BESS & Grid Storage Developed 2023 · C8 4 min

Long Duration Energy Storage: Technology Readiness, Markets, and Financeability

Long duration energy storage is emerging as a core requirement for grids that run on high shares of wind and solar. This case study examines what long duration energy storage (LDES) is, the technologies competing to deliver it, the electricity market and policy conditions shaping its rollout, and the reasons most LDES projects are not yet bankable. It sits at the meeting point of technology readiness, market design, and finance.

The Problem: Storing Energy Beyond a Few Hours

LDES generally refers to systems that store large amounts of energy for extended periods, typically more than 6 to 10 hours, in contrast to lithium-ion batteries designed for 1 to 4 hours. There is no universally agreed definition, but the purpose is consistent: to balance supply and demand over long windows and keep the grid reliable as intermittent renewables grow.

Several forces drive demand. The shift to wind and solar creates variability that short-duration storage cannot fully smooth. Climate targets and energy policy accelerate renewable deployment. Rising lithium-ion metal prices matter too, since lithium-ion capacity costs are expected to fall only around 27 percent more by 2030, and LDES technologies sit largely outside the lithium-ion and EV supply chain, which can be attractive when lithium costs and supply concerns are high.

The Approach: Mapping the Technology Landscape

LDES divides into four broad categories. Mechanical storage includes pumped hydro, compressed air, and gravity-based systems that store energy as potential or kinetic energy. Thermal storage, such as molten salt, holds energy as heat and dispatches it through a steam turbine. Chemical storage, including hydrogen and ammonia, stores energy in chemical bonds and can reach seasonal durations. Electrochemical storage covers flow batteries and other non-lithium chemistries suited to intra-day markets beyond the usual four hours.

These technologies differ across power rating, discharge duration, levelized cost of storage, efficiency, plant scale, and technology readiness. Lithium-ion covers a wide band of the power-and-duration map, but other technologies perform better economically in specific zones, from intra-day balancing up to multi-day and seasonal storage. A recurring trade-off is that many LDES options avoid scarce or expensive mineral inputs but demand more engineering, labour, and site work, and some, such as pumped hydro, compressed air, and gravity systems, need particular geological conditions and cannot be built everywhere.

Two use cases illustrate the value. In California, LDES can absorb midday solar surplus and release it in the evening, easing the duck curve, the widening gap between demand and available solar through the day. In Germany, LDES can address Dunkelflaute, extended periods of low wind and sun, by shifting energy across seasons.

Findings and Trade-Offs

The central finding is that most LDES technologies are not bankable today, chiefly because they are not yet cost competitive against alternatives. Bankability requires a secure revenue stream, proven technology, and risk mitigation. Revenue can come from energy and capacity markets, ancillary services, and power purchase agreements, but many LDES projects lack the track record and warranties that lenders expect.

On cost, the levelized cost of storage for LDES is generally higher than lithium-ion for durations under four hours, yet the relative advantage improves as duration lengthens. Pumped hydro and compressed air can be economic over days to weeks, and thermal or chemical storage over even longer periods. In the US, LDES is expected to become competitive with lithium-ion for large 8-hour systems in the second half of the decade, aided by the Investment Tax Credit under the Inflation Reduction Act. Deployments so far have been mostly pilot or early commercial, though the average duration of new utility-scale storage in the US has been rising since 2021.

What It Means for the Industry

Policy is doing much of the heavy lifting. The US Department of Energy has targeted a 90 percent cost reduction versus a 2020 lithium-ion baseline and 10-plus-hour storage within a decade, backed by significant funding, while the Investment Tax Credit supports storage broadly rather than LDES specifically. In the EU, the Electricity Market Directive and recent market design proposals promote non-fossil flexibility and require member states to assess flexibility needs regularly, with the first assessment due in early 2025.

Building a durable LDES market depends on four foundations: understanding the use cases, proving the technology, designing supportive market and regulatory frameworks, and accelerating through reform and incentives. Until those align, LDES will grow through targeted, policy-supported projects rather than open-market competition alone.

Key Takeaways

LDES stores energy for typically more than 6 to 10 hours, well beyond lithium-ion's usual 1 to 4 hour range.

Four technology families compete: mechanical, thermal, chemical, and electrochemical, each suited to different durations.

Many LDES options avoid scarce minerals but need more engineering, labour, site work, and sometimes specific geology.

LDES tackles the California duck curve for daily shifting and German Dunkelflaute for seasonal balancing.

Most LDES is not yet bankable, mainly because it is not cost competitive and lacks operating track record.

LDES cost advantage improves with longer duration; US 8-hour systems are expected to rival lithium-ion later this decade.

Policy is pivotal: US DOE targets a 90 percent cost cut and 10-plus hours, while the EU pushes non-fossil flexibility.