Pathways to Commercial Liftoff

The pathway to:
Long Duration Energy Storage
Commercial LiftOff

The power sector will need to rapidly scale and transition to answer emerging environmental and social challenges and meet the Biden administration’s targets for:

Net Zero emissions
carbon-pollution free electricity by 2035
100 %

Today, the power sector is responsible for one third of domestic emissions. Successfully decarbonizing requires a transition from fossil-fuels-based generation assets to carbon-free power sources such as renewables (e.g., wind, solar) and nuclear. Since variable renewables cannot be turned on and off to meet peak demand in the same manner as fossil-fuels-based generation assets, the grid will need a new way of providing flexibility and reliability.

Long Duration Energy Storage (LDES) is a key option to provide flexibility and reliability in a future decarbonized power system. LDES includes several technologies that store energy over long periods for future dispatch. The Pathways report organizes LDES market by duration of dispatch into four segments: short duration, inter-day LDES, multi-day / week LDES, and seasonal shifting. This report focuses on those two intermediate duration market segments—inter-day and multi-day / week LDES. 

NOTE: Two other market segments (short duration and seasonal shifting) are not directly covered in this report.

Short duration Inter-day LDES Multi-day / week LDES Seasonal Shifting
Duration of dispatch 0-4 hours 10–36 hours 36–160 hours 160+ hours
Storage technologies • Batteries
• Flywheels
• Some mechanical technologies
• Most mechanical technologies
• Some electrochemical technologies
• Many thermal technologies
• Many electrochemical technologies
• Chemical storage (e.g., hydrogen)
Primary end-use • Intra-day energy shifting (e.g., day to night)
• Frequency regulation
• Inter-day energy shifting (e.g., one point in a day to another point the next day) • Resilience for extended shortfall of power • Shifting energy over months (e.g., summer to winter)

The U.S. grid may need 225-460 GW of LDES capacity for a net-zero economy by 2050, representing $330B in cumulative capital requirements.

While meeting this requirement requires significant levels of investment, analysis shows that, by 2050, net-zero pathways that deploy LDES result in $10-20B in annualized savings in operating costs and avoided capital expenditures compared to pathways that do not.

$10-20 billion in savings

By following the path outlined in this report, LDES technologies could be the least-cost option for providing three primary market-related benefits:

Support and complement the expansion of variable renewables

  • LDES can provide stability and flexibility to the grid as variable renewables expand
  • LDES can reduce the cost of grid expansions by providing optionality and planning flexibility
  • Enhance grid resilience and reduce the need for new natural gas capacity

  • LDES can improve local and regional resiliency with increasing frequency of extreme weather events
  • Available and cost-effective LDES reduces the need for more than 200GW of new natural gas capacity in a net-zero world
  • Diversify domestic energy storage supply chain

  • A diversified set of storage technologies reduces the risk of net-zero goals being contingent upon lithium-ion manufacturing buildout, in addition to increasing the potential availability of lithium-ion for EVs
  • The focus of this commercialization effort is to understand the challenges, solutions, and potential long-run benefits of LDES achieving technology “liftoff” by 2030. “Liftoff” is defined as the point where the LDES industry becomes a largely self-sustaining market that does not depend on significant levels of public capital and instead attracts private capital with a wide range of risk.

    Improvements in technology performance and cost curves, market and regulatory mechanisms, and supply chain development and planning are needed in the immediate and near term to achieve commercial liftoff.

    Improvements Needed

    LDES technology cost reduction of 45-55% and Round Trip Efficiency (RTE) improvement of 7-15% by 2030 to attract sustained investment.

    To be competitive with alternative options, LDES technology costs should come down by 45–55% by 2028-2030 relative to costs reported by leading technologies today, and both the performance (measured by roundtrip efficiency – RTE) and the working lifetime of LDES technologies would also improve.

     Today (for best-in-class technology)2030 Target*
    Intra-day LDES$1,100–1,400 per kW 69% RTE$650 per kW 75% RTE
    Multi-day LDES$1,900–2,500 per kW 45% RTE$1,100 per kW 55–60% RTE

    * Technology improvement and compensation goals outlined in this report are in-line with existing DOE Energy Storage Grand Challenge (ESGC) goals of $0.05/kWh for long-duration stationary applications.

    Demonstration and deployment projects – primarily deployed by utilities, developers, and Independent Power Producers with the support of outside funding— are essential for achieving these technology cost-curve and performance improvements. To reach liftoff, LDES technologies could go through three phases of commercialization with in-field projects:

    Demonstrations phase

    Deploy many small demonstrations to create a visible set of commercial-scale case studies across the market landscape.

    Scaling & selection phase

    Prove which technologies benefit the most from scaling and create visibility for technology players standing up supply chains for utility-scale deployment.

    Deployment phase

    Deploy large projects to affirm LDES technology viability and show the limited need for outside support (i.e., standalone, bankable use cases).

