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1、March|2023Pathways to Commercial Liftoff:Long Duration Energy StorageThis report was prepared as an account of work sponsored by an agency of the United States government.Neither the United States government nor any agency thereof,nor any of their employees,makes any warranty,express or implied,or a
2、ssumes any legal liability or responsibility for the accuracy,completeness,or usefulness of any information,apparatus,product,or process disclosed,or represents that its use would not infringe privately owned rights.Reference herein to any specific commercial product,process,or service by trade name
3、,trademark,manufacturer,or otherwise,does not necessarily constitute or imply its endorsement,recommendation,or favoring by the United States government or any agency thereof.The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government
4、or any agency thereof.Pathways to Commercial Liftoff:Long Duration Energy StorageCommentsThe Department of Energy welcomes input and feedback on the contents of this Pathway to Commercial Liftoff.Please direct all inquiries and input to liftoffhq.doe.gov.Input and feedback should not include busines
5、s sensitive information,trade secrets,proprietary,or otherwise confidential information.Please note that input and feedback provided is subject to the Freedom of Information Act.AuthorsAuthors of the Long Duration Energy Storage Pathway to Commercial Liftoff:Office of Technology Transitions:Katheryn
6、(Kate)Scott,Stephen HendricksonOffice of Policy:Nicole RyanOffice of Clean Energy Demonstrations:Andrew Dawson,Kenneth Kort,Jill CapotostoOffice of Electricity:Benjamin Shrager,Vinod SiberryOffice of Energy Efficiency and Renewable Energy:Paul SpitsenArgonne National Laboratory:Susan Babinec,Patrick
7、 Balducci,Zhi ZhouCross-cutting Department of Energy leadership for the Pathways to Commercial Liftoff effort:Office of Clean Energy Demonstrations:David Crane,Kelly Cummins,Melissa KlembaraOffice of Technology Transitions:Vanessa Chan,Lucia TianLoan Programs Office:Jigar Shah,Jonah WagnerAcknowledg
8、ementsThe authors would like to acknowledge analytical support from Argonne National Laboratory and McKinsey&Company;as well as valuable guidance and input provided during the preparation of this Pathway to Commercial Liftoff from:Office of Clean Energy Demonstrations:Catherine Clark,Caroline Grey,J
9、ason Munster,Brian ODonnchadhaOffice of Technology Transitions:Marcos Gonzales Harsha,Hannah Murdoch,James Fritz,Anna Siefken,Erik HadlandLoan Programs Office:Julie Kozeracki,Ramsey Fahs,Kevin Johnson,Carolyn Davidson,Leslie Rich,Christopher CreedOffice of Policy:Carla Frisch,Steve Capanna,Elke Hods
10、on,Colin Cunliff,Ravahn Samati,Jay Vaingankar,Piper OKeefeOffice of Energy Efficiency and Renewable Energy:Alejandro Moreno,Courtney Grosvenor,Sam Baldwin,Diana Bauer,Changwon Suh,Samuel Bockenhauer,Matthew Bauer,Sunita Satyapal,Heather Croteau,Lauren Boyd,Jeffrey Bowman,Sean Porse,Tien DuongOffice
11、of Electricity:Gene Rodrigues,Eric HsiehOffice of the Secretary:Kate GordonOffice of Economic Impact and Diversity:Shalanda BakerOffice of Energy Jobs:Betony Jones,Christy VeederOffice of International Affairs:Julie Cerqueira,Matt ManningOffice of the General Counsel:Avi Zevin,Brian Lally,Ami Grace-
12、TardyOffice of Manufacturing and Energy Supply Chains:David Howell,Jacob Ward,Mallory ClitesOffice of Science:Asmeret Asefaw Berhe,Craig Henderson,John VetranoArgonne National Laboratory:Aymeric Rousseau,Thomas H.FanningPathways to Commercial Liftoff:Long Duration Energy StorageTable of ContentsLDES
13、 Executive Summary1Chapter 1:Introduction and Objectives6Section 1.a:Objectives6Section 1.b:Approach and Methodology7Section 1.c:Source of Insight7Section 1.d:Scope/Definition7Section 1.e:Technology role8Chapter 2:Current State-LDES Technologies and Markets9Section 2.a:Value Proposition9Section 2.b:
14、Technology Landscape11Section 2.c:Use Cases15Section 2.d:Competitive Landscape16Section 2.e:Techno-economics21Chapter 3:Pathways to Commercial Scale23Section 3.a:Implied Capital Formation 23Section 3.b:Broader Implications of LDES Scale-up24Chapter 4:Challenges to Commercialization and Potential Sol
15、utions28Section 4.a:Overview of Challenges and Considerations Along the Value Chain28Section 4.a.i:Overcoming Near-term Challenges to Improve Technology Performance and Cost curves30Section 4.a.ii:Lack of Market Mechanisms 33Section 4.a.iii:Need for Industrialization35Section 4.b:Potential Key Accel
