Long-duration energy storage projects attract more than US $58 billion investment over last three years
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Long-duration storage energy (LDES) projects around the world have attracted more than US $58 billion in commitments made by governments and companies since 2019. If all these projects went forward, it would lead to the installation of 57 gigawatts (GW) of LDES – the equivalent of three times the global energy-storage capacity deployed in 2022, according to analysis from Wood Mackenzie.
Wood Mackenzie’s latest ‘Long-duration energy storage report 2022’, which provides a comprehensive analysis of the global LDES industry, including Asia Pacific, Europe, and North America, has found that projects representing US $30 billion are now either under construction or in operation. However, most long-duration energy storage technologies are still nascent, and technology developers will struggle to scale cost-effectively before 2030.
Kevin Shang, Senior Research Analyst at Wood Mackenzie, and lead author of the report said: “To accelerate the energy transition, more renewable energy sources will be used for generating power, but this in turn presents challenges for the reliability and stability of the power system. Some technology solutions exist today, but they are far from meeting society’s power needs.”
“Long-duration energy storage technology, with longer durations of 8 to approx. 100 hours, holds great promise as a low-cost solution to enable a grid with more renewable sources. This is why companies and governments have significantly increased their commitment to the LDES market.”
Despite this rapid progress, emerging LDES technologies still face an ever-growing list of technical, financial, and business barriers to enable them to gain broader deployment, reduce costs and prove economic value against Combined Cycle Gas Turbines paired with Carbon Capture and Storage, modular nuclear reactors, or green hydrogen fueled power plants. Currently, pumped hydro storage is the only LDES technology deployed on a large-scale and will continue to dominate the market until 2030.
Wood Mackenzie’s analysis shows clear geographical disparities in the development of the LDES market. For the Asia Pacific region, the deployment of vanadium redox flow batteries and compressed air energy storage has accelerated rapidly in China, which has been largely driven by strong policy support.
“This year, we’ve seen the world’s largest redox flow battery energy storage system, 100 megawatts (MW)/400 megawatt hours (MWh), connected to the grid in Dalian, China. The city of Zhangjiakou also saw the world’s largest compressed air energy storage project, 100MW/400MWh, start its operations. Since these industry milestones, all vanadium redox flow batteries in China have entered the GWh era.”
Shang continued: “In the western hemisphere, the US continues to invest in and build its LDES industry, with companies actively pushing for innovation, and promoting pilot and demonstration projects. In contrast, most European countries have been less enthusiastic. The UK Government has been an exemption, as it explores the role LDES technologies have to offer, while actively seeking to support industry players.”
In addition to scaling up LDES technologies, Wood Mackenzie says companies also need to create new business models, which will enable them to attract private investors and explore the possibility of making a profit without subsidy support in the long run.
Government support is also required to help lower upfront capital costs, provide revenue certainty, and generate market signals for investment mobilisation and broader deployment of LDES projects.
“Overcoming financial, legislation, and policy barriers will be fundamental in accelerating deployment and unlocking the potential of LDES” Shang concluded.
About the report
Wood Mackenzie’s ‘Long-duration energy storage report 2022’ report highlights key trends for recent developments in major technology groups that may provide long-duration electricity storage applications, including electrochemical energy storage, thermal energy storage and mechanical energy storage. The report analyses the current innovation status, investment landscape, and economics of selected energy storage technologies. The report also reviews the market opportunities and challenges that arise while these technologies seek a broader deployment, taking into account government energy policy, legislation, and decarbonisation strategy. This report is published annually.
Definition of long duration energy storage (LTES): The term “long duration energy storage” is used to refer to a wide technology group with sufficient duration to provide reliable capacity and support grid resource adequacy Wood Mackenzie defines long duration as 8 hours of discharge duration at a rated power and excludes lithium ion battery technology.