State (of Health) of the LDES Market

Key Points

• Will the current administration retain the Department of Energy (DOE)’s LDES Pilot Program, LDES Demonstrations Program and DOD/DOE LDES Joint Program in their current form?

• Can state-level LDES procurement mandates offset a potential reduction in the financial support for LDES by the federal government?

• Can favorable fiscal and regulatory factors in markets outside of the US sustain growth of the LDES market?

Developments Year to Date

The energy storage industry has not been directly impacted by the President’s executive orders on energy. However, the current administration’s technology-agnostic stance and pending restructuring of the department of energy (DOE) are indications that the federal government’s support for the energy storage industry might decrease significantly. As a subset of the energy storage industry, the low maturity of the long duration energy storage (LDES) industry puts it at a greater disadvantage compared to its peers.

I recently attended the InterSolar Energy Storage North America (IESNA) conference, one of the largest trade shows in North America for the solar and energy storage industries, which provided a great opportunity for informed discussions on the state of the market. Most of the leading LDES original equipment manufacturers (OEMs) including BASF Stationary Energy Storage (BSES)/NGK, CMBlu, Energy Vault, Eos, ESS and Invinity were in attendance.

The overarching themes were as follows:

1. Uncertainty: It remains to be seen how the higher tariffs (especially against China), pending DOE restructuring and forthcoming review of existing notices of funding opportunity (NOFO) announcements for LDES programs are going to affect the growth of the industry. In particular, the fate of the LDES Pilot Program, whose US $100 million NOFO was issued in July 2024, remains unpredictable. The funding was meant to provide up to 50% funding to 5-15 projects leveraging non-lithium LDES. The application deadline of the opportunity was March 14, 2025. Other DOE-funded LDES programs that might be affected are the LDES Demonstrations Program and DOD/DOE LDES Joint Program.

2. Repositioning: The prevailing fiscal and regulatory environments in the US might necessitate the rebranding of LDES as a reliability solution. As such, the rearrangement of the LDES value stack would position reliability and affordability above sustainability.

3. Optimism: Despite the likelihood of difficult times ahead, most OEMs have expressed optimism that alternative funding sources will arise to offset any losses in federal funding for LDES demonstration projects. This optimism is informed by significant LDES procurement mandates issued by states like California (2 GW by 2037) and New York (1.2 GW by 2030). Technological advancements and manufacturing scale-up are already increasing the competitiveness of LDES technologies. OEMs who are currently deploying commercial projects will be in a better position to weather the less favorable fiscal environment.

Opportunities Abroad

Most LDES OEMs have operations and are competitive in global markets. Such OEMs will be able to leverage positive developments overseas such as the United Kingdom (UK)’s floor-and-cap scheme aimed at increasing the deployment of commercial LDES projects. To be eligible for funding under the scheme, the energy storage technology must be capable of delivering a minimum discharge duration of 8-hours at continuous rated power. Even though all technologies including lithium-ion batteries are eligible for this scheme, derating power output to lengthen discharge duration is not allowed. The scheme has been designed by UK’s energy regulator, Office of Gas and Electricity Markets (Ofgem), to enable project developers to recover invested capital while protecting electricity consumers from high prices. Applications open in April 2025.