Myth-busting Long-duration energy storage (LDES): separating hype from reality

The US Department of Energy's Long Duration Energy Storage Earthshot program set a target of reducing LDES costs to $0.05 per kilowatt-hour for systems delivering 10 or more hours of duration by 2030. As of early 2026, the cheapest deployed LDES systems operate at roughly $0.15 to $0.20/kWh on a levelized basis, and the most mature non-lithium technologies (iron-air, flow batteries, compressed air) are tracking cost reduction curves that suggest the 2030 target remains plausible but far from guaranteed (DOE LDES Earthshot, 2025). Meanwhile, global LDES project announcements exceeded 120 GWh in cumulative capacity through 2025, yet only about 18 GWh had reached financial close or begun construction (LDES Council, 2025). That gap between announcement and execution is where the myths live, and where decision-makers most need clarity.

Why It Matters

The electricity grid is shifting from a system built around dispatchable fossil fuel generators to one dominated by variable renewables. As solar and wind penetration increases beyond 50-60% of generation capacity, the grid faces multi-day periods of low renewable output that lithium-ion batteries, typically sized for 2 to 4 hours of discharge, cannot economically address. California's grid operator (CAISO) documented 14 events in 2024 where net load exceeded available dispatchable capacity for 8 or more consecutive hours, up from 6 such events in 2022 (CAISO, 2025).

LDES technologies, defined as systems capable of discharging stored energy for 10 hours or more, are positioned to fill this gap. The investment case is substantial: Bloomberg New Energy Finance estimates that $330 billion in cumulative LDES investment will be required globally by 2040 to support grid decarbonization targets aligned with a 1.5-degree pathway (BloombergNEF, 2025). Federal incentives in the US, including the Inflation Reduction Act's Investment Tax Credit of up to 50% for standalone storage projects meeting prevailing wage and domestic content requirements, have further accelerated interest. But the distance between interest and bankable, deployed projects remains large, fueled in part by persistent myths about what LDES can and cannot do today.

Key Concepts

Long-duration energy storage encompasses technologies designed to store and release energy over periods ranging from 10 hours to multiple days or even seasons. The major technology families include electrochemical systems (iron-air batteries, zinc-based batteries, flow batteries using vanadium or organic electrolytes), mechanical systems (compressed air energy storage, liquid air energy storage, gravity-based storage), thermal systems (molten salt, heated rock, ice storage), and chemical storage (green hydrogen produced via electrolysis and later converted back to electricity through fuel cells or turbines).

Each technology family carries distinct tradeoffs in round-trip efficiency, energy density, siting flexibility, capital cost, and degradation characteristics. Round-trip efficiency ranges from approximately 40-45% for hydrogen pathways to 65-80% for flow batteries and compressed air, compared to 85-92% for lithium-ion (NREL, 2025). These differences are central to understanding why no single LDES technology dominates, and why several of the myths below persist.

Myth 1: LDES Is Just Bigger Lithium-Ion

This misconception stems from the grid storage market's current dominance by lithium-ion batteries. In 2025, lithium-ion represented over 95% of new grid storage installations globally by capacity (Wood Mackenzie, 2025). Some analysts extrapolate that declining lithium-ion costs will eventually make 8, 12, or even 24-hour lithium-ion systems competitive, eliminating the need for alternative chemistries.

The evidence does not support this projection for durations beyond 6 to 8 hours. Lithium-ion cost is dominated by energy capacity (the battery cells themselves) rather than power capacity (the inverters and balance of system). Adding duration means adding proportionally more cells. An MIT Energy Initiative analysis demonstrated that lithium-ion systems at 12-hour duration carry a levelized cost approximately 2.5 to 3 times that of a 4-hour system, because the cell cost scales linearly while the fixed infrastructure costs are spread over fewer discharge cycles per year (MIT Energy Initiative, 2025). Technologies like iron-air and compressed air decouple energy and power costs: the "fuel" (iron pellets, compressed air in underground caverns) is cheap, and adding hours of duration costs a fraction of what it costs in lithium-ion.

The practical implication: lithium-ion remains the dominant and most cost-effective technology for applications up to 4 to 6 hours. For durations beyond 8 hours, alternative technologies offer fundamentally different cost structures that lithium-ion cannot replicate by simply scaling up.

Myth 2: LDES Technologies Are Not Commercially Ready

This myth contains a grain of truth but overgeneralizes. Several LDES technologies are at or near commercial deployment, while others remain pre-commercial.

