72
Revenue per MW-year (all sources)	N/A	$137,000	$165,000

Action Checklist

• Assess grid reliability gaps by analyzing historical curtailment data, peaker plant dispatch frequency, and multi-day weather event exposure to quantify the duration of storage needed beyond 4-hour lithium-ion coverage
• Engage with LDES technology providers early to conduct site suitability assessments, particularly for compressed air systems requiring underground geology evaluation or flow batteries requiring water access
• Model revenue stacking potential across resource adequacy, energy arbitrage, ancillary services, and clean energy credits specific to your market and regulatory jurisdiction
• Initiate utility interconnection studies at least 30 months ahead of planned commercial operation dates, specifying multi-day discharge profiles to avoid queue processing designed for shorter-duration assets
• Apply for federal LDES demonstration funding through the DOE's Long-Duration Energy Storage Demonstration Program and the IRA Section 48 Investment Tax Credit, which now covers standalone storage
• Establish independent monitoring protocols for degradation, efficiency, and availability metrics from day one of operations to build the performance dataset that lenders require for subsequent projects
• Advocate in regional market design proceedings for duration-differentiated capacity valuation that compensates LDES assets for reliability contributions beyond the 4-hour standard

FAQ

Q: How does long-duration energy storage differ from conventional lithium-ion battery storage? A: The primary distinction is discharge duration. Lithium-ion battery systems are typically designed for 1 to 4 hours of discharge at rated power, optimized for daily peak shaving and frequency regulation. LDES technologies provide 8 to 100+ hours of discharge, addressing multi-day grid reliability gaps caused by extended weather events, seasonal renewable variation, and prolonged demand surges. The technology platforms differ fundamentally: iron-air batteries use iron oxidation chemistry with very low material costs but lower round-trip efficiency. Compressed air systems store mechanical energy in underground caverns with 40+ year asset lives. Flow batteries circulate liquid electrolytes through electrochemical cells, enabling independent scaling of power (cell stack size) and energy (tank volume). Each approach involves different tradeoffs in efficiency, cost, siting requirements, and operational characteristics.

Q: What is the investment case for LDES given the lower round-trip efficiency compared to lithium-ion? A: The investment case rests on three factors. First, capital cost per unit of stored energy is dramatically lower: iron-air batteries at $20 per kWh versus lithium-ion at $250 to $300 per kWh, meaning LDES can store 10 to 15 times more energy for the same capital outlay. Second, the value of energy during extended shortage events is far higher than during daily peaks: CAISO wholesale prices during the September 2025 heat wave reached $1,800 per MWh at midnight, well above the efficiency-adjusted cost of delivering stored energy from LDES assets. Third, LDES displaces peaker plants that face increasing carbon costs and declining utilization rates, capturing value that shorter-duration storage cannot access. Investors should model project economics over the full 20 to 40 year asset life rather than applying lithium-ion-style 10 to 15 year assumptions.

Q: Can this pilot model be replicated in emerging markets with less developed grid infrastructure? A: Several elements are directly transferable, but adaptation is essential. Iron-air batteries use globally abundant materials and can be containerized for deployment without specialized infrastructure, making them viable in regions with limited industrial supply chains. Compressed air storage requires specific geological formations (salt caverns, hard rock caverns, or depleted wells) that are available in many emerging markets but require site-specific assessment. The revenue stacking model depends on organized wholesale electricity markets, which are absent in much of Sub-Saharan Africa and South Asia. In those contexts, LDES value is better captured through avoided diesel generation costs (which can exceed $300 per MWh in island and off-grid applications) or through reliability premiums paid by industrial customers. India's Solar Energy Corporation has issued tenders for 500 MWh of LDES capacity in Rajasthan and Gujarat, adapting the technology validation approach while using a different commercial structure based on long-term power purchase agreements rather than merchant market revenue.

Q: What are the main risks that could slow LDES deployment? A: Four risks dominate. Technology maturation risk: most LDES platforms have less than two years of commercial operating history, and unexpected degradation or failure modes could emerge. Market design risk: if regulators fail to implement duration-differentiated capacity valuation, LDES will remain systematically undercompensated relative to its grid reliability contribution. Supply chain risk: while iron-air uses abundant materials, manufacturing capacity for specialized components (membranes for flow batteries, turbo-expanders for CAES) is limited and concentrated among few suppliers. Financing risk: the absence of standardized performance warranties and insurance products for LDES technologies forces developers to accept higher capital costs, which may make marginal projects unviable until a larger operational track record exists.

Sources

• California Independent System Operator. (2025). Summer 2025 Heat Event: Grid Operations After-Action Report. Folsom, CA: CAISO.
• US Department of Energy. (2023). Pathways to Commercial Liftoff: Long-Duration Energy Storage. Washington, DC: DOE.
• Pacific Gas and Electric. (2025). Long-Duration Energy Storage Pilot: First Year Performance Summary. San Francisco, CA: PG&E Corporation.
• Hydrostor. (2025). Advanced Compressed Air Energy Storage: Moss Landing Project Performance Data. Toronto, ON: Hydrostor Inc.
• Form Energy. (2025). Iron-Air Battery System: Commercial Deployment Operational Results. Somerville, MA: Form Energy Inc.
• BloombergNEF. (2025). Long-Duration Energy Storage Market Outlook 2026-2035. New York, NY: Bloomberg LP.
• California Energy Commission. (2025). EPIC Program: Energy Storage Research and Demonstration Portfolio Review. Sacramento, CA: CEC.
• Generate Capital. (2025). Infrastructure Finance for Climate Solutions: LDES Project Finance Case Studies. San Francisco, CA: Generate Capital Inc.