Investors are whipping up an irrational frenzy in the long-duration energy storage sector

According to conventional wisdom, long-duration energy storage is the missing puzzle piece that would immediately solve all of the problems caused by the intermittency of renewables. But the reality on the ground is nowhere near that simple.

For one thing, commercial LDES technology exists almost exclusively in the minds of entrepreneurs, investors and analysts (with the exception of pumped hydro). Unlike short-term energy storage, which has become a booming market with real commercial products that are increasingly being integrated with grids, LDES remains mired largely in the realm of the theoretical.

Despite the lack of an actual market, the LDES investment scene has teetered toward the downright irrational since we cataloged the players in the already-frothy market that existed back in April.

The latest sign that we’ve hit peak LDES is the special-purpose acquisition company formed by gravity-based energy-storage tower maker Energy Vault and Novus Capital Corp. Energy Vault, a revenue-free startup founded by Bill Gross at Idealab Studio, has transitioned overnight to a revenue-free public company valued at more than $1 billion.

Energy Vault’s proposed system consists of a multi-armed crane tower that raises and stacks composite blocks using a motor powered by renewable energy. Using this approach, the system can store and release potential energy with what the company claims is 80 to 85 percent round-trip efficiency. 

So far, Energy Vault has announced one block-stacking tower that has been connected to a power grid — a 5‑megawatt/35-megawatt-hour system that went online in Switzerland in July 2020.

The renewable energy experts at SoftBank, Saudi Aramco and Palantir Technologies have invested in Energy Vault. Investor Craig Lawrence at Energy Transition Ventures has a less sanguine take.

LDES demand and economics

The U.S. Department of Energy defines LDES as systems that can store energy for more than 10 hours. LDES could accelerate the retirement of peaker plants, defer upgrades of transmission and distribution infrastructure, and improve the dispatchability of renewables such as solar and wind — at least in theory.

But economically viable long-duration energy storage just doesn’t exist yet, nor does a clear regulatory path or any tangible level of market demand.

Most of the science behind LDES products won’t be ready for pilot-testing for years to come, with commercial production years beyond that — and that’s if everything goes right with the technology, costs and markets. 

Another LDES roadblock is the uncertain regulatory environment. LDES could be added to a grid, but currently it would have to bid into existing markets accustomed to 4-hour batteries. Because the first hour of storage is more valuable than the nth hour in an arbitrage scheme, LDES is going to have to be an order of magnitude cheaper than lithium-ion battery storage. Today’s high-growth, gigawatt-scale energy storage market is absolutely dominated by lithium-ion batteries with short durations ranging from minutes to a few hours. 

To make sense, LDES project economics might have to be pegged to different value streams focused on resiliency or capacity, if those were to exist.

A survey of LDES companies and technologies

Here are more than two dozen companies with LDES aspirations across electrochemical, thermal, mechanical and geomechanical technologies. (The pumped-hydro storage sector has not changed much since we reported on it in April. Perhaps we’ll cover hydrogen storage in an upcoming greenwashing issue.)

Electrochemical LDES companies

Electrochemical LDES innovators are trying to develop cheap, manufacturable ​“battery-like” structures, hoping they’ll become the lithium-ion battery of the long-duration storage space. Vendors are searching for earth-abundant materials that can be deployed at massive scale, as well as the processes to put them to work. 

Go with the flow

Flow batteries are another electrochemical technology that some companies aspire to use in LDES applications. 

Flow batteries circulate a liquid electrolyte through stacks of electrochemical cells and have long held the promise of 10-hour durations, tens of thousands of cycles, minimal degradation and no limitations on depth of discharge. This performance promise has lured venture capital investment and research and development for 20 years — but so far, the investments have yielded few commercial, competitive flow battery products. Flow battery firms such as ESS, Invinity, Primus Power, Raytheon, Sumitomo, UET and ViZn use materials ranging from vanadium to zinc to iron to sulfur and manganese.

ESS makes what it terms a ​“flow battery” that moves electrons using a liquid mixture of iron and salt. The company announced in May that it would go public by merging with a special-purpose acquisition company.

Mechanical and geomechanical LDES companies

Geomechanical solutions to LDES include compressing air, gas or water in natural caverns or containers as well as gravitational systems that raise a rail car or a huge weight with low-cost or curtailed energy and then generate power when the mass is lowered.

Thermal storage LDES companies

Thermal storage can use excess or curtailed power to charge a thermal ​“battery” made of materials such as molten salt or cryogenic liquids. 

Meet the Dunkelflautes

A paper published in Nature Energy in March offered up a few compelling findings on long-duration storage. The research indicates that systems with more than 100 hours of energy storage capacity provide the most benefit to the grid.

But there are only about five or six 100-hour droughts per year on an energy grid with an ultra-high penetration of renewables, according to Lee Kasten, a power system operator in the Western Electricity Coordinating Council. ​“That’s not a lot of opportunity for arbitrage,” he notes.

Kasten adds that 125-hour or 150-hour droughts do come around every five years or so. ​“We’ve got a ton of historical data showing long stretches where wind generation dips across the entire continent,” he says. These are known as Dunkelflaute events, a German word meaning ​“dark doldrums” that refers to periods when little wind or solar energy is generated.

According to Kasten, ​“We’re going to need to keep around a considerable amount of fuel to handle this problem. It’s quite possible we’ll use batteries in conjunction with fuel to help us get through the Dunkelflautes, but you don’t need to use a long-term battery — the diurnal batteries would suffice.”

Billions of investment dollars beg to differ. Revered investors are betting that LDES is mandatory for a modern renewables-heavy grid.