Racing to the Future: Why LDES Must Scale Fast for Global Energy Stability
Seizing the momentum around LDES
Long duration energy storage (LDES) is in the air. Whether it’s the new Energy Storage and Grids Pledge formally supported by the COP29 presidency or the LDES Council’s inaugural annual report, LDES is increasingly—and rightly—central to the global dialogue around our inextricably linked goals: grid stability, resilience, and cost efficiency. While the Pledge’s sixfold growth objective of 1.5 terawatts (TW) of energy storage by 2030 is good news, it’s not nearly enough capacity to support, and stabilize global energy systems as demand grows, and as they shift toward increasingly variable energy generation resources.
“Long duration energy storage is a game changer for renewable energy, enabling countries to achieve their climate goals by balancing supply and demand.” – Francesco La Camera, Director-General, International Renewable Energy Agency
LDES needs to scale up to 50 times faster
The LDES Council’s first annual report clearly lays out the urgency around scaling LDES globally. The Council’s project database currently forecasts only 0.22 TW of LDES deployment. This projected new capacity is significantly below the 1.5 TW by 2030 called for by the Pledge—and alarmingly below the Council’s benchmark of 8 TW of new LDES capacity by 2040 as the world’s energy systems generation reach their variable energy generation tipping points. To ensure a stable energy future, LDES projects will need to scale up to fifty times faster globally than current projections. While this shortfall might seem daunting, the LDES Council’s inaugural report lays out a global road map with tested strategies and levers to accelerate LDES deployment around the world.
Proven strategies to accelerate LDES deployment
The report outlines seven critical enabling strategies and actions, grouped by theme, by which policymakers, regulators, technology providers, and end users can create a supportive LDES environment and accelerate global LDES deployment today. While many countries are already employing some of these enablers, there is no country in the world today implementing all seven.
Key enablers to spur need for LDES:
1. Raise awareness of LDES technologies
2. Conduct assessment of need
3. Set LDES targets
Key enablers to improve financing for LDES:
4. Allocate pre-commercial funding
5. Provide market access and long-term revenue visibility
6. Implement efficient grid pricing
Key enables to improve deployment of LDES:
7. Enable ease of connection
Learning from LDES in Australia
While every country and energy system is unique, exciting LDES developments in Australia demonstrate the adaptability and variety of these seven strategies to accelerate LDES deployment. For example, the New South Wales (NSW) government is currently targeting 2 GW of LDES by 2030 to help achieve both decarbonization and grid reliability as the state decommissions its coal power plants. In one particularly exciting development, Hydrostor recently joined the NSW Government in the town of Broken Hill on the future site of the Silver City Energy Storage Centre, to announce the signing of a land agreement which will support the project’s construction.
LDES projects in NSW can bid through competitive tenders for long-term energy service agreements, which incentivize investment through competitive minimum prices and long-term certainty. Eligible projects must have a duration of at least 8 hours to better support the NSW grid’s transition away from coal. The Australian government has a similar national program called the Capacity Investment Scheme, though it has a lower minimum duration. The NSW and Australian governments are both fostering LDES development by conducting assessment of need and setting targets; improving financing for LDES by providing market access and long-term revenue visibility; and arguably implementing efficient grid pricing.
A different LDES approach in the UK
The UK government is currently harnessing a market mechanism called “Cap and Floor” to improve financing for LDES. Like many other ambitious clean energy technologies and big infrastructure investments, LDES requires a lot of capital on the front end while reducing costs among other ROI metrics long-term. The “Cap and Floor” strategy provides investors with long-term revenue visibility before they commit significant capital to LDES investment. Cap and Floor provides a multi-year contract with both a minimum (“floor”) and maximum (“cap”) on project revenues. Investors are guaranteed a return on their investment while consumers and society at large remain protected. The UK Department of Energy Security and Net Zero and OFGEM will open the first allocation window in Q2 2025.
Choose your own LDES adventure
While the need remains as urgent as ever, the UK and Australia show two different ways to enable the LDES growth the world needs to maintain reliability and efficiency in its electric grids. While a fifty-fold increase in the rate of global LDES deployment demands astronomical growth, the Council’s seven strategies are clear, proven and actionable strategies that can be deployed around the world today to help scale stable, reliable, and secure energy systems.
Hydrostor Inc.