Deep dive: Long-duration energy storage (LDES) — the hidden trade-offs and how to manage them
What's working, what isn't, and what's next — with the trade-offs made explicit. Focus on duration, degradation, revenue stacking, and grid integration.
In October 2024, Form Energy secured $405 million in Series F financing, pushing its valuation to approximately $3.4 billion and signaling a watershed moment for long-duration energy storage (LDES). The global LDES market reached between $3.1 billion and $4.84 billion in 2024, with projections suggesting growth to $10.43 billion by 2030 at a compound annual growth rate of 13.6 percent. Yet beneath these impressive figures lies a complex landscape of technological trade-offs, economic uncertainties, and integration challenges that procurement teams must navigate carefully. As variable renewable energy penetration approaches the 40-50 percent threshold where multi-day storage becomes essential, understanding these hidden trade-offs is no longer optional—it's a strategic imperative for organizations committed to decarbonization.
Why It Matters
The fundamental challenge facing grid operators worldwide is temporal mismatch: solar panels generate electricity during daylight hours, wind turbines produce power intermittently, yet demand persists around the clock. Lithium-ion batteries, which dominate the current storage market with an 85 percent share of residential installations, excel at short-duration applications of 2-4 hours but become prohibitively expensive and physically impractical for multi-day storage requirements.
The U.S. Department of Energy defines LDES as technologies capable of discharging for 10 or more hours, but the most transformative applications require 100+ hours of storage capacity. According to the Long Duration Energy Storage Council, meeting net-zero targets by 2040 will require between 85 and 140 terawatt-hours of LDES capacity globally—a scale that demands $1.5 to $3 trillion in investment. This storage capacity is essential for displacing fossil fuel peaker plants, which currently provide grid reliability during extended periods of low renewable generation.
For procurement professionals, LDES represents both an opportunity and a risk. Early movers who secure favorable contracts with emerging LDES providers may lock in competitive pricing before demand escalates. Conversely, organizations that delay may face capacity constraints in a supply-limited market or find themselves dependent on increasingly expensive fossil fuel backup power as carbon pricing mechanisms tighten.
Key Concepts
Storage Duration Categories
LDES technologies span multiple duration categories, each suited to different grid services:
| Duration Category | Hours | Primary Applications | Leading Technologies |
|---|---|---|---|
| Intra-day | 4-12 hours | Peak shaving, renewable firming | Flow batteries, compressed air |
| Multi-day | 24-100 hours | Extended weather events, seasonal shifting | Iron-air, gravity storage |
| Seasonal | 100+ hours | Winter/summer balancing | Hydrogen, thermal storage |
Round-Trip Efficiency vs. Duration Trade-off
One of the most significant hidden trade-offs in LDES is the inverse relationship between storage duration and round-trip efficiency. Lithium-ion batteries achieve 90-95 percent round-trip efficiency but are economically viable only for short durations. Iron-air batteries, which can store energy for 100+ hours, operate at 50-60 percent efficiency. This means that for every 100 kWh of electricity used to charge an iron-air system, only 50-60 kWh can be recovered during discharge.
This efficiency penalty appears severe in isolation but becomes acceptable when considered in the context of curtailment economics. In markets with high renewable penetration, surplus electricity during peak generation periods often has zero or negative value. Using "free" curtailed electricity to charge a 55 percent efficient LDES system still delivers net positive value compared to curtailing that generation entirely.
Levelized Cost of Storage (LCOS)
The Levelized Cost of Storage provides a standardized metric for comparing LDES technologies across different durations and use cases:
| Technology | LCOS 2024 ($/kWh) | Projected LCOS 2030 | Key Cost Drivers |
|---|---|---|---|
| Vanadium Flow | $0.160 | $0.052 | Electrolyte costs, manufacturing scale |
| Iron-Air | $0.080-0.120 | $0.020-0.050 | Manufacturing automation, iron sourcing |
| Compressed Air | $0.100-0.150 | $0.060-0.090 | Cavern development, turbine efficiency |
| Gravity Storage | $0.120-0.180 | $0.070-0.100 | Construction costs, site availability |
The DOE's Long Duration Storage Shot initiative targets a 90 percent cost reduction by 2030, which would make LDES competitive with natural gas peaker plants on a levelized basis.
