TOPIC #3
Long-Duration Energy Storage
New technologies move closer to market deployment.
Long-Duration Storage Needed to Integrate High Renewable Penetration
The United States has installed roughly 20 GW of storage capacity since 2019. This new capacity has overwhelmingly been short-duration lithium-ion batteries. As a result, more than 90% of this capacity can provide discharge durations of only four hours or less (see Figure 3.1).
Integrating higher penetrations of renewables will require longer discharge durations. While no standard definition exists, long-duration energy storage can be considered any technology capable of discharging energy for 10 hours or longer. The need for long-duration storage may be significant. California estimates that retiring the state’s natural gas generation assets will require 37 GW of long-duration storage by 2045.
Not surprisingly, a variety of long-duration storage technologies are in various stages of development (see Figure 3.2). Further, the convergence of innovation, investment, and regulatory commitments may result in long-duration storage quickly becoming a common resource for electric utilities.
Figure 3.1: U.S. Installed Storage Capacity by Year and Duration, 2019 through July 2024
Sources: EIA; ScottMadden analysis
KEY TAKEAWAYS
Battery storage added to the electric grid in recent years is primarily lithium-ion batteries with a discharge duration of four hours or less.
Long-duration storage technologies—capable of providing more than 10 hours of discharge—will be needed to integrate higher penetrations of renewables.
Some technologies, such as the iron-air battery system being developed by Form Energy, may eventually provide up to 100 hours of battery storage.
Key milestones to monitor as the industry matures include technology performance improvements, cost declines, regulatory support, and supply chain developments.
Battery storage added to the electric grid in recent years is primarily lithium-ion batteries with a discharge duration of four hours or less.
Long-duration storage technologies—capable of providing more than 10 hours of discharge—will be needed to integrate higher penetrations of renewables.
Some technologies, such as the iron-air battery system being developed by Form Energy, may eventually provide up to 100 hours of battery storage.
Key milestones to monitor as the industry matures include technology performance improvements, cost declines, regulatory support, and supply chain developments.
Figure 3.2: Long-Duration Storage Technology Readiness Level and Discharge Duration
Source: Future Cleantech Architects and Long Duration Energy Storage Council
Public Policy and Market Interest Catalysts
In July 2021, the DOE announced the “Long Duration Storage Shot” as part of the broader Energy Earthshot Initiative. Designed to accelerate breakthroughs, the long-duration storage effort establishes a target to reduce the cost of 10+-hour grid-scale energy storage systems by 90% from a 2020 baseline by 2030.
Long-duration energy storage was also bolstered by the passage of the Inflation Reduction Act, which provides tax credits for clean energy manufacturing and allows standalone storage projects to receive the federal investment tax credit.
In addition to policy support, states and electric utilities are beginning to explore long-duration storage technologies and their potential role in the clean energy transition. Numerous studies and projects have been announced in multiple jurisdictions over the last two years (see Figure 3.3).
A growing number of startup companies are developing and providing long-duration storage solutions—including multiday offerings. While Form Energy may be the most visible, there are multiple other companies operating long-duration storage facilities or deploying demonstration projects (see Figure 3.4).
Figure 3.3A: Recent Long-Duration Storage Activity and Development (Western U.S.)
Source: ScottMadden research
Figure 3.3B: Recent Long-Duration Storage Activity and Development (Eastern U.S.)
Source: ScottMadden research
Improvements in Technology, Cost, Regulatory Support, and Supply Chain Needed
According to the DOE, long-duration storage will need to achieve certain milestones to reach technology “liftoff," defined as the point where the industry is largely self-sustaining and not dependent on significant levels of public capital.
More specifically, long-duration storage will need to meet the following three milestones:
- Demonstrate technology performance and cost curve improvements to attract sustained investment. More specifically, the DOE estimates system costs must decline 45% to 55%, and roundtrip efficiency must improve by 7% to 15% by 2030 to compete with lithium-ion storage and hydrogen.
- Secure resource adequacy compensation in markets or through public utility commission valuation. The DOE estimates the compensation must reach $50 to $75 per kW per year by 2030 to attract private financing. Further, realizing this value will require methodology changes in integrated resource planning, resource adequacy planning, and transmission planning.
- Develop a supply chain capable of manufacturing 3 GW annually by 2030 and 10 GW to 15 GW annually by 2035. The timing of the supply chain expansion will be closely linked to renewable penetrations.
Demonstration projects coming online in the next few years will reveal if long-duration energy storage can deliver on promised results and become a critical resource on the electric grid.
IMPLICATIONS
In recent years, energy storage capacity added to the grid has been predominantly lithium-ion batteries. While well-suited for short discharge durations, additional technologies or solutions will be needed to integrate higher penetrations of renewable energy resources.
Public policy and market interest is spurring the growth of long-duration energy storage startup companies and the deployment of pilot projects. These early deployments should provide insight into the companies and technologies best suited to serve the electric grid. At the same time, markets and regulators must begin to consider how to model, plan, and compensate long-duration energy storage when it provides unique value to the grid.
CONTACT OUR EXPERTS
On Energy Storage
Chris Sturgill
Partner
csturgill@scottmadden.com 919.781.4191
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