Compressed air energy storage (CAES) has operated commercially since the 1970s at the Huntorf plant in Germany (321 MW) and since 1991 at the McIntosh plant in Alabama (110 MW). Hydrostor's Advanced Compressed Air Energy Storage (A-CAES) system in Goderich, Ontario, has operated commercially since 2019 and improves on legacy CAES by eliminating natural gas co-firing, achieving round-trip efficiencies of approximately 60% (Hydrostor, 2025). Hydrostor has 4 GWh of projects under development across the US and Australia.

Flow batteries have crossed the commercial threshold for specific applications. ESS Inc. has deployed its iron flow battery systems at multiple utility and commercial sites. Invinity Energy Systems has operational vanadium flow battery installations exceeding 100 MWh globally, with a 30 MWh project commissioned for the UK grid in 2024 (Invinity, 2025).

Iron-air technology, led by Form Energy, is earlier-stage but advancing rapidly. Form Energy's first commercial-scale project, a 10 MW / 1,000 MWh system for Great River Energy in Minnesota, broke ground in 2024 with commissioning expected in 2026. The company has announced over 10 GWh of projects in its pipeline (Form Energy, 2025).

The correction: LDES is not a single technology at a single readiness level. Compressed air and flow batteries are commercially deployed today. Iron-air is in late-stage commercialization. Gravity storage and liquid air are at pilot and demonstration scale. Hydrogen for grid re-electrification remains largely at the project-announcement stage for dedicated grid applications.

Myth 3: Round-Trip Efficiency Is the Most Important Metric

Grid planners and energy executives frequently compare LDES technologies using round-trip efficiency as the primary metric, concluding that any technology below 80% efficiency is inherently uncompetitive. This framing is misleading.

Round-trip efficiency matters most when the cost of input energy is high. As solar and wind generation costs have fallen below $0.03/kWh in favorable markets, the economic penalty of lower efficiency shrinks. A system with 50% round-trip efficiency fed by $0.02/kWh solar effectively converts that energy to $0.04/kWh on the input side, while a 90%-efficient lithium-ion system converts it to $0.022/kWh. The $0.018/kWh efficiency penalty is often smaller than the difference in capital costs per unit of stored energy.

The LDES Council's 2025 benchmarking report found that when evaluated on a levelized cost of storage (LCOS) basis, including capital costs, O&M, degradation, and round-trip losses, iron-air systems at 100-hour duration were projected to deliver LCOS of $0.06-$0.10/kWh versus $0.25-$0.40/kWh for lithium-ion at the same duration, despite iron-air's round-trip efficiency of approximately 45% versus lithium-ion's 88% (LDES Council, 2025).

The metric that matters most is LCOS for the specific application: seasonal shifting, multi-day reliability, peaker replacement, or transmission deferral. Round-trip efficiency is one input to that calculation, not a standalone indicator of economic viability.

Myth 4: Hydrogen Will Win the LDES Market

Green hydrogen has attracted enormous policy support and capital as a long-duration storage medium. The logic is straightforward: produce hydrogen via electrolysis when renewable power is abundant, store it in salt caverns or pipelines, and convert it back to electricity via fuel cells or gas turbines when needed.

The challenge is economics. The full-cycle cost of electricity-to-hydrogen-to-electricity remains high. A 2025 analysis by Lazard estimated the all-in LCOS for a green hydrogen re-electrification pathway at $0.20-$0.35/kWh, compared to $0.08-$0.15/kWh for compressed air and $0.06-$0.12/kWh for iron-air at 100-plus hour durations (Lazard, 2025). The primary drivers of hydrogen's cost disadvantage are low electrolyzer utilization rates, capital-intensive fuel cell or turbine re-conversion equipment, and the 55-60% energy losses through the full round trip.

Hydrogen's most compelling LDES application is seasonal storage, where extremely large volumes of energy must be stored for weeks or months and where the low marginal cost of underground storage in salt caverns can offset the round-trip losses. For multi-day (10 to 100 hour) applications, electrochemical and mechanical LDES technologies are on track to be more cost-effective.

The correction: hydrogen is a credible seasonal storage solution but an expensive choice for the 10-to-100-hour duration range that represents the largest near-term LDES market by deployment volume.

