Regulatory tracker: Long-duration energy storage (LDES) rules by jurisdiction — what's live, pending, and proposed

The International Energy Agency projects that global electricity systems will need between 85 and 140 TWh of long-duration energy storage by 2040 to maintain grid reliability at renewable penetration levels above 60%, yet fewer than 2 GW of non-pumped-hydro LDES capacity is operational worldwide as of early 2026 (IEA, 2025). Regulatory frameworks are emerging as either the primary accelerant or the principal barrier to deployment. Across the US, EU, UK, Australia, and key Asian markets, at least 35 distinct policies directly affecting LDES procurement, interconnection, permitting, or compensation have been enacted, proposed, or are pending review. For executives evaluating LDES investments, understanding which rules are live, which are in legislative pipelines, and which remain at the proposal stage is essential for project timing and market entry decisions.

Why It Matters

Long-duration energy storage, generally defined as systems capable of discharging stored energy for 8 hours or more, fills a grid reliability gap that short-duration lithium-ion batteries cannot address. As grids add variable renewable generation, multi-day periods of low wind and solar output (known as "dunkelflaute" events in European planning) require storage durations of 24 to 200+ hours. Without dedicated regulatory treatment, LDES technologies compete in markets designed for 4-hour lithium-ion systems, where they are structurally disadvantaged on cost per kW metrics despite offering superior grid resilience value.

Regulatory frameworks determine whether LDES receives standalone procurement targets, capacity market participation rules that value duration, investment tax credits, and streamlined permitting. Jurisdictions that have enacted LDES-specific policies are attracting the majority of project development activity. California, which established the first LDES procurement mandate in 2023, has secured more than 5 GW of contracted LDES capacity through utility integrated resource plans. Markets without tailored treatment, by contrast, see LDES projects stall at the financing stage because revenue certainty is insufficient.

The policy landscape is shifting rapidly. Between January 2025 and February 2026, at least 12 new LDES-relevant regulations or regulatory proceedings were initiated across major markets. Tracking these developments is no longer optional for developers, utilities, investors, and technology providers seeking to deploy capital in the LDES space.

Key Concepts

Defining LDES in Regulatory Contexts

Regulatory definitions of LDES vary significantly across jurisdictions, creating compliance complexity for multinational developers. California's Public Utilities Commission (CPUC) defines LDES as storage with discharge duration of 8 hours or more. The US Department of Energy's Long Duration Energy Storage Shot uses a 10-hour threshold. The European Commission's proposed Net-Zero Industry Act references storage technologies with "multi-day" capability without specifying a minimum duration. Australia's Capacity Investment Scheme defines "medium" and "long" duration as 4 to 12 hours and 12+ hours respectively. These definitional differences affect which technologies qualify for incentives and procurement mandates, and developers must map their technology's duration profile against each jurisdiction's specific thresholds.

Procurement Mandates vs. Market Mechanisms

LDES regulatory approaches generally fall into two categories: direct procurement mandates that require utilities to contract for a specified volume of LDES capacity, and market mechanism reforms that adjust capacity markets, ancillary service markets, or clean energy standards to better compensate long-duration attributes. California and New York have adopted procurement mandates. The UK's capacity market has introduced duration-linked de-rating factors. Australia's Capacity Investment Scheme uses competitive auctions with duration-tiered evaluation criteria. Each approach carries distinct implications for project bankability, revenue certainty, and technology selection.

Permitting and Interconnection Challenges

LDES technologies span a wide range of physical footprints and environmental profiles, from underground compressed air systems requiring subsurface permitting to above-ground iron-air battery installations to pumped thermal systems with minimal land use. Existing permitting frameworks, designed primarily for conventional generation or short-duration batteries, often lack clear pathways for novel LDES technologies. Interconnection queue reforms, which have been implemented in several US regional transmission organizations (RTOs), are beginning to address the multi-year delays that have stalled LDES projects alongside other clean energy resources.

What's Working

United States: Federal and State Policy Convergence

The US represents the most active LDES regulatory landscape globally. At the federal level, the Inflation Reduction Act (IRA) provides a 30% Investment Tax Credit (ITC) for standalone energy storage, including LDES, through at least 2032. The ITC applies regardless of duration, making it equally available to 4-hour lithium-ion and 100-hour iron-air systems. The Department of Energy's LDES demonstration program, funded at $505 million under the Bipartisan Infrastructure Law, has awarded grants to nine projects totaling over 60 GWh of planned capacity across technologies including iron-air (Form Energy), flow batteries (ESS Inc.), and compressed air (Hydrostor) (DOE, 2025).

