Trend watch: Long-duration energy storage (LDES) in 2026 — signals, winners, and red flags

The LDES market reached $4.84 billion in 2024 and is projected to exceed $13 billion by 2032, with the U.S. Department of Energy investing $100 million specifically in non-lithium storage pilots targeting 10+ hour discharge duration (MarketsandMarkets, 2024). For procurement professionals evaluating storage options, understanding which LDES technologies deliver bankable performance versus extended R&D timelines has become essential as renewable penetration approaches grid integration thresholds.

Why It Matters

The United States is approaching the inflection point where long-duration storage becomes not merely useful but essential. As variable renewable energy (VRE) penetration reaches 40-50% of electricity generation—already achieved in states like California and approaching in Texas—the value of 4-hour lithium-ion batteries diminishes while the need for 8-100+ hour storage intensifies. The DOE's Long Duration Storage Shot aims to reduce LDES costs by 90% by 2030, signaling federal commitment to this technology category.

For procurement teams, the timing creates both opportunity and risk. Early LDES adopters can secure favorable contract terms, influence project design, and build operational expertise before market tightening. However, technology selection errors—betting on solutions that fail to scale or degrade faster than projected—can result in stranded assets and supply gap exposure.

The Inflation Reduction Act (IRA) reshapes project economics through Investment Tax Credits (ITC) and Production Tax Credits (PTC) applicable to storage. Standalone storage now qualifies for ITC, with bonus credits for domestic content and energy communities. These incentives narrow the cost gap between proven lithium-ion and emerging LDES technologies, creating windows for procurement commitments that wouldn't pencil without policy support.

Understanding duration requirements, degradation profiles, revenue stacking opportunities, and grid interconnection realities separates strategic LDES procurement from technology gambling.

Key Concepts

Duration measures how long a storage system can discharge at rated power. LDES typically refers to systems providing 8+ hours of storage, with technologies like iron-air batteries achieving 100+ hours. Duration requirements depend on grid characteristics—markets with high solar penetration need overnight storage; those with seasonal wind variation may need weekly or seasonal storage.

Degradation describes capacity loss over time and cycling. Lithium-ion batteries degrade 2-3% annually with daily cycling; many LDES technologies promise lower degradation but lack long-term operational data. Degradation curves directly impact lifecycle economics and capacity contracting.

Revenue stacking combines multiple value streams from a single storage asset: energy arbitrage (buying low, selling high), capacity payments, ancillary services (frequency regulation, reserves), and transmission/distribution deferral. LDES assets with longer durations can access capacity markets that short-duration batteries cannot.

Grid integration encompasses interconnection, dispatch coordination, and compliance with reliability requirements. The U.S. interconnection queue contains over 2,500 GW of proposed projects—most including storage components—with average wait times exceeding 4 years. Procurement timelines must account for interconnection realities.

Technology	Duration	Round-Trip Efficiency	Degradation (Annual)	TRL
Lithium-ion	2-4 hours	85-90%	2-3%	9
Pumped Hydro	8-24 hours	75-85%	<0.5%	9
Compressed Air (CAES)	8-24 hours	50-70%	<1%	8-9
Iron-Air Battery	24-100+ hours	45-55%	TBD	7-8
Flow Battery (Vanadium)	4-12 hours	65-75%	<0.1%	8
Liquid Air (LAES)	8-24 hours	55-60%	<1%	7-8
Gravity Storage	8-12 hours	75-85%	Minimal	7-8

What's Working

Iron-Air Battery Commercialization

Form Energy's iron-air battery technology represents the leading LDES breakthrough. With 100-hour duration capability at projected costs of $20/kWh—compared to $150-200/kWh for lithium-ion—iron-air could fundamentally reshape grid storage economics. The chemistry uses abundant, low-cost materials (iron, water, air) with domestic supply chain potential.

Form Energy raised $405 million in October 2024 led by T. Rowe Price with GE Vernova participation, funding manufacturing scale-up at their Weirton, West Virginia facility. The company has secured utility offtake agreements with Great River Energy, Xcel Energy, and Georgia Power totaling over 1 GW of announced projects (Form Energy, 2024).

For procurement teams, iron-air represents high-potential/moderate-risk positioning. Technology readiness is advancing rapidly, but operational track records remain limited. Early mover advantages may be substantial if cost projections materialize.

Flow Battery Grid Deployments

Vanadium and iron flow batteries have accumulated significant operational history, with demonstrated degradation rates below 0.1% annually—enabling 20+ year asset lives. The technology's power/energy decoupling allows duration scaling by adding electrolyte tanks without proportional cost increase.