Myth 5: LDES Can Replace All Peaker Plants by 2030

Grid planners have identified LDES as a potential replacement for natural gas peaking plants, which typically operate fewer than 1,000 hours per year and provide capacity during demand peaks or low-renewable periods. The California Public Utilities Commission's 2024 procurement order included 2 GW of long-duration storage to explicitly offset planned peaker retirements.

However, peaker replacement requires not just energy duration but also rapid dispatch capability, grid interconnection, and proven reliability during extreme weather events. Most LDES technologies have limited track records operating under grid stress conditions. Form Energy's iron-air system has a ramp rate measured in hours, not minutes, making it unsuitable for the fast-response ancillary services that some peakers provide. Compressed air systems offer faster response but require specific geological formations for underground storage, limiting siting flexibility.

The realistic timeline: LDES will replace some peaker capacity by 2030, particularly in regions with favorable geology (compressed air) or where multi-hour discharge is the primary requirement. Full replacement of the US peaker fleet, estimated at approximately 120 GW, will extend well into the 2030s and will require a portfolio of LDES technologies rather than a single solution.

What's Working

Form Energy's iron-air technology has secured over $800 million in cumulative funding and has multiple utility offtake agreements, providing the demand signal needed to justify manufacturing scale-up. The company's Weirton, West Virginia manufacturing facility is under construction with initial capacity of 500 MW per year.

Hydrostor's A-CAES projects have moved beyond pilot stage to utility-scale development, with the 500 MW / 4,000 MWh Willow Rock project in California advancing through permitting with support from a 15-year capacity contract from the Los Angeles Department of Water and Power.

The LDES Council, a coalition of over 60 companies, has successfully standardized cost and performance benchmarking methodologies, reducing the apples-to-oranges comparison problem that plagued earlier technology assessments.

Federal and state policy support in the US has been significant. The IRA's technology-neutral Investment Tax Credit, combined with DOE loan guarantee programs, has materially improved project economics. California, New York, and Minnesota have enacted LDES-specific procurement mandates or incentives.

What's Not Working

Project financing remains the largest bottleneck. Lenders and tax equity investors are comfortable with lithium-ion's 15-year track record but apply significant risk premiums to newer LDES technologies. The gap between announced projects and financed projects, approximately 85% of announced LDES capacity has not reached financial close, reflects this financing challenge more than technology risk (LDES Council, 2025).

Supply chain readiness lags ambition. Form Energy's iron-air batteries require large quantities of iron pellets and specialized electrodes, and the company is still scaling domestic manufacturing. Flow battery supply chains face vanadium price volatility, with vanadium pentoxide prices swinging between $5 and $14 per pound over the past three years, creating planning uncertainty.

Market design in most US wholesale electricity markets does not adequately compensate the capacity and reliability value that LDES provides. Most capacity market structures reward 4-hour duration and do not differentiate pricing for 10-hour, 24-hour, or multi-day capability, reducing the revenue available to LDES projects.

Permitting timelines for large LDES projects, particularly compressed air requiring underground cavern development, can extend to 3 to 5 years, creating execution risk that lithium-ion projects, which can be deployed in 12 to 18 months, do not face.

Key Players

Established Companies

• Form Energy: developing iron-air battery technology for 100-hour duration grid storage with multiple utility offtake agreements and a manufacturing facility under construction in West Virginia
• Hydrostor: commercializing Advanced Compressed Air Energy Storage (A-CAES) with utility-scale projects under development in California and Australia
• ESS Inc.: deploying iron flow battery systems for commercial and utility applications with 4 to 12 hour duration
• Invinity Energy Systems: manufacturing and deploying vanadium flow batteries for grid and commercial applications globally

Startups

• Noon Energy: developing carbon-oxygen battery technology targeting costs below $0.03/kWh at multi-day durations
• Malta Inc. (Alphabet): electro-thermal storage system using molten salt and chilled antifreeze to store and discharge electricity
• Quidnet Energy: repurposing oil and gas well technology for underground pumped hydro storage in sedimentary rock formations
• Energy Vault: gravity-based energy storage using composite blocks and automated crane systems

Investors

• Breakthrough Energy Ventures: lead investor in Form Energy and several other LDES technology companies
• Temasek Holdings: major investor in multiple LDES companies and the LDES Council founding sponsor
• S2G Ventures: invested in LDES and grid flexibility technologies through its energy transition fund

