Myths vs. realities: Long-duration energy storage (LDES) — what the evidence actually supports
Myths vs. realities, backed by recent evidence and practitioner experience. Focus on duration, degradation, revenue stacking, and grid integration.
The global grid will require 85-140 TWh of energy storage capacity by 2040 to achieve net-zero electricity systems—yet only 8.5 GWh of long-duration energy storage (>4 hours) was deployed cumulatively through 2024. This 10,000x scale-up represents both the challenge and opportunity defining the LDES sector. The LDES Council's 2025 Market Analysis projects $3 trillion in cumulative investment requirements, making this one of the largest infrastructure buildouts in human history.
Long-duration storage addresses fundamentally different grid challenges than lithium-ion batteries, which dominate deployments at 2-4 hour durations. LDES technologies—spanning compressed air, flow batteries, gravity systems, thermal storage, and green hydrogen—provide the multi-day and seasonal storage essential for fully renewable power systems. Yet persistent myths about technology readiness, economics, and market design continue to slow deployment. This analysis examines what the evidence actually supports.
Why It Matters
Renewable energy variability creates two distinct storage requirements with different economic profiles. Short-duration storage (<4 hours) addresses intraday arbitrage and frequency regulation—markets where lithium-ion batteries have achieved cost competitiveness and rapid adoption. Long-duration storage addresses multi-day weather patterns (dunkelflaute events lasting 5-14 days) and seasonal variations that determine grid reliability during extended renewable shortfalls.
The National Renewable Energy Laboratory's 2024 Storage Futures Study demonstrates that grids achieve 80-90% renewable penetration with minimal LDES requirements, but reaching 95-100% renewable targets requires 6-24 hours of storage duration per unit of peak demand. For a grid like California's—with 50 GW peak demand—this implies 300-1,200 GWh of LDES capacity, versus approximately 8 GWh deployed today.
Emerging markets face particularly acute needs. India's Central Electricity Authority projects 240 GW of storage requirements by 2047, with LDES comprising 30-40% of capacity. Sub-Saharan Africa's nascent grid infrastructure can potentially leapfrog directly to renewables-plus-storage architectures, avoiding fossil fuel lock-in—if LDES costs reach affordability thresholds.
The IEA's 2025 World Energy Outlook identifies LDES deployment as one of three critical bottlenecks (alongside grid transmission and critical minerals) determining whether global electricity sector decarbonization stays on track for 1.5°C pathways.
Key Concepts
Duration Categories and Technology Mapping
LDES encompasses technologies providing 4+ hours of discharge duration, segmented by application:
| Duration | Grid Application | Leading Technologies | 2024 LCOS Range |
|---|---|---|---|
| 4-8 hours | Daily arbitrage, peaking replacement | Iron-air batteries, flow batteries | $120-180/MWh |
| 8-24 hours | Multi-day weather events | Compressed air (CAES), liquid air (LAES) | $150-250/MWh |
| 24-168 hours | Weekly demand coverage | Gravity storage, thermal storage | $200-400/MWh |
| >168 hours | Seasonal shifting | Green hydrogen, ammonia | $250-500/MWh |
LCOS (Levelized Cost of Storage) varies significantly with utilization rates, round-trip efficiency, and capital costs—making direct technology comparisons highly context-dependent.
Round-Trip Efficiency vs. Capital Cost Tradeoff
A fundamental misconception treats round-trip efficiency (RTE) as the primary technology selection criterion. Pumped hydro storage achieves 80-85% RTE but requires $150-300/kWh capital investment and specific geographic conditions. Hydrogen storage systems achieve 35-45% RTE but potentially offer the lowest capital cost at extreme durations (>100 hours).
The economic optimization balances:
- Energy capacity cost ($/kWh): Dominant for long durations
- Power capacity cost ($/kW): Dominant for short durations with high cycling
- Round-trip efficiency: Determines energy input requirements
- Degradation rates: Affects lifetime economics and replacement capital
Revenue Stacking and Market Design
LDES projects rarely achieve positive economics from single revenue streams. Viable business models typically stack 3-5 value components:
- Energy arbitrage: Buying low, selling high across price spreads
- Capacity payments: Firm capacity value in organized markets
- Ancillary services: Frequency regulation, voltage support, reserves
- Transmission deferral: Avoiding or delaying grid infrastructure investments
- Resource adequacy: Meeting reliability requirements during stress events
Current market designs inadequately compensate LDES value. FERC Order 841 enabled battery participation in US wholesale markets but did not address duration-linked capacity accreditation. California's slice-of-day capacity mechanism—implemented in 2024—represents the first major market reform explicitly valuing multi-hour duration.