Degradation and Cycle Life
Unlike lithium-ion batteries, which typically degrade to 80 percent capacity after 3,000-5,000 cycles, many LDES technologies offer dramatically longer operational lifespans. Vanadium redox flow batteries have demonstrated 20,000+ cycles with minimal degradation, while iron-air systems use reversible rusting chemistry that theoretically supports unlimited cycling. This extended lifespan significantly improves lifecycle economics, as the initial capital expenditure can be amortized over decades rather than years.
What's Working and What Isn't
What's Working
Iron-air battery commercialization is accelerating rapidly. Form Energy's Weirton, West Virginia manufacturing facility began trial production in September 2024 and transitioned to commercial production by late 2024. The 550,000 square foot facility is expanding to 850,000 square feet by 2025 and targeting 1 million square feet by 2028. In July 2025, Ore Energy connected Europe's first grid-scale iron-air battery in Delft, Netherlands, demonstrating that multiple manufacturers are achieving commercial readiness simultaneously.
Flow battery reliability has been proven at utility scale. Sumitomo Electric's vanadium redox flow battery installation in San Diego has operated since 2017 with greater than 99 percent availability, providing grid services to CAISO. This multi-year track record has reduced perceived technology risk and enabled subsequent deployments, including a 4 MWh system at Cameron Corners, California designed for Public Safety Power Shutoff resilience.
Government funding programs have reached meaningful scale. The U.S. DOE launched a $100 million LDES Pilot Program in September 2024, while California's Energy Commission has deployed over $270 million for LDES projects. New York State's NYSERDA has awarded over $30 million to 20+ projects across hydrogen, zinc hybrid, vanadium flow, and iron-air technologies.
Corporate off-takers are validating market demand. Microsoft and Google have invested in LDES pilots, with Google's strategic investment in Energy Dome's CO₂ battery technology in July 2025 signaling major technology company appetite for long-duration solutions beyond traditional lithium-ion.
What's Not Working
Interconnection queues remain a critical bottleneck. Despite technology maturation, LDES projects face the same 4-5 year interconnection timelines that plague all grid-scale energy projects. The Lawrence Berkeley National Laboratory reported that over 2,000 GW of generation and storage projects were waiting in U.S. interconnection queues as of 2024, with average wait times exceeding 4 years.
Revenue stacking remains complicated and jurisdiction-specific. LDES systems can theoretically generate revenue from multiple sources—energy arbitrage, capacity payments, ancillary services, and transmission deferral. However, market rules in most jurisdictions were designed around conventional generation and short-duration storage, creating barriers to capturing the full value that LDES provides.
Compressed air storage faces geographic constraints. While CAES offers excellent economics at GW scale, suitable geology—salt caverns, depleted gas fields, or hard rock formations—exists in limited locations. This geographic constraint, combined with lengthy permitting timelines for underground formations, has slowed CAES deployment relative to modular technologies like flow and iron-air batteries.
Supply chain localization is incomplete. While Form Energy has established domestic manufacturing in West Virginia, the broader LDES supply chain remains globally distributed. Vanadium for flow batteries is primarily sourced from Russia, China, and South Africa, creating geopolitical supply risks that mirror concerns around lithium-ion battery materials.
Key Players
Established Leaders
Form Energy (Somerville, MA / Weirton, WV) leads iron-air battery development with over $1.5 billion in total funding and an 85 MW project pipeline representing the largest iron-air deployment on Earth. The company's 100-hour duration positions it specifically for multi-day storage applications that lithium-ion cannot economically address.
ESS Inc. (Wilsonville, OR; NYSE: GWH) manufactures all-iron flow batteries using earth-abundant, non-toxic materials. As a publicly traded company, ESS provides transparency on financial performance and manufacturing progress that private competitors cannot match.
Energy Vault (Westlake Village, CA; NYSE: NRGV) commercializes gravity-based energy storage using massive concrete blocks raised and lowered by cranes. The mechanical approach offers simple, understandable technology with minimal degradation over time.
Sumitomo Electric (Osaka, Japan) brings decades of vanadium redox flow battery manufacturing experience and the longest utility-scale operating track record in North America.