ESS Inc. deployed a 75 kW/500 kWh iron flow battery with Burbank Water and Power in May 2024, demonstrating utility-scale reliability. Their technology uses earth-abundant materials and claims 25-year lifetime without capacity degradation (ESS Inc., 2024).

Invinity Energy Systems commissioned multiple vanadium flow installations across UK and US, with growing focus on solar-plus-storage configurations where 6-8 hour duration captures greater renewable production value.

California LDES Program Momentum

California's dedicated LDES program has committed over $60 million to demonstration projects, with procurement signals indicating long-term state commitment. The California Public Utilities Commission ordered procurement of 1,000 MW of LDES by 2026, creating guaranteed offtake for qualifying projects.

Recent awards include $14 million to Pacific Steel Group for a 4 MW/32 MWh zinc hybrid system and $42 million to a Camp Pendleton 48 MWh zinc hybrid installation. These projects de-risk technology pathways while building domestic supply chains (California Energy Commission, 2024).

What's Not Working

Interconnection Queue Bottlenecks

The U.S. interconnection queue dysfunction creates existential risk for LDES projects. Average interconnection study timelines exceed 4 years, with projects frequently experiencing 2-3 year delays between study phases. For technologies with limited commercial history, combining technology risk with interconnection uncertainty compounds procurement challenge.

Projects entering the queue today face completion timelines extending to 2029-2030—well beyond typical corporate planning horizons. Procurement teams must factor queue position and utility relationships into project evaluation.

Revenue Uncertainty for Novel Durations

Existing wholesale market structures and capacity accreditation frameworks were designed for shorter-duration resources. LDES assets with 24+ hour capability may not capture full value within current market designs, as capacity credits and ancillary service markets don't adequately compensate multi-day storage.

FERC and regional ISO market reforms are underway but proceeding slowly. Procurement contracts should anticipate market evolution rather than assuming current revenue structures persist.

Round-Trip Efficiency Economics

Many LDES technologies operate at 50-70% round-trip efficiency compared to 85-90% for lithium-ion. This efficiency gap means more energy must be purchased to deliver the same output, directly impacting arbitrage economics. In markets with narrow price spreads, efficiency penalties can outweigh duration benefits.

Procurement analysis should model actual expected dispatch profiles, not theoretical duration capability. An 8-hour system cycling daily faces different efficiency economics than one cycling weekly for seasonal balancing.

Supply Chain Immaturity

Unlike lithium-ion with established global supply chains, most LDES technologies depend on nascent manufacturing capacity. Lead times for flow battery electrolyte, iron-air components, and compressed air equipment exceed 12-18 months, with limited supplier redundancy.

The IRA's domestic content bonus credits incentivize U.S. manufacturing but cannot instantly create supply chain depth. Procurement teams should validate supply chain commitments before contracting.

Key Players

Established Leaders

Form Energy leads iron-air commercialization with utility-scale projects under construction and $1.2 billion in cumulative funding. Their 100-hour duration capability targets multi-day grid resilience applications.

Energy Vault has commercialized gravity-based storage using proprietary composite blocks, with projects commissioned in China and US. Their EVx platform targets 8-12 hour duration at grid scale.

Hydrostor develops advanced compressed air storage (A-CAES) with thermal energy storage, achieving higher efficiency than conventional CAES. Projects under development in California and Australia total over 4 GWh.

ESS Inc. produces iron flow batteries with demonstrated utility deployments and 25-year lifetime warranties. Recent pivot toward integrated system delivery addresses installation complexity concerns.

Emerging Startups

Invinity Energy Systems (UK/US) — Vanadium flow battery manufacturer with growing North American installations, recently expanded manufacturing capacity.

Ambri (Boston) — Liquid metal battery technology with 20-year lifetime claims, funded by Bill Gates and oil majors for industrial-scale demonstrations.

Eos Energy Enterprises (New Jersey) — Zinc-based battery systems targeting 8-12 hour duration, with significant California program participation.

CMBlu Energy (Germany) — Organic flow battery using sustainable materials, offering alternative to vanadium supply chain concerns.

Key Investors & Funders

Breakthrough Energy Ventures — Anchor investor in Form Energy, Ambri, and other LDES innovators. Bill Gates has repeatedly emphasized LDES as critical climate technology.

DCVC — Deep tech venture firm with significant LDES portfolio including iron-air and gravity storage investments.

GE Vernova — Strategic investor in Form Energy, signaling integration with turbine and grid equipment offerings.

U.S. DOE Loan Programs Office — Provides project financing for LDES deployments, de-risking capital structure for first-of-kind projects.