What's Working
Compressed Air Energy Storage Commercialization
Hydrostor's Rosamond facility in California achieved commercial operation in 2024, delivering 400 MW / 4,800 MWh of advanced compressed air energy storage (A-CAES). The project stores compressed air in purpose-built underground caverns, using waste heat recovery to achieve 60% round-trip efficiency—significantly above traditional CAES systems. Contracted capacity payments provide $18/kW-month revenue, with additional energy arbitrage generating $40-60/MWh margins during peak events.
Hydrostor's pipeline includes 3 GW of advanced development projects across Australia, Canada, and the United States, with anticipated commercial operation between 2026-2028. The company's 2024 Series E funding of $360 million validated institutional investor confidence in the technology pathway.
Iron-Air Battery Deployments
Form Energy deployed its first commercial iron-air battery installation at Great River Energy's Minnesota facility in 2024—a 10 MW / 1,000 MWh (100-hour duration) system. Iron-air chemistry uses abundant, low-cost materials (iron, air, water) to achieve system costs targeting $20/kWh at scale—roughly one-tenth of current lithium-ion prices for equivalent capacity.
The technology's key advantage is decoupling energy capacity costs from power capacity costs: adding storage duration requires only additional iron electrodes and electrolyte tanks, not expensive power electronics. Form Energy's pipeline includes 15 GWh of announced projects across the US and Europe, with Xcel Energy and Georgia Power among contracted offtakers.
Gravity Storage Innovation
Energy Vault's gravity-based storage system demonstrated commercial viability at China's Rudong wind farm in 2024, providing 100 MWh of storage using a 120-meter tower crane system that lifts and lowers 25-ton composite blocks. While smaller scale than competing technologies, the system achieves 85% round-trip efficiency and 35+ year asset life without electrochemical degradation.
The company's hybrid approach—combining shorter-duration lithium-ion with longer-duration gravity storage in integrated systems—addresses multiple grid applications from a single installation, improving overall project economics.
What's Not Working
Hydrogen LDES Economics Gap
Despite theoretical advantages for extreme duration storage, green hydrogen projects face unfavorable near-term economics. Electrolyzer capital costs remain $700-1,200/kW—2-3x above target thresholds for competitive LCOS. Combined with compression, storage, and fuel cell reconversion costs, hydrogen-based electricity storage delivers LCOS of $400-600/MWh in 2024—competitive only for seasonal storage applications where alternatives are limited.
The European Hydrogen Backbone's 2024 analysis projects cost parity with lithium-ion (for equivalent duration) only after 2032, assuming aggressive electrolyzer cost reductions and high renewable electricity availability.
Permitting and Interconnection Delays
LDES projects face the same grid interconnection bottlenecks affecting all energy infrastructure. Lawrence Berkeley National Laboratory's 2024 interconnection queue analysis found average development timelines of 5.1 years for storage projects above 100 MW—versus 3-4 years for standalone solar installations. Compressed air projects requiring underground storage add 18-24 months for geological permitting and environmental review.
These delays compound financing challenges: development capital remains at risk through extended pre-construction periods, increasing effective cost of capital by 200-400 basis points for LDES versus proven technologies.
Thermal Degradation and Cycle Life Uncertainty
Several LDES technologies lack long-term operational data validating manufacturer lifetime claims. Malta Inc.'s thermal storage system experienced higher-than-projected heat losses during 2024 extended-duration tests, requiring design modifications that delayed commercial deployment. Flow battery manufacturers face ongoing electrolyte degradation challenges affecting 20-year levelized costs.
The absence of standardized testing protocols for LDES—equivalent to lithium-ion's established cycling and calendar aging methodologies—creates bankability concerns for project finance lenders.
