Energy storage deployment in the United States between 2010 and 2022 primarily consisted of four-plus-hour storage, which accounted for less than 10% of the cumulative 9 GW deployed. However, experts predict that this technology will play a more significant and versatile role on the grid in the future, according to a recent publication by NREL (National Renewable Energy Laboratory).
Previous studies conducted by NREL identified economic opportunities for hundreds of gigawatts of storage with durations ranging from six to ten hours, even in the absence of new policies aimed at reducing carbon emissions.
Paul Denholm, a senior research fellow and lead author at NREL, stated that longer-duration energy storage has the potential to enhance grid resilience. He added, "There are advantages to developing and deploying larger storage capacities, whether it's the ability to store more renewable energy or meet the demand for energy during winter."
Traditionally, four-hour storage systems have been well-suited for meeting capacity requirements during summer peaks. With the increased deployment of solar energy, their ability to serve this purpose has been further enhanced.
As a result, several wholesale market regions have implemented a fixed "four-hour capacity rule." This rule fully compensates storage systems with a minimum duration of four hours and does not provide additional capacity revenues for longer durations. Consequently, a six-hour battery would not generate more revenue compared to a four-hour battery.
NREL's publication states, "This rule, coupled with limited additional energy arbitrage value for longer durations and the cost structure of lithium-ion batteries, has created a disincentive for durations exceeding four hours. As a result, approximately 40% of the installed storage capacity in 2021 and 2022 had a duration of exactly four hours, while durations greater than four hours accounted for less than 6%."
However, factors such as the integration of solar power, extreme weather conditions, and the electrification of building heating systems are altering the landscape. Winter peak demand is becoming more significant than summer peak demand, as already observed in the Southeast and Texas.
Denholm highlighted the potential of energy storage in meeting the increasing winter demand. He stated, "Expanding storage capacity can also support transmission and enhance resilience, thereby increasing the value of developing energy storage solutions with durations exceeding four hours."
Several technologies, including thermal storage and next-generation compressed-air energy storage, have the potential to achieve cost parity with lithium-ion batteries while offering longer service lifetimes. However, these emerging technologies face the challenge of competing with established lithium-ion technology, which has enjoyed a head-start of several decades. To overcome this, large-scale deployment will be necessary.
Denholm expressed optimism about the promising technologies that, with further development, can meet winter demand peaks and compete with lithium-ion technology. He emphasized that the ultimate goal is grid reliability, and increased storage capacity can contribute significantly to achieving that objective.