Evaluating Long-Duration Energy Storage: Costs, Benefits, and Regulatory Pathways

Summary

The webinar examined how long-duration energy storage (LDES) can support grid reliability, renewable integration, and rising electricity demand—and what utilities and regulators can do to make projects financeable and deployable.

LDES was generally defined as storage lasting 8 hours or more, with some systems able to operate for days, weeks, or seasons. Technologies include chemical, thermal, mechanical, and electrochemical approaches. Speakers stressed that no single technology fits every use case: procurement and planning should be based on system needs rather than assumptions that favor a particular technology.

The core business challenge is bridging the gap between promising pilots and commercial-scale projects. Utilities need stronger evidence of reliability and delivery capability; developers need clearer revenue signals, procurement opportunities, and ways to demonstrate performance. Better planning models, technology-neutral procurement, risk-sharing, and information exchange can help close that gap.

Frameworks, Processes, and Playbooks

Utility Technology-Commercialization Funnel: Xcel Energy

• Monitor and evaluate: Assess technology viability, performance, and small-scale deployment opportunities, including pilots below 1 MW.
• Select and demonstrate: Test more mature technologies in larger projects. Xcel cited projects of around 10 MW with Form Energy.
• Implement and commercialize: Move from one-off demonstrations toward repeatable procurement, formal regulatory approval, and integration into utility plans.

The shift is from grant-driven, bespoke projects toward commercial readiness—including supply chains, infrastructure, workforce, and the likelihood that an asset remains reliable over its life.

Improved Capacity-Expansion Modeling

• Xcel added an 8,760-hour simulation—hourly analysis across a full year—to its planning process.
• More granular analysis helps identify renewable “droughts,” when wind and solar output is low for a day or longer, and better assess storage value than a plan based mainly on peak and off-peak periods.
• Xcel now applies the approach across its operating companies and is including a 100-hour LDES resource in its plans.
• Modeling remains difficult: the utility would like to evaluate 10-, 24-, and 100-hour options, but adding multiple durations can increase runtime and model complexity.

Technology-Neutral Procurement

• Avoid RFPs written around a specific technology and duration—such as “four-hour lithium-ion”—when the objective is to meet a system need.
• Evaluate proposals against the services required and the project’s contribution to the overall portfolio, rather than relying solely on a standalone cost comparison.
• Consider project delivery, developer experience, EPC capability, and the ability to meet schedule and performance commitments alongside price.

Risk-Sharing and Bankability

• Use tools such as performance guarantees and milestone-based payments to align developer incentives with delivery and reliability.
• Share operating and pilot-project information—potentially under confidentiality agreements—to reduce repeated “first-of-its-kind” assessments and speed learning.
• Provide long-term contracts, procurement visibility, and clear regulatory treatment to improve revenue certainty for developers and financiers.

System Planning and Market Reform

• Model storage needs across hours, days, and seasons, rather than only hourly capacity requirements.
• Improve capacity-accreditation methods to recognize reliability, resilience, and grid-stability contributions.
• Work with ISOs and RTOs to represent new technologies in planning and cluster studies.

Key Metrics, Targets, and Timelines

• LDES duration: The Long Duration Energy Storage Council described LDES as 8+ hours. Anna Siefken noted that the U.S. Department of Energy uses 10+ hours as a separate category; the discussion also covered systems lasting multiple days.
• New York storage target: The state’s goal increased from 3 GW by 2030 under its 2018 roadmap to 6 GW by 2030 under the roadmap adopted in 2024. The 6 GW target was described as roughly 20% of state peak load.
• New York’s 6 GW allocation:
  • 1,300 MW already operating and credited toward the target.
  • 3,000 MW for large-scale, front-of-meter storage above 5 MW.
  • 1,500 MW for retail storage below 5 MW.
  • 200 MW for residential storage.
• New York LDES procurement: LDES is defined as 8+ hours for the large-scale procurement program. A 20% LDES target, or 600 MW of the 3,000 MW large-scale target, was set.
• New York awards: The first competitive awards selected eight projects. One was a 140 MW, 8-hour lithium-ion project in western New York, described as the state’s first major project counted as LDES.
• New York innovation investment: More than $35 million had been invested in LDES projects, primarily in non-lithium-ion technologies. Additional selections were expected.
• Colorado funding: The Colorado Public Utilities Commission approved a $100 million rate-based fund for early-stage, carbon-free technologies with long development timelines or high upfront costs.
• Xcel pilot scale: Xcel cited roughly 10 MW projects with Form Energy and pilots below 1 MW in its earlier evaluation stages.
• Timing: The Council identified modeling as a focus for 2027. Anna Siefken also warned that stakeholders were in a “critical two-year period” to establish the right market and procurement conditions.

Concrete Examples and Actionable Recommendations

• New York’s staged market-building approach: The state combined a 2030 capacity goal with segment-specific targets, program plans, market and tariff reforms, incentives, competitive procurement, and innovation funding. NYSERDA administers programs with the state commission.
• Colorado’s Section 123 approach: New carbon-free technologies can be assessed differently from conventional resources in RFPs. Rather than judging only the project’s standalone cost, evaluators can consider its effect on total portfolio value and whether the developer can deliver it.
• Minnesota operating company approach: A renewable-energy-standard surcharge allowed recovery of costs for storage pilot projects, subject to regulatory approval. Xcel also described a planned emerging-technology RFP running alongside procurement for dispatchable capacity.
• LDES value streams: Potential uses include shifting energy across hours or days, absorbing excess renewable generation, backup supply, peak reduction, frequency response, load regulation, inertia, black start, and outage prevention.

Recommendations for Regulators and Utilities

• Set explicit duration-specific targets or procurement quotas where system needs justify them.
• Write technology-neutral solicitations and create a clear route from pilot to commercial deployment.
• Recognize resilience and reliability benefits in capacity accreditation and compensation.
• Give developers and investors predictable procurement schedules and contract terms.
• Require evidence of technical performance and delivery capability, while using guarantees and milestones to manage uncertainty.
• Support project development, supply chains, workforce readiness, and grid interconnection—not just technology demonstrations.
• Share results from pilots so new projects do not repeatedly face the same “first-of-its-kind” barriers.

Main Barriers Discussed

• Revenue and policy uncertainty: Developers and financiers lack clear visibility into long-term revenues and how different grid services will be compensated.
• Modeling limitations: Standard planning methods can favor short-duration resources; multi-duration modeling can be computationally demanding and may not capture all market effects.
• Cost and affordability: Emerging technologies often appear more expensive than established storage options and may be screened out before their full system value is reflected.
• Technology and delivery risk: Utilities need stronger evidence of reliability, manufacturing capacity, project execution, and long-term performance.
• Market and interconnection hurdles: Outdated market structures, unclear duration requirements, and complex interconnection queues can slow deployment.
• Domestic supply chain constraints: Speakers noted that U.S. manufacturing capacity is not yet sufficient for all components and that procurement rules requiring domestic content can be difficult to meet.

Presenters and Sources

• Jessica Diaz and Marjorie Schneier, NARUC Center for Partnership and Innovation — webinar hosts.
• Commissioner Denise Sheehan, New York State Public Service Commission — moderator and overview of New York’s storage programs.
• Anna Siefken, Long Duration Energy Storage Council — industry, policy, procurement, and bankability perspectives.
• Lucy Metzroth, Xcel Energy — utility technology evaluation, modeling, procurement, and commercialization experience.