SUSI Partners’ latest report, which was co-authored by energy storage consultancy Clean Horizon, assesses the investment potential of deploying nascent long-duration energy storage (“LDES”) solutions to decarbonise electricity grids. The report introduces the emerging LDES sector and zeroes in on technology costs and revenue streams to shed light on key requirements for LDES solutions to achieve a sustainable commercial liftoff.
As the swich from dispatchable, fossil fuel-based power generation to intermittent renewable energy sources progresses, grid operators have so far mostly relied on lithium-ion batteries to manage short-term imbalances between supply and demand. However, further increases in renewable energy penetration rates are expected to bring to the fore scalable and relatively quick-to-deploy LDES solutions that can more economically cover prolonged and high-volume imbalances.
For investors, an emerging LDES market could offer significant potential, with a well-timed market entry ahead of increased capital inflows into the sector being a crucial factor in maximising returns. The report therefore provides an understanding of the relevant revenue streams and the required developments that can make LDES a viable investment opportunity in the coming years.
The report identifies regularly occurring electricity price volatility as a key requirement for LDES viability and tracks already emerging signs of increased volatility as well as access to additional revenue streams such as capacity payments in selected markets. Furthermore, as the proprietary analysis of the levelized cost of storage (“LCOS”) for selected LDES technologies shows, further technology cost decreases will be necessary to make LDES solutions commercially viable.
Ultimately, LDES technologies can be expected to follow a trajectory similar to now well-established clean energy technologies such as solar PV and lithium-ion batteries. Initially, support mechanisms will play an important role in advancing technology readiness and preparing markets for LDES integration. Once market signals start pointing towards a sustained demand for long-duration energy storage, economies of scale can be expected to materialise and make LDES solutions an established part of decarbonised energy systems.
Professional investors can request a copy of the report here:
