Regional spotlight: Long-duration energy storage (LDES) in US — what's different and why it matters

The United States is building a long-duration energy storage (LDES) market unlike anything else in the world. While global LDES installed capacity reached approximately 1.8 GW by end of 2025, the US alone accounts for over 45% of announced projects in the development pipeline, representing more than 85 GW of planned capacity across all stages. This concentration reflects a unique convergence of federal policy incentives, state-level clean energy mandates, grid reliability crises, and private capital formation that has created conditions for LDES deployment at a scale and pace unmatched by any other market. For investors evaluating this sector, understanding the specific US dynamics, including where they diverge from global assumptions, is essential for accurate risk assessment and opportunity identification.

Why It Matters

The US electricity grid faces a structural problem that lithium-ion batteries alone cannot solve. As variable renewable energy (solar and wind) penetration exceeds 30 to 40% of generation capacity in leading states, the grid requires storage capable of discharging for 8 to 100+ hours to bridge multi-day periods of low renewable output. Lithium-ion batteries, which dominate the current storage market with over 95% of new installations, are economically optimized for 2 to 4 hour discharge durations. Beyond 8 hours, their capital costs scale linearly with duration, making them prohibitively expensive for the multi-day and seasonal storage applications that a deeply decarbonized grid requires.

The scale of the need is substantial. The National Renewable Energy Laboratory (NREL) estimates that achieving 90% clean electricity by 2035, consistent with the Biden administration's targets and subsequent IRA appropriations, requires 225 to 460 GW of new energy storage, with 80 to 140 GW needing durations exceeding 10 hours. The Inflation Reduction Act's Long-Duration Energy Storage Demonstration Initiative allocated $505 million specifically for LDES projects, while the broader IRA energy storage investment tax credit (Section 48E) provides 30 to 50% credits for standalone storage systems depending on domestic content and prevailing wage requirements. These incentives have no equivalent in any other national market.

State-level mandates compound the federal push. California's SB 100 requires 100% clean electricity by 2045 and the California Energy Commission's 2025 demand forecast identifies 52 GW of new storage needed by 2045, with at least 15 GW requiring durations beyond 8 hours. New York's Climate Leadership and Community Protection Act mandates 70% renewable electricity by 2030 and 6 GW of energy storage by 2030. Oregon, Nevada, Colorado, and Illinois have enacted similar targets that implicitly require long-duration storage solutions to meet reliability standards during renewable curtailment periods.

What Makes the US Market Different

Federal Investment Tax Credits Create Asymmetric Economics

The IRA's technology-neutral clean energy investment tax credit (Section 48E) provides a base 6% credit for energy storage, increasing to 30% with prevailing wage and apprenticeship requirements, and up to 50% with domestic content bonuses and energy community adders. For a $400 million iron-air battery project sited in a former coal community using domestically manufactured components, the effective federal subsidy can exceed $200 million. No other country offers comparable capital cost support for LDES technologies.

This has created a gravitational pull for LDES companies worldwide. ESS Inc., headquartered in Wilsonville, Oregon, manufactures iron flow batteries and has concentrated its deployment pipeline in the US. Form Energy, the most heavily funded LDES startup globally with over $800 million raised, is building its first commercial-scale iron-air battery manufacturing facility in Weirton, West Virginia, a former steel town qualifying for energy community bonus credits. The 760,000-square-foot factory is expected to produce multi-day storage systems starting in 2026, with initial capacity sufficient for approximately 1 GW of annual production.

Grid Reliability Failures Have Created Political Urgency

Winter Storm Uri in February 2021 caused $195 billion in damage across Texas and neighboring states, killed over 240 people, and exposed the catastrophic consequences of insufficient grid reliability during extended weather events. The storm created political consensus for resilience investments that transcends traditional partisan divisions on clean energy policy. ERCOT, the Texas grid operator, subsequently approved over 4 GW of battery storage and issued requests for proposals specifically citing multi-day storage requirements.

California's rolling blackouts during the August 2020 heat wave similarly catalyzed storage procurement. The California Public Utilities Commission ordered 11.5 GW of new generation and storage resources between 2023 and 2035, with explicit requirements for resources capable of 8+ hour discharge to address the "net peak" demand period after solar generation declines. These grid emergencies have created bipartisan political support for LDES that exists in few other jurisdictions globally.

Interconnection Queue Dynamics Favor Storage

The US has a severe transmission interconnection bottleneck. As of mid-2025, Lawrence Berkeley National Laboratory reported over 2,600 GW of generation and storage capacity waiting in interconnection queues across the seven US independent system operators (ISOs) and regional transmission organizations (RTOs), with average wait times exceeding 5 years. Storage projects, particularly those co-located with existing generation or connected behind-the-meter at industrial facilities, face shorter queue timelines than standalone renewable generation projects.

This structural advantage has driven LDES developers to pursue hybrid configurations. Combining LDES with existing solar or wind farms allows projects to utilize existing interconnection agreements, avoiding the multi-year queue process. Form Energy's partnership with Great River Energy in Minnesota exemplifies this approach: a 1.5 MW / 150 MWh iron-air system co-located at an existing coal plant site scheduled for retirement, leveraging the plant's grid connection and transmission capacity.

Technology Landscape in the US Market

Iron-Air Batteries

Form Energy's iron-air technology represents the most commercially advanced non-lithium LDES solution in the US. The technology uses reversible rusting of iron pellets to store and release energy, with a target cost of $20 per kWh of capacity, roughly one-tenth the cost of lithium-ion systems at equivalent durations. The company has signed capacity agreements with utilities including Great River Energy, Xcel Energy, and Georgia Power, with initial projects ranging from 10 MW / 1,000 MWh to 15 MW / 1,500 MWh. The key risk for investors is manufacturing execution: Form Energy's Weirton facility must scale from pilot to gigawatt-scale production, a transition where many hardware startups have failed.

Flow Batteries

Flow batteries store energy in liquid electrolytes pumped through electrochemical cells, with duration easily extended by adding larger electrolyte tanks. The technology is commercially deployed at scale in China (with over 1 GW of vanadium redox flow batteries operational), but US deployment remains limited.

ESS Inc. manufactures iron flow batteries with 4 to 12 hour durations, targeting commercial and industrial applications and front-of-meter utility installations. The company went public via SPAC in 2021 and has faced financial headwinds, with 2024 revenues of approximately $25 million against annual losses exceeding $100 million. However, ESS received a conditional $300 million loan guarantee from the Department of Energy's Loan Programs Office in 2025, providing critical capital for manufacturing scale-up.

Invinity Energy Systems, a UK-based vanadium flow battery manufacturer, has expanded US operations with installations for Pacific Gas and Electric and several municipal utilities. Their VS3 product offers 4 to 6 hour durations at approximately $350 per kWh, competitive with lithium-ion for applications requiring daily cycling over 25-year asset lives.

Compressed Air and Gravity Storage

Hydrostor, a Canadian company, is developing advanced compressed air energy storage (A-CAES) projects in the US, including a 500 MW / 4,000 MWh facility in Kern County, California. The technology stores energy by compressing air into underground caverns and recovering the thermal energy during expansion. Hydrostor's projects target 8 to 24 hour durations at costs of $150 to $200 per kWh, with 50-year asset lives that improve levelized cost economics relative to battery technologies requiring replacement after 20 to 25 years.

Energy Vault, publicly traded since 2022, offers gravity-based storage using composite blocks lifted and lowered by electric motors. While the technology has attracted attention, its 8 to 12 hour duration and relatively high capital costs ($250 to $350 per kWh) place it in direct competition with lithium-ion systems that benefit from far more mature manufacturing supply chains.