Emerging Startups
Energy Dome (Milan, Italy) has developed CO₂ battery technology that compresses and liquefies carbon dioxide for storage, achieving 75-80 percent round-trip efficiency. Google's 2025 strategic investment has accelerated international expansion plans.
PolarNight Energy (Tampere, Finland) uses sand-based thermal storage capable of up to 100 MWh capacity, targeting district heating decarbonization with technology that can store summer solar energy for winter use.
Quino Energy (Cambridge, MA) is developing organic quinone flow batteries that can potentially repurpose decommissioned oil storage tanks, reducing infrastructure costs while creating transition employment for fossil fuel workers.
Key Investors and Funders
Breakthrough Energy Ventures (Bill Gates) has backed Form Energy since early stages and continues supporting LDES through its climate investment platform.
TPG Rise Climate participated in Form Energy's Series F and has deployed over $7 billion into climate solutions across sectors.
T. Rowe Price led Form Energy's October 2024 financing round, bringing institutional investor credibility to the LDES sector.
GE Vernova established a strategic partnership with Form Energy in October 2024, potentially integrating iron-air storage with its grid equipment and services portfolio.
Examples
1. Xcel Energy Iron-Air Deployment (Minnesota, USA)
Xcel Energy has contracted with Form Energy for an iron-air battery installation expected to come online in late 2025. The project specifically targets "dunkelflaute" events—extended periods of low wind and solar generation that can persist for multiple days in Minnesota winters. Xcel's grid modeling indicated that without multi-day storage, achieving its 2050 net-zero commitment would require maintaining substantially more fossil fuel capacity for reliability. The Form Energy system allows the utility to retire legacy natural gas peakers while maintaining grid reliability through extended weather events.
2. Highview Power Cryogenic Storage (Hunterston, Scotland)
In October 2024, Highview Power launched a 2.5 GWh liquid air energy storage facility at Hunterston, Scotland. The system compresses air to liquid form for storage and then expands it through turbines during discharge. Located on a former nuclear power station site, the project demonstrates how LDES can repurpose brownfield industrial infrastructure while providing grid services. The Hunterston installation specifically targets frequency response and grid balancing for Scotland's rapidly growing wind generation portfolio.
3. California Public Safety Power Shutoff Resilience
California's Pacific Gas & Electric has deployed multiple LDES systems specifically for Public Safety Power Shutoff (PSPS) resilience. During wildfire risk periods, PG&E de-energizes transmission lines to prevent equipment from sparking fires, leaving communities without power for days. The 4 MWh Sumitomo flow battery at Cameron Corners provides 48+ hours of backup power to critical facilities, demonstrating that LDES value extends beyond wholesale energy markets to include resilience applications that traditional cost-benefit analysis may undervalue.
LDES Performance KPIs by Technology
| KPI | Iron-Air | Vanadium Flow | Compressed Air | Gravity | Thermal |
|---|---|---|---|---|---|
| Round-Trip Efficiency | 50-60% | 70-80% | 40-70% | 80-85% | 40-60% |
| Duration Range (hours) | 24-150+ | 4-12+ | 8-24+ | 4-12 | 24-168+ |
| Cycle Life | 10,000+ | 20,000+ | Unlimited* | Unlimited* | Unlimited* |
| Energy Density (Wh/L) | 50-100 | 20-50 | Site-dependent | Site-dependent | 50-150 |
| CAPEX ($/kWh) | $50-100 | $200-400 | $100-200 | $150-250 | $20-60 |
| Response Time | Minutes | Milliseconds | Minutes | Seconds | Minutes-Hours |
| Geographic Constraints | None | None | High (caverns) | Moderate (terrain) | None |
| TRL (2025) | 7-8 | 9 | 7-8 | 7-8 | 6-8 |
*Mechanical systems limited by component wear rather than electrochemical degradation
Action Checklist
- Assess organizational load profile and curtailment exposure: Quantify current and projected exposure to renewable curtailment or extended outage risk to determine appropriate LDES duration requirements
- Map regulatory landscape for revenue stacking: Engage regulatory affairs to identify which grid services LDES can monetize in your jurisdiction and advocate for market rule changes where necessary
- Evaluate interconnection timeline risk: Factor 4-5 year interconnection lead times into project planning and consider co-location with existing generation or load to expedite grid connection
- Conduct technology-specific due diligence: Request bankable performance guarantees, third-party engineering reports, and reference site visits before committing to specific LDES technologies
- Model full lifecycle economics including degradation: Extend financial analysis beyond simple LCOS to capture degradation trajectories, maintenance requirements, and end-of-life recycling or disposal costs
- Engage potential off-takers early: Whether selling stored energy to utilities or using LDES for corporate sustainability commitments, early engagement with off-takers reduces market risk
FAQ
Q: How does LDES differ from conventional battery storage for procurement purposes?
A: LDES systems require fundamentally different evaluation criteria than lithium-ion storage. Duration is the primary differentiator—LDES provides 10-100+ hours versus 2-4 hours for lithium-ion. Procurement teams should focus on degradation guarantees over decades rather than years, geographic requirements for certain technologies (compressed air requires specific geology), and revenue stacking opportunities that may require regulatory engagement. The longer project lifespans also mean supplier financial stability and technology obsolescence risk become more significant evaluation factors.
Q: What are the primary risks when contracting for LDES capacity before technologies reach full commercial maturity?
A: Key risks include technology performance uncertainty, supplier financial viability, interconnection delays, and regulatory changes affecting revenue streams. Mitigate technology risk through independent engineering reviews and performance guarantees with meaningful financial backing. Address supplier viability by favoring well-funded companies with diverse customer bases. Manage interconnection risk by selecting sites with available grid capacity or existing interconnection agreements. Hedge regulatory risk through contract provisions that allow price adjustments if market rules change materially.
Q: How should organizations balance LDES investment against other decarbonization options?
A: LDES should be evaluated as part of an integrated decarbonization portfolio rather than in isolation. For organizations with high renewable energy procurement, LDES enables 24/7 carbon-free energy matching and reduces exposure to spot market price volatility. For grid-connected industrial facilities, LDES may defer or eliminate the need for backup diesel generation. The optimal allocation depends on load profile, renewable resource availability, grid characteristics, and regulatory incentives—requiring integrated resource planning rather than technology-specific analysis.
Q: What timeline should procurement teams expect from RFP to commercial operation?
A: Realistic timelines range from 3-6 years depending on technology, site characteristics, and regulatory jurisdiction. Allow 6-12 months for procurement process and contract negotiation, 12-24 months for permitting and engineering, 36-48 months for interconnection (the longest lead item in most cases), and 12-24 months for construction and commissioning. Some timelines can be compressed by selecting sites with existing interconnection capacity or co-locating with operational generation facilities.
Q: How are LDES projects typically financed, and what does this mean for procurement structure?
A: LDES projects use varied financing structures including project finance (debt secured against contracted revenue), corporate balance sheet financing, and third-party ownership models similar to solar PPAs. For procurement, third-party ownership reduces upfront capital requirements but typically results in higher all-in costs. Project finance requires bankable off-take agreements, meaning procurement commitments may need to meet lender requirements for contract term, creditworthiness, and termination provisions. Understanding your counterparty's financing structure helps negotiate appropriate contract terms.
Sources
- U.S. Department of Energy, "Long Duration Energy Storage Pilot Program Funding Notice," September 2024. https://www.energy.gov/oced/long-duration-energy-storage
- Form Energy, "Series F Financing Announcement," October 2024. https://formenergy.com/form-energy-secures-405m-in-series-f-financing/
- MarketsandMarkets, "Long Duration Energy Storage Market Size Report," January 2025. https://www.marketsandmarkets.com/Market-Reports/long-duration-energy-storage-market-148402450.html
- Sumitomo Electric, "The Role of Long Duration Energy Storage and Flow Batteries," 2024. https://sumitomoelectric.com/products/flow-batteries/stories/what-is-ldes
- Long Duration Energy Storage Council, "Net Zero Power: LDES Pathways to 2040," 2023. https://ldescouncil.com/
- California Energy Commission, "Long Duration Energy Storage Program," 2024. https://www.energy.ca.gov/programs-and-topics/programs/long-duration-energy-storage-program
- MIT Technology Review, "2024 Climate Tech Companies to Watch: Form Energy," October 2024. https://www.technologyreview.com/2024/10/01/1104382/2024-climate-tech-companies-form-energy-iron-batteries/
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