Action Checklist

• Assess your grid or facility's duration requirements by analyzing historical load, renewable generation, and outage data to determine whether 4-hour, 10-hour, or multi-day storage is the binding constraint
• Evaluate LDES technologies on LCOS at your required duration rather than on round-trip efficiency alone
• Engage with at least two LDES technology providers to obtain site-specific cost and performance proposals before defaulting to lithium-ion for projects requiring more than 6 hours of duration
• Map available federal and state incentives, including IRA tax credits, DOE loan guarantee programs, and state-specific LDES procurement mandates
• Assess geological suitability for compressed air or underground hydrogen storage at or near your target sites
• Structure offtake agreements or capacity contracts of 10-plus years to improve project financeability and attract lender interest
• Monitor FERC and state PUC proceedings on capacity market redesign to understand how LDES duration value may be compensated in wholesale markets

FAQ

Q: At what renewable penetration level does LDES become necessary rather than optional? A: Analysis from NREL and Lawrence Berkeley National Laboratory suggests that LDES becomes economically valuable once variable renewables exceed approximately 60-70% of total generation capacity on an annual basis. Below that threshold, a combination of lithium-ion, demand response, and flexible gas generation can maintain reliability. Above 70%, multi-day low-renewable events create reliability gaps that only LDES or overbuilding renewables can address. Several US states, including California and Colorado, are approaching this threshold and have begun LDES procurement.

Q: How should utilities think about technology risk when evaluating LDES bids? A: Apply a tiered risk framework. Compressed air and flow batteries have commercial operating histories and can be evaluated using standard project finance due diligence. Iron-air and other newer technologies warrant technology insurance, manufacturer performance guarantees backed by corporate balance sheets, and phased procurement that conditions larger orders on demonstrated performance at earlier-stage projects. DOE loan guarantees can mitigate lender risk for first-of-a-kind deployments.

Q: Will LDES costs follow the same dramatic decline curve as lithium-ion? A: Partially. LDES technologies benefit from manufacturing scale-up and learning-by-doing, but the cost reduction trajectory depends on the technology family. Electrochemical systems (iron-air, flow batteries) are expected to follow Wright's Law curves similar to lithium-ion, with 15-20% cost reductions per doubling of cumulative production. Mechanical systems (compressed air, gravity) have higher site-specific civil engineering costs that scale less predictably with manufacturing volume. The DOE's $0.05/kWh target for 2030 is achievable for select technologies in favorable configurations but should not be assumed as a universal baseline.

Q: Is LDES a good investment opportunity today? A: The market is pre-revenue or early-revenue for most pure-play LDES companies, making it high-risk and high-reward. The strongest near-term investment thesis centers on companies with signed offtake agreements, secured project financing, and manufacturing facilities under construction. Infrastructure investors with 10-plus year horizons are better positioned than growth-stage venture investors expecting near-term returns. LDES project equity, structured with IRA tax credits and long-term capacity contracts, offers more predictable returns than technology-company equity.

Sources

• US Department of Energy. (2025). Long Duration Storage Shot: Progress and Pathways. Washington, DC: DOE Office of Electricity.
• LDES Council. (2025). The Path to Commercial Liftoff: 2025 LDES Market Status Report. Geneva: LDES Council.
• BloombergNEF. (2025). Long-Duration Energy Storage Outlook 2025. New York: Bloomberg LP.
• CAISO. (2025). 2024 Annual Report on Market Issues and Performance. Folsom, CA: California Independent System Operator.
• MIT Energy Initiative. (2025). The Future of Energy Storage: An Interdisciplinary MIT Study. Cambridge, MA: Massachusetts Institute of Technology.
• Lazard. (2025). Lazard's Levelized Cost of Storage Analysis, Version 9.0. New York: Lazard Ltd.
• NREL. (2025). Storage Futures Study: Technology Cost and Performance Assumptions. Golden, CO: National Renewable Energy Laboratory.
• Wood Mackenzie. (2025). Global Energy Storage Market Outlook Q1 2026. Edinburgh: Wood Mackenzie.
• Form Energy. (2025). Company Overview and Project Pipeline Update. Somerville, MA: Form Energy Inc.
• Hydrostor. (2025). Advanced Compressed Air Energy Storage: Technology and Project Portfolio. Toronto: Hydrostor Inc.
• Invinity Energy Systems. (2025). Annual Report and Accounts 2024. Edinburgh: Invinity Energy Systems PLC.