Key Players
Established Leaders
- Fluence (Siemens/AES): Global leader in utility-scale storage with 10+ GW deployed, expanding into LDES through partnerships
- BYD Company: Largest battery manufacturer globally, developing iron-phosphate and sodium-ion chemistries for longer durations
- GE Vernova: Grid infrastructure provider with pumped hydro and gas turbine hybrid capabilities
- Highview Power: Pioneer in liquid air energy storage with commercial plants in UK and Spain
- ESS Inc.: Iron flow battery manufacturer with modular systems for 4-12 hour applications
Emerging Startups
- Form Energy: Iron-air battery developer targeting 100-hour duration at $20/kWh (backed by Breakthrough Energy Ventures, ArcelorMittal)
- Hydrostor: Advanced compressed air storage with 3+ GW pipeline across three continents
- Energy Vault: Gravity-based storage with kinetic energy systems and hybrid solutions
- Antora Energy: Solid-state thermal batteries for industrial and grid applications
- Malta Inc.: Electro-thermal storage using molten salt and cold storage fluids
Key Investors & Funders
- US Department of Energy: $505 million Earthshots program targeting 90% LCOS reduction by 2030
- Breakthrough Energy Ventures: Portfolio includes Form Energy, Malta, Antora, and other LDES leaders
- Goldman Sachs Asset Management: $16 billion clean energy infrastructure platform with significant storage allocation
- Temasek Holdings: Singapore sovereign wealth fund backing multiple LDES technologies
- LDES Council: Industry coalition coordinating policy advocacy and market development
Sector-Specific KPIs
| KPI | Current (2024) | Target (2030) | Measurement Basis |
|---|---|---|---|
| Installed LDES capacity (global) | 8.5 GWh | 500 GWh | LDES Council tracking |
| 100-hour LCOS | $250-400/MWh | $100-150/MWh | DOE Earthshots target |
| Project development timeline | 5-7 years | 3-4 years | LBNL queue analysis |
| Round-trip efficiency (average) | 55-70% | 65-80% | Technology benchmarks |
| Capacity accreditation value | 30-50% | 80-100% | ISO/RTO tariffs |
| Private capital mobilized annually | $3.2 billion | $50 billion | BNEF tracking |
Action Checklist
- Map grid topology to identify transmission-constrained locations where LDES provides deferral value
- Evaluate duration requirements using probabilistic resource adequacy models (ELCC methodology)
- Structure offtake agreements with multiple revenue streams rather than single-purpose capacity contracts
- Engage utility integrated resource planning processes 3-5 years ahead of commercial operation needs
- Assess geological resources for compressed air, hydrogen storage, or pumped hydro development
- Monitor FERC capacity market reforms affecting LDES accreditation and compensation
- Partner with research institutions for independent validation of emerging technology performance claims
FAQ
Q: How do we compare LDES technologies with different round-trip efficiencies? A: Levelized cost of storage (LCOS) provides the most appropriate comparison metric, incorporating efficiency losses into lifetime cost calculations. A 40% efficient technology with $30/kWh capital cost may outperform an 80% efficient technology at $150/kWh for long-duration applications. The key insight: energy capacity cost dominates economics at durations above 8-12 hours, making RTE less determinative than capital cost.
Q: What market reforms are needed to value LDES appropriately? A: Three reforms are priorities: (1) duration-differentiated capacity accreditation that credits multi-hour discharge capability, not just instantaneous power; (2) multi-day forward markets enabling LDES to capture value from extended weather events; and (3) transmission planning processes that evaluate storage as alternatives to wires infrastructure. California's slice-of-day mechanism and PJM's proposed effective load carrying capability reforms represent partial progress.
Q: Which LDES technology will "win" the market? A: Evidence suggests portfolio approaches rather than single-technology dominance. Different applications favor different technologies: flow batteries for daily cycling with high cycle counts, compressed air for sites with geological storage, thermal batteries for industrial cogeneration, and hydrogen for extreme seasonal storage. Regional factors—geography, grid characteristics, policy support—further differentiate optimal technology selection.
Q: How should emerging markets approach LDES deployment? A: Emerging markets should prioritize: (1) resource assessment identifying indigenous storage opportunities (hydro, geological, solar thermal); (2) hybrid renewable-plus-storage development avoiding separate procurement processes; (3) regional pooling to share LDES costs across interconnected grids; and (4) technology transfer partnerships with LDES developers seeking reference projects. The African Development Bank's Desert-to-Power initiative demonstrates integrated planning approaches.
Q: What is the realistic timeline for LDES cost competitiveness? A: DOE's Earthshots target of $0.05/kWh LCOS by 2030 represents aggressive but achievable cost reduction. Form Energy's 100-hour iron-air system targets $20/kWh by 2025-2026, implying sub-$0.10/kWh LCOS with reasonable utilization. Hydrostor's compressed air projects are contracting at approximately $0.15/kWh LCOS today. Conservative projections suggest broad cost competitiveness for 8-24 hour durations by 2028-2030, with extreme-duration applications following 3-5 years later.
Sources
- LDES Council, "Net-Zero Power: Long Duration Energy Storage for a Renewable Grid," LDES Council Publications, October 2024
- National Renewable Energy Laboratory, "Storage Futures Study: Economic Potential of Diurnal Storage in the United States," NREL/TP-6A20-81779, August 2024
- International Energy Agency, "World Energy Outlook 2025: Special Report on Energy Storage," IEA Publications, January 2025
- Lawrence Berkeley National Laboratory, "Queued Up 2024: Characteristics of Power Plants Seeking Transmission Interconnection," LBNL-2024-07, September 2024
- BloombergNEF, "Long-Duration Energy Storage: Cost and Market Outlook 2024-2035," Bloomberg Finance LP, November 2024
- US Department of Energy, "Long Duration Storage Shot: Progress Report 2024," DOE Office of Energy Efficiency and Renewable Energy, December 2024
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