    Market compensation of $50-75 per kilowatt-year via resource adequacy compensation or equivalent by 2030 to support a business case for investment.

    Predictable compensation for LDES resource adequacy benefits—(roughly equivalent to an additional ~$50–75 per kW per year by 2030)—would directly support a business case for investment.1 State, regional, and national interventions could ensure that LDES is valued for the benefits it provides to energy markets and infrastructure utilization (e.g., dynamic capacity markets, differentiated capacity products, and a recognition of storage for its dual role in generation and transmission systems). The LDES Pathways report includes both an evaluation LDES market readiness based on grid conditions and policy / market constructs and set of interventions in five categories that could improve LDES deployment:

    Long-term market signalsAddress stakeholder uncertainty and are particularly valuable for investors
    • Carbon pricing
    • GHG reduction targets
    • Transmission expansion
    Revenue mechanismsImprove investors’ risk-adjusted return on LDES
    • Capacity markets
    • Other market products for longer duration firm dispatchable power
    • Long-term bilateral contracts
    • 24/7 virtual PPAs
    AnalyticsHelp to increase transparency and reduce uncertainty among stakeholders to enable long-term planning
    • Decarbonization modeling tools
    • 20-30 year integrated resource planning models
    • Standardized model inputs
    Direct technology support and enabling measuresBoost the market for LDES
    • Direct grants and incentives
    • PTCs
    • Storage ITCs
    • Loan guarantees
    Stakeholder supportEnsure long-term viability of LDES
    • Increased number of people employed by LDES
    • Additional capital devoted to variable renewables or storage

    10-15 gigawatts of annual manufacturing deployment capacity by 2035 to handle the anticipated growth of LDES in the 2030s.

    The timing of LDES manufacturing and deployment capacity expansion is linked to renewables penetration. As renewables adoption grows in select markets, the need for grid integration and flexibility services follows. Bringing down supply-chain-formation-related costs requires repeat deployments of the same technologies suggesting the potential need to identify leading technologies early to enable scaled manufacturing. At least 3 GW of annual LDES manufacturing and deployment capacity will be required per year by 2030 (compared to <1 GW in 2022), and up to 10–15 GW by 2035.

    Workforce will be the most significant risk to deployment, as most forms of LDES are highly engineering and construction intensive. Active planning such as expansion of on-the-job training and registered apprenticeship programs, project hybridization and modular project deployment can preclude gaps.

    1.5 – 2.1M

    Estimated “direct” job-years required for scale-up over the 30-year development cycle.

    This report identifies a relatively small set of possible, priority actions for public and private stakeholders to consider in support LDES’s pathway to commercial liftoff

    • Financial support, including grants and loans, for lab-based research to demonstration projects. This has already begun, with DOE’s Energy Storage Grand Challenge, Long Duration Storage Shot, and demonstration projects from the Office of Clean Energy Demonstrations.
    • Modeling tools and valuation frameworks for regulators, ISOs, and commercial customers to evaluate their LDES needs. The National Laboratories could create publicly available tools and market compensation standards.
    • Transparency on technology cost and performance to help investors, regulators and policymakers quickly adapt their portfolios. The National Laboratories can support research on technology vetting and certification for deployment readiness.
    • Evaluation of grid needs to maintain flexibility and reliability with higher amounts of variable renewables.
    • Consideration of new mechanisms (e.g., new capacity market design—potentially duration dependent, longer time horizon resource adequacy studies, interconnection queue reform, and classification of storage assets both as generation and load in transmission planning).
    • State Renewable Portfolio Standards (RPS) could drive additional LDES deployment.
    • Tax breaks or other incentives to attract early deployments or manufacturing hubs.
    • Updated integrated resource planning and resource adequacy methodologies (e.g., lengthen duration of IRP assessments).
    • Updated rate base guidance or mandates on LDES investments.
    • Approval of early investments within rate-base (e.g., grid-scale pilots) to accelerate market transformation and reduce longer-term customer costs.
    • Publicity of successful LDES projects including use of LDES revenue mechanisms (e.g., capacity payments), new business models and financial products.
    • Data transparency around specific projects (e.g., uptime rate, cashflows) to allow capital providers with differing risk profiles to assess technical, project, and market risks.
    • Pilots of LDES add-ons at larger sites to help developers better understand LDES’s system integration and operations implications.
    • Demand for higher-percentage load-following power purchase agreements (PPAs) (e.g., 24-7 time matching), especially for customers with ambitious ESG targets and relatively low electricity spend as a percentage of their operating costs.
    • Consideration of LDES deployments on their own in applicable on-site, behind-the-meter use cases.

    Watch the LDES Webinar

    The U.S. Department of Energy, in partnership with other federal, state, and local agencies, has tools to address challenges to commercial liftoff and is committed to working with communities and the private sector to build the nation’s clean energy infrastructure in a way that meets the country’s climate, economic, and environmental justice imperatives.

    Want to learn more?