Examples

Form Energy + Great River Energy (Minnesota): Great River Energy, a generation and transmission cooperative serving 1.7 million members, contracted with Form Energy for a 1.5 MW/150 MWh iron-air battery system—enabling 100 hours of continuous discharge. The project supports Great River's target of 50% renewable energy by 2030 by providing multi-day storage for wind integration. Scheduled for 2025 commissioning, the installation will provide critical operational data for iron-air technology validation. Procurement teams should monitor performance reports for degradation and efficiency data (Form Energy, 2024).
Hydrostor Pecho Energy Storage Center (California): Hydrostor's 400 MW/3,200 MWh compressed air project in San Luis Obispo County represents one of the largest LDES projects in development. The system uses underground caverns for air storage with thermal energy capture, achieving 60%+ round-trip efficiency. Pacific Gas & Electric has contracted for capacity, validating bankability of A-CAES technology. Expected 2028 operation provides LDES capacity at scale previously achievable only through pumped hydro, without geographic constraints of traditional pumped storage (Hydrostor, 2024).
Root-Power Portfolio (United Kingdom): UK developer Root-Power announced 2.4 GWh of LDES capacity across four projects in Yorkshire, Buckinghamshire, and Lincolnshire in June 2025. The portfolio uses flow battery technology with 8-12 hour duration, targeting grid balancing services as UK renewable penetration increases. The multi-project approach enables technology standardization and supply chain optimization. UK procurement dynamics differ from US but offer transferable lessons for portfolio-based LDES strategy (Root-Power, 2025).

Action Checklist

Assess duration requirements: Model actual grid/facility needs to specify minimum viable duration
Evaluate interconnection position: Prioritize projects with queue advancement or existing interconnection rights
Stress-test degradation assumptions: Request third-party validation of projected capacity curves
Model revenue stacking realistically: Account for market access, ISO rules, and potential market reforms
Verify supply chain commitments: Confirm manufacturer capacity and component sourcing for delivery timelines
Engage DOE program offices: Explore Loan Programs Office financing and technical assistance resources
Structure flexible offtakes: Consider options capturing technology improvement without stranding commitment

FAQ

Q: How should procurement teams compare lithium-ion versus LDES for specific applications? A: Duration requirements drive technology selection. For 2-4 hour applications (solar time-shifting, frequency regulation), lithium-ion remains cost-optimal. For 8+ hour needs (overnight renewable firming, multi-day resilience), LDES offers better lifecycle economics despite higher upfront costs. Model total cost of ownership including degradation, replacement cycles, and capacity accreditation value.

Q: What contract structures mitigate LDES technology risk? A: Performance guarantees with degradation bands protect against underperformance. Milestone-based payment structures align vendor incentives with operational success. Offtake agreements with capacity adjustment mechanisms accommodate actual (versus projected) asset capability. Consider shorter initial terms with extension options as technology matures.

Q: How do IRA incentives affect LDES project economics? A: Standalone storage qualifies for 30% Investment Tax Credit, with 10% bonus for domestic content and 10% for energy community locations. Some LDES technologies with higher domestic content may access greater effective subsidies than import-dependent lithium-ion. Model after-tax economics with realistic qualification scenarios.

Q: What Scope 3 implications exist for LDES procurement? A: LDES enabling renewable integration reduces grid emission intensity—a Scope 2 benefit. Manufacturing emissions from LDES components constitute Scope 3 Category 1 (purchased goods). Iron-air and flow batteries using abundant materials may have lower embodied carbon than rare-earth-dependent alternatives. Request lifecycle assessments from manufacturers to support sustainability claims.

Q: How do capacity markets value different LDES durations? A: Capacity accreditation rules vary by ISO/RTO. PJM's effective load carrying capability (ELCC) methodology increasingly penalizes short-duration resources as storage penetration grows. CAISO accredits based on 4-hour minimum with declining marginal value. ERCOT's energy-only market lacks capacity payments but offers scarcity pricing during extended events. Match duration procurement to jurisdictional capacity valuation.

Sources

MarketsandMarkets. (2024). Long Duration Energy Storage Market Growth, Drivers and Opportunities.
U.S. Department of Energy. (2024). Long-Duration Energy Storage Pilot Program Funding Announcement.
Form Energy. (2024). Series E Funding and Project Pipeline Announcements.
California Energy Commission. (2024). Long Duration Energy Storage Program Awards.
Hydrostor. (2024). Pecho Energy Storage Center Project Update.
SNS Insider. (2024). Long Duration Energy Storage Market Size Report.