At the state level, California leads with its 2023 CPUC decision requiring investor-owned utilities to procure 2 GW of LDES (8+ hours) by 2030 and an additional 4 GW by 2035. Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric have signed contracts totaling approximately 3.2 GW through 2025 solicitations, with Form Energy's 100-hour iron-air technology securing the largest share at 1.8 GW across multiple sites (CPUC, 2025). New York's Climate Leadership and Community Protection Act mandates 6 GW of energy storage by 2030 (all durations) and 15 GW by 2035, with the New York State Energy Research and Development Authority (NYSERDA) administering a dedicated LDES procurement track that provides 15-year revenue contracts for systems with 8+ hour duration.

European Union: Strategic Framework Development

The EU's Net-Zero Industry Act, which entered into force in mid-2025, designates energy storage as a "strategic net-zero technology" eligible for accelerated permitting (maximum 18 months for projects of strategic importance). While the Act does not set LDES-specific procurement targets, it requires member states to include storage deployment targets in their National Energy and Climate Plans (NECPs) due for update by June 2026. Germany's Federal Ministry for Economic Affairs has proposed a "capacity mechanism" for 2027 that would include duration-weighted payments, with systems providing 12+ hours of discharge eligible for a 40% premium over 4-hour baseline capacity payments (BMWK, 2025).

The European Commission's revised electricity market design directive, adopted in December 2024, mandates that all EU member states establish capacity mechanisms or strategic reserves that explicitly account for storage duration in their valuation frameworks. This directive effectively requires 27 national markets to create pathways for LDES compensation, though implementation timelines and specific design parameters remain at member state discretion.

Australia: Competitive Auction Approach

Australia's Capacity Investment Scheme (CIS), launched in late 2024, allocated AUD 2.4 billion in its first round, with storage receiving the largest share at AUD 1.1 billion. The scheme uses duration-tiered evaluation criteria where projects offering 8+ hours of storage receive a scoring premium in competitive auctions. Three LDES projects were awarded contracts in the first CIS round, including a 250 MW / 2,000 MWh (8-hour) vanadium flow battery project in South Australia and a 500 MW compressed air energy storage project in the Latrobe Valley, Victoria (AEMO, 2025). The Australian Energy Market Commission (AEMC) has separately proposed reforms to the National Electricity Market's (NEM) capacity payment structure to introduce "duration adequacy" requirements beginning in 2028.

What's Not Working

Several regulatory gaps continue to impede LDES deployment across otherwise supportive jurisdictions. In the US, interconnection queue reform has been incomplete. FERC Order 2023, which mandated first-ready, first-served clustering for interconnection studies, has improved processing times for solar and wind projects but has done less for LDES, where site-specific geotechnical requirements (compressed air, pumped hydro) introduce unique study complexities. Average interconnection timelines for LDES projects in PJM and MISO remain at 4 to 6 years, compared to 2 to 3 years for battery storage projects without subsurface components.

In the EU, the gap between strategic framework ambitions and national implementation creates uncertainty. As of early 2026, fewer than 8 of 27 member states have published draft NECP updates that include quantified LDES targets. France, Spain, and Italy, which together account for over 40% of EU renewable energy capacity, have not yet specified LDES procurement volumes or timelines. This implementation lag means that EU policy support for LDES remains more aspirational than operational in the majority of member markets.

The UK's capacity market has incorporated storage but with de-rating factors that systematically undervalue LDES. A 100-hour system receives a de-rating factor only modestly above a 4-hour system because the de-rating methodology is based on "equivalent firm capacity" during peak stress events of typically 4 to 8 hours. The Department for Energy Security and Net Zero launched a consultation in September 2025 to revise de-rating methodologies, but final rule changes are not expected until late 2026, leaving LDES developers with insufficient capacity market revenues to close financing in the interim.

Across jurisdictions, environmental permitting for novel LDES technologies remains ad hoc. Compressed air energy storage projects requiring underground cavern development face permitting timelines of 3 to 7 years in the US due to overlapping federal (Bureau of Land Management, EPA Underground Injection Control) and state mining and environmental review requirements. Above-ground technologies face fewer permitting barriers but still lack standardized review categories in most jurisdictions.

Key Players

Established companies: Form Energy (iron-air battery technology, largest LDES contract portfolio globally), EDF (pumped hydro and compressed air development across EU markets), AES Corporation (multi-technology LDES deployment in US and Latin America), Hydrostor (advanced compressed air energy storage in North America and Australia), NextEra Energy (utility-scale LDES procurement in Florida and California), Siemens Energy (thermal energy storage and power-to-X integration)

Startups and technology providers: ESS Inc. (iron flow batteries for 4 to 12 hour applications), Invinity Energy Systems (vanadium flow batteries deployed in UK and Australia), Malta Inc. (pumped thermal energy storage), Energy Vault (gravity-based storage and flow battery hybrid systems), Noon Energy (carbon-oxygen battery technology targeting 100+ hour duration), Ambri (liquid metal batteries for grid-scale LDES)

