Lenders’ Faith in Lithium-Ion May Be Slowing Long-Duration Storage, Experts Say

The appeal of proven short-duration lithium-ion batteries to lenders may be constraining the market for long-duration energy storage (LDES), experts said at a Clean Energy States Alliance webinar covered by ESS News. Banks tend to favor technologies with predictable revenue and proven reliability — advantages that shorter-cycle systems currently hold — making it harder for long-duration projects to secure capital.

Sandia National Laboratories analyst Will McNamara and the US Department of Energy define LDES as systems capable of running from ten hours up to days or weeks. McNamara noted that treating four-hour installations as LDES is an overly generous reading; the eight-to-24-hour range is more accurately described as medium-duration storage.

The contrast with the broader battery market is striking. US utility-scale battery capacity surpassed 50 GW by July 2026, with 9.7 GWh installed in the first quarter — a 32% rise. California leads nationally at 60 GWh, ahead of Texas at 29.2 GWh and Arizona at 20.2 GWh. Forecasts project 200 GW and 655 GWh across the country by 2031.

True LDES remains a narrow segment: roughly 16 GWh installed in the US, with pumped-hydro plants accounting for more than 90% of that figure. California’s Tumbleweed project — 125 MW and 1,000 MWh at eight hours of duration — shows how far lithium-ion has stretched, although that duration still sits in the medium-duration band under the same framework. Lithium-ion systems achieve 85–95% efficiency, compared with 70–80% for flow batteries.

Pacific Northwest National Laboratory senior analyst Jeremy Twitchell said four-hour systems are the most profitable today, eight-hour systems are less so, and ten-hour systems are close to but have not yet reached economic viability in the scenario examined. LDES Council director Anna Siefken said a wave of sessions is anticipated for early 2027, with proceedings on procurement and quotas for systems of eight hours or more already in preparation.

Source: ESS News (pv magazine)