The United States is adding renewables to the grid faster than ever, and that’s fantastic news for decarbonization, but there’s a big catch. Solar and wind aren’t always producing exactly when we need electricity, which means storage is essential to keep the lights on around the clock while lowering emissions. Grid-scale storage is exploding, but nearly all of today’s growth is short-duration, usually lithium-ion batteries lasting four hours or less. But what happens when you need energy stored overnight, through a calm, windless week, or in winter lulls where renewable output is depressed? That’s when long-duration energy storage (LDES), systems capable of storing energy for eight or more hours, can play a vital role. Without storage solutions that can smooth renewable variability across days or even weeks, we’ll have to keep relying on other solutions with significant emissions profiles, like natural gas. LDES can step into that role, enabling higher penetration of renewables and significantly cutting emissions intensity.
Credit: EIA
While these use cases make theoretical sense, on the ground, actual LDES deployments remain limited. The problem is, despite how useful they could be, current market setups don’t make it easy for LDES to compete. So if we want this sector to succeed, here’s what needs to change.
Roadblocks Holding LDES Back
Right now, long-duration storage is facing an uphill battle:
- Market Blind Spots: Most energy markets are built to compensate for peak load capacity, ignoring the value LDES brings during longer periods of low renewable output or their advantages in extreme weather. Grid operators need to take a wider view of what it will take to have a healthy, clean, and resilient grid in the future.
- Endless Waiting Lines: Getting connected to the grid these days is a painfully slow process. Interconnection delays are a well documented issue, but this is an even larger hurdle for developing technologies, who need experience deploying to bend down cost curves.
- Li-ion is Tough Competition: Li-ion batteries are cheap, familiar, and reliable, which is why they’re the go-to storage technology for utilities and developers. Any alternative that hopes to compete in intra-day storage (<12 hour duration) is going to have a high bar to clear in building trust and competing on cost to potential buyers.
- Limited Compensation Structures: Relying on revenue exclusively from load shifting energy from cheap times to expensive times isn’t enough. These technologies need creative funding mechanisms to help them get off the ground and to appropriately compensate for the wide range of benefits they can provide.
Credit: NREL: Moving Beyond 4-Hour Li-Ion Batteries: Challenges and Opportunities for Long(er)-Duration Energy Storage
Policy Tweaks that could Move the Needle
Fortunately, there are plenty of policies being experimented with that can change this dynamic:
- Reward Longer Durations: ISOs like PJM, ISO-NE, and MISO are starting to test duration-based accreditation. These policies recognize and reward storage systems for the full duration they can provide power, rather than just focusing on who can meet peak grid conditions.
- Think Seasonally: Instead of treating every month the same, regulators in places like NYISO, MISO, and CPUC are exploring seasonal resource planning, recognizing that the energy needs in winter versus summer can differ dramatically. With increasing electrification of heating, winter peaks are growing while also becoming longer and flatter, requiring distinct solutions from what works during sharp, intense peaks in the summer.
Credit: NREL: Moving Beyond 4-Hour Li-Ion Batteries: Challenges and Opportunities for Long(er)-Duration Energy Storage
- Let Storage Multitask: Markets could let storage providers stack revenue by offering multiple services at once which would dramatically improve their economics.
- Value Resilience: Building extreme weather and multi-day outage scenarios into capacity assessments would mean LDES gets credit for its ability to keep grids running smoothly when things get rough. Increasing frequency of extreme weather events means that assets that can provide resilience will only become more necessary.
- Ease Up on Charge Requirements: Current rules in many markets around battery states of charge (how full the battery needs to be to bid into a market) are rigid and tailored to short-duration storage. Flexing these rules a bit would let LDES assets perform at their best and compete in markets on a fair footing.
Financial Incentives Never Hurt
However, to truly scale up, LDES will need healthy financial incentives:
- Stable, Predictable Revenue: We’re excited about schemes like the recently passed cap and floor policy in the UK which create stability by guaranteeing minimum revenue but preventing excessive profits, similar to subsidies Illinois passed to support existing nuclear facilities.
- LDES Carve-outs: Several state programs expanding storage capacity with specific carve-outs for LDES capacity are already in place. California, New York, and Massachusetts have programs in place, with several others actively exploring similar policies.
- Voluntary Premiums: Programs where large electricity consumers voluntarily pay higher rates to support emerging storage technologies could kick-start deployment without hitting everyone’s wallet. Fervo Energy’s partnership with Google under Nevada’s Clean Transition Tariff could be a model for future LDES deployment, particularly for energy-hungry data centers.
The Bottom Line
LDES might not be flashy, but it’s indispensable for a renewable-powered future. With a few smart policy shifts, regulators, policymakers, and grid operators could create a self-sustaining market for a technology that can vastly improve grid stability while lowering emissions.
Research and writing by Josh Phan-Gruber, Evergreen Climate Innovations Research Fellow ’25.
Josh recently graduated with a dual MBA + MS in Sustainable Systems at the University of Michigan, where he focused on climate tech, early-stage operations, and venture investing.