Investors and policy organizations: Long Duration Energy Storage Council (industry consortium advocating for policy reforms, 60+ member companies), Breakthrough Energy Ventures (early-stage LDES technology investments including Form Energy and Malta), ARPA-E (US federal research funding for novel LDES concepts), Clean Energy Finance Corporation (Australian government green bank financing LDES projects under CIS)

Action Checklist

• Map your LDES technology's discharge duration against regulatory definitions in target markets (8-hour CPUC threshold, 10-hour DOE threshold, 12-hour EU premium tier)
• Secure IRA Investment Tax Credit eligibility documentation for US-deployed LDES projects before 2032 sunset provisions
• Monitor California's next CPUC procurement cycle (expected Q3 2026) for additional LDES contracting opportunities
• Track EU member state NECP updates (due June 2026) for country-specific LDES procurement targets and capacity mechanism designs
• Evaluate Australia's CIS Round 2 auction (expected late 2026) for projects meeting 8+ hour duration scoring premiums
• Engage with FERC proceedings on interconnection queue reform to advocate for LDES-specific study track accommodations
• Review UK capacity market de-rating consultation outcomes (expected late 2026) before committing to UK market entry
• Assess permitting pathway complexity for site-specific LDES technologies, particularly subsurface systems requiring multi-agency review

FAQ

Q: Which jurisdiction currently offers the strongest regulatory support for LDES? A: California provides the most comprehensive LDES-specific regulatory framework as of early 2026. The combination of an explicit 6 GW LDES procurement mandate (8+ hours), long-term utility contracts (15 to 20 years), federal ITC eligibility (30%), and established interconnection processes makes it the most bankable market for LDES project development. Over 60% of global non-pumped-hydro LDES capacity under contract is in California. New York is building comparable policy architecture but is 12 to 18 months behind in procurement execution.

Q: How do LDES technologies qualify for the IRA Investment Tax Credit? A: The IRA's Section 48E standalone energy storage ITC applies to any storage technology that stores energy for later electrical generation, regardless of duration, chemistry, or mechanical approach. LDES technologies including flow batteries, compressed air, iron-air batteries, thermal storage, and gravity systems all qualify. The base credit is 6%, increasing to 30% with prevailing wage and apprenticeship requirements. A 10% domestic content bonus and 10% energy community bonus are also available, potentially reaching a combined 50% ITC for qualifying projects. Developers must place projects in service before the ITC begins its phasedown, currently scheduled to start after 2032 (IRS, 2025).

Q: What is the timeline for EU member states to implement LDES-specific policies? A: The revised electricity market design directive requires all member states to incorporate storage duration valuation into capacity mechanisms or strategic reserves, but does not mandate a specific implementation deadline beyond the standard 18-month transposition period (ending mid-2026). Realistically, national capacity mechanism reforms that explicitly value LDES are expected to roll out between 2027 and 2029, with Germany, the Netherlands, and the Nordic markets moving first. Developers targeting EU markets should plan for a 2 to 4 year policy maturation period before LDES-specific revenue streams become operational.

Q: Are there any jurisdictions actively restricting or disadvantaging LDES? A: No major market has enacted explicitly anti-LDES regulation, but several have structural market designs that functionally disadvantage long-duration systems. Texas's ERCOT energy-only market provides no capacity payments whatsoever, meaning LDES revenue depends entirely on energy and ancillary service price volatility. Japan's capacity market currently caps contract lengths at one year for new resources, insufficient for LDES project financing which typically requires 10+ year revenue certainty. Both markets have reform proceedings underway but timelines remain uncertain.

Sources

• International Energy Agency. (2025). Energy Storage Outlook 2025: Scaling Long-Duration Technologies for Grid Reliability. Paris: IEA.
• US Department of Energy. (2025). Long Duration Energy Storage Demonstration Program: Project Awards and Progress Report. Washington, DC: Office of Clean Energy Demonstrations.
• California Public Utilities Commission. (2025). Integrated Resource Plan: Long-Duration Energy Storage Procurement Update. San Francisco: CPUC.
• German Federal Ministry for Economic Affairs and Climate Action (BMWK). (2025). Capacity Mechanism Design for Electricity Market 2.0: Duration-Weighted Payment Structures. Berlin: BMWK.
• Australian Energy Market Operator. (2025). Capacity Investment Scheme Round 1: Outcomes Report. Melbourne: AEMO.
• Long Duration Energy Storage Council. (2025). LDES Policy Tracker: Global Regulatory Developments Q1 2026. Geneva: LDES Council.
• Internal Revenue Service. (2025). Section 48E Energy Storage Investment Tax Credit: Final Guidance. Washington, DC: US Department of the Treasury.