Hydrogen and Thermal Storage

Green hydrogen produced via electrolysis and stored in salt caverns or underground formations represents the only technology capable of providing seasonal storage (weeks to months) at grid scale. The DOE's Regional Clean Hydrogen Hubs program allocated $7 billion to establish seven hydrogen production and storage hubs across the US, with the Gulf Coast, Appalachian, and California hubs most relevant to LDES applications. However, round-trip efficiency of 30 to 40% for hydrogen (compared to 70 to 85% for batteries and compressed air) limits its economic viability to scenarios where no other storage technology can provide sufficient duration.

Thermal energy storage, using molten salt, heated sand, or phase-change materials, has niche applications for industrial process heat and concentrated solar power plants. Malta Inc., spun out of Google X, is developing an electro-thermal storage system using molten salt and anti-freeze, targeting 10+ hour durations. Antora Energy manufactures solid-state thermal batteries that store electricity as heat in carbon blocks, delivering industrial heat at temperatures up to 1,500 degrees Celsius.

Investment Considerations

Revenue Stacking Is Essential

No single revenue stream currently supports LDES project economics in isolation. Successful projects stack multiple value streams: energy arbitrage (buying low, selling high), capacity payments, ancillary services (frequency regulation, spinning reserves), transmission and distribution deferral, and resilience value. CAISO, PJM, and ERCOT have all modified market rules since 2023 to better compensate storage resources for capacity and reliability contributions, but market design continues to undervalue long-duration resources relative to their system benefits.

Manufacturing Risk Dominates the Near Term

For investors, the primary risk in US LDES is not technology feasibility but manufacturing scale-up. Form Energy, ESS Inc., and Hydrostor all have technologies proven at pilot scale. The challenge is translating pilot success to factories producing hundreds of megawatts annually at target costs and quality levels. Historical data from adjacent industries (solar panel manufacturing, lithium-ion cell production) suggests that first-of-kind factories typically operate at 50 to 70% of nameplate capacity for 18 to 24 months while resolving yield, quality, and supply chain issues.

Policy Duration Risk

The IRA's clean energy tax credits are structurally durable, extending through at least 2032 with phase-down provisions. However, the bonus credit adders for domestic content (10%), energy communities (10%), and low-income communities (10 to 20%) are subject to annual allocation caps and administrative interpretation that could change with political transitions. Investors should model base-case project returns using the 30% ITC alone, treating bonus credits as upside rather than underwriting to the full 50%.

Action Checklist

• Map the US LDES project pipeline by technology, geography, and development stage using DOE and LDES Council databases
• Evaluate state-level procurement mandates that explicitly require or incentivize storage durations exceeding 8 hours
• Assess IRA tax credit eligibility for target projects, including domestic content, energy community, and prevailing wage requirements
• Conduct due diligence on manufacturing readiness levels, focusing on first-of-kind factory execution risk and supply chain dependencies
• Model revenue stacking scenarios across energy, capacity, and ancillary services markets for target ISO/RTO regions
• Monitor FERC proceedings on storage market participation rules, particularly Order 841 implementation and duration-specific capacity accreditation
• Evaluate interconnection queue positions for target projects and assess co-location strategies that may accelerate grid connection timelines
• Track DOE Loan Programs Office conditional commitments and grant awards as signals of technology and project credibility

Sources

• National Renewable Energy Laboratory. (2025). Storage Futures Study: The Role of Long-Duration Energy Storage in a Clean US Electricity System. Golden, CO: NREL.
• Lawrence Berkeley National Laboratory. (2025). Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection. Berkeley, CA: LBNL.
• US Department of Energy. (2025). Long-Duration Energy Storage Demonstration Initiative: Project Selections and Program Update. Washington, DC: DOE.
• Long Duration Energy Storage Council. (2025). A Path to Net Zero: The Role of Long-Duration Energy Storage. Geneva: LDES Council.
• BloombergNEF. (2025). US Long-Duration Energy Storage Market Outlook, H2 2025. New York: Bloomberg LP.
• Federal Energy Regulatory Commission. (2025). Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators: Implementation Assessment. Washington, DC: FERC.
• California Energy Commission. (2025). SB 100 Joint Agency Report: Achieving 100 Percent Clean Electricity in California. Sacramento, CA: CEC.