World Needs ‘Collaborative Competition To Capture US$4 Trillion Long-Duration Opportunity’

Long-duration energy storage (LDES) was firmly on the agenda and one of the main talking points among attendees at last week’s Energy Storage Summit EU in London.
As the global transition to renewables-based energy systems picks up speed, so too does the need for energy storage. Balancing the grid at less than 20% penetration of variable sources like solar PV and wind is not considered challenging, but once that threshold is exceeded, it becomes more complicated.
Some grids have already passed that mark and are for the most part where the biggest markets for battery storage tend to be found. In those situations, lithium-ion battery energy storage systems (BESS) are being commonly used, with between about an hour and four hours storage duration.
However, as Julia Souder, executive director of the Long-duration Energy Storage Council (LDES Council) said in a presentation, once the share of renewables goes to about 60% or above, the need for LDES assets becomes acute.
The LDES Council was launched at COP26 in 2021. What Souder said is remarkable about it is that along with numerous LDES technology providers, there are also service providers and large energy off-takers among them – including Google and Microsoft to name just two.
Part of the council’s role is to “debunk the myth” around LDES – that the technologies involved are not commercial yet. Many of them are, and they just need to scale up, Souder tells in an interview.
Another part of its role is to show the world not only how urgent the need for long-duration is and will be, but also that long duration technology, like solar, wind and BESS before it, represents a huge business opportunity.
Power, heat, hydrogen: all long-duration options with purpose and a place
To date the LDES Council has launched four reports with McKinsey on that opportunity and need. The first, published shortly after the council came together, highlighted a US$3 trillion market opportunity just on the power and energy system addressable market for LDES.
The second report focused on the need for policy and regulatory support for LDES until the forecasted maturation of the market in 2030-2035, followed by a report on creating 24/7 renewable energy power purchase agreements (PPAs) for corporates, with LDES as a cornerstone. It was the fourth and most recent report however, highlighting the applications for LDES in net zero heating, that added another US$1 trillion to that addressable market value.
Getting across the message that there’s a diversity of LDES technologies for those different sector applications is essential, Souder says. Having worked previously in grid operation and planning, the executive director was made aware that “grid operators love pumped hydro [energy storage],” for example.
Bringing that “trust factor” to other types of long-duration storage is “part of the discussion too,” Souder says.
Technology providers and energy storage developers convened to discuss some of those points in a panel session later that day, titled ‘Technology planning for the future of energy storage’.
On that panel were representatives of flow battery provider (and energy storage subsidiary of Spain’s Gransolar) E22, ‘CO2 battery’ company Energy Dome and RheEnergise, which has developed a proprietary High-Density Pumped Hydro technology which replaces the water in a pumped hydro energy storage (PHES) plant with a more viscous fluid.
As E22 commercial director for the UK and Ireland Matt Denyer said, the vanadium redox flow battery (VRFB) tech the company provides “works very well,” but like other LDES, it’s largely a market-ready technology looking, or waiting for, market structures that reward its ability to offer 4–10-hour durations of storage at scale.
The first markets likely to support that are already emerging. Energy Dome senior VP of corporate development Ben Potter pointed to requests for proposals (RFPs) for LDES in the southwestern US, as well as growing interest from Chile and India which are both rapidly adding solar to their grids. Heavy industrial electricity consumers could also be a first-mover market segment, Potter said.
Moderator Sam Wilkinson, director of clean energy technology at research firm S&P Global Insights (formerly IHS Markit) asked the participants from three developer-investor companies what it would take for them to choose an LDES option as an alternative to lithium-ion.
Sonia Quitero, new business director at developer Conrad Energy, said that her team studies markets, liquidity and forecasts pricing before selecting technologies. Both the right technology and application need to be there to support a business model for any new option, Quitero said, hinting that Conrad Energy will be announcing a project soon – although she made it clear that it will not be in the UK.
Renewable energy innovation manager Eurico Correia of Portuguese utility Galp had reached the same conclusion as Quitero, he said. Galp is technology agnostic and would have “no specific reason to go for one tech or the other, except the value we can bring”.
On a related note, Canada-headquartered developer CarbonFree has recently submitted its bids to an RFP in Ontario with 600MW of 4-hour duration lithium-ion battery storage.
“We had to choose lithium,” CarbonFree founder and CEO David Oxby said, for reasons that included cost and energy density. It would also be a challenge to choose a new or alternative technology with which to bid into that RFP and get approval to use it on the grid at scale within the required timeline.
However, Oxby said the lithium-ion battery supply chain, characterised for most people by its huge relevance to electric vehicles (EVs), is itself constrained and challenging to negotiate and get those projects online in time by 2025.
“We’d love to find something else we can use [besides lithium],” Oxby said, although he added that it would be preferable to find a technology proven in the field in other territories already than for CarbonFree to become a first-mover in that regard.
Scale of challenge equals scale of opportunity
According to the LDES Council, about 8TW of long-duration storage is need by 2040 to keep the world on-track for limiting the impacts of climate change and transitioning to renewables. Around the world, there are 10 countries that now have energy storage targets, which is a great start, Julia Souder says in her presentation, “but nowhere near enough”.
Somewhere in the order of 131GW to 531GW of annual growth would be needed to hit various climate targets, and while LDES Council sees a big pipeline of announced long-duration projects around the world, it is still too small, albeit rapid growth if not doubling of that pipeline could be expected within the next 12 months.
The good news is that there are a lot of options available in the policy and regulatory “toolbox” that can offer long-duration tech providers and customers long-term market signals, revenue mechanisms and direct support for technologies.
What may be needed above all, however, is “a policy landscape of collaborative competition”; a recognition that no country, state or region can achieve this transformation alone. And the same goes for clean energy technologies, Julia Souder says.
At last year’s COP27, LDES Council partnered with global industry organisations representing wind, solar, hydroelectric power and green hydrogen to form the Global Renewables Alliance. There was a ‘eureka’ moment when the groups all sat down together to discuss their strategies for the next two to five years and came to the conclusion that these clean energy technologies are not competitors to one another, but instead can be “really powerful” by working together.
“We signed a memorandum of understanding (MOU) so that we can work globally to show: ‘look, all these countries have net zero goals. You will need us to succeed’.”
“How do we make your lives easier by coordinating planning efforts so that we can actually all work together to speed up the scale of renewable energy development and storage?”