16、erating Actions39Chapter 5:Metrics and Milestones40Section 5.a:Explaining the KPIs40Section 5.b:Priority KPIs41Appendices42Appendix 1-Illustrative LDES Project Templates42Appendix 2-Project Templates Modeling Methodology52Appendix 3-External Sources of Insight65Appendix 4-Power Modeling Assumptions6
17、6Appendix 5-Long-list of Market Mechanisms68Appendix 6-LDES Technology Types70Appendix 7-Long-list of KPIs72Appendix 8-Energy and Environmental Justice Concerns 73References 74Pathways to Commercial Liftoff:Long Duration Energy StorageLDES:Executive SummaryThese Pathways to Commercial Liftoff report
18、s aim to establish a common fact base and ongoing dialogue with the private sector around the path to commercial liftoff for critical clean energy technologies.Their goal is to catalyze more rapid andcoordinated action across the full technology value chain.Introduction to LDESTo answer emerging env
19、ironmental and social challenges as well as meet the Biden administrations targets for 2050 Net Zero emissions and 100%carbon-pollution free electricity by 2035,the power sector will need to rapidly scale and transition.Currently,the power sector is responsible for one third of domestic emissions.Su
20、ccessfully decarbonizing requires a transitionaway from uncontrolled fossil-fuels-based generation assets towards carbon-free power sources such as renewables(e.g.,wind,solar)and nuclear.The power sector will need to simultaneously transition to new power sources and scale rapidly to meet new electr
21、ified downstream uses.As variable renewables cannot be turned on and off to meet peak demand in the same manner as fossil-fuels-based generation assets,the grid will need a new way of providing flexibility and reliability.New options,like Long Duration Energy Storage(LDES),will be key to provide thi
22、s flexibility and reliability in a future decarbonized power system.LDES includes a set of diverse technologies that share the goal of storing energy for long periods of time for future dispatch.The form of energy that is stored and released,as well as the duration of dispatch is highly variable acr
23、oss technologies.This report focuses on the application of LDES systems for electricity purposes(e.g.,energy is stored and then dispatched in the form of electricity at a later time).To evaluate the commercial feasibility of LDES within the U.S.,this effort consulted a wide range of existing researc
24、h1and modeled a U.S.-power-sector decarbonization pathway with varied decarbonization and technical scenarios to assess LDESs role in the power sector and factors influencing LDES deployment pathways for electricity needs.The integrated modeling scenarios serve three purposes:1.Estimating a business
25、-as-usual trajectory:The business as usual(BAU)scenario represents the current trajectory and includes the impacts of the 2022 Inflation Reduction Act(IRA)but without additional commercialization interventions.2.Forecasting least-cost pathways to meet decarbonization goals:Net-zero decarbonization s
26、cenarios forecast what it would take to reach net-zero by 2050 under different constraints on variable renewables and on transmission capacity.We forecast scenarios both with and without achieving interim clean power by 2035.3.Exploring technology potential:Technology-specific sensitivities represen
27、t conditions for the uptake of different types of LDES under different operating parameters and competing technology conditions(e.g.,net-zero without LDES).Based on this analysis,the U.S.grid may need 225-460 GW of LDES capacity for power market application for a net zero economy by 2050,representin
28、g$330B in cumulative capital.While this requires significant levels of investment,analysis shows that by 2050 net-zero pathways that deploy LDES result in$10-20Biin annualized savings in operating costs and avoided capital expenditures compared to pathways that do not(by 2050).The focus of this comm
29、ercialization effort is to understand the challenges,solutions,and potential long-run benefits of LDES achieving technology“liftoff”by 2030.“Liftoff”is defined as the point where the LDES industry became a largely self-sustaining market that does not depend on significant levels of public capital an
30、d instead attracts private capital with a wide range of risk.“Liftoff”is characterized by significant improvement in technology and operating parameters,market recognition of LDESs full value,and realization of industrial-scale manufacturing and deployment capacity.These improvements are needed for
31、LDES to compete with alternative technologies.1 Including research from the Department of Energy and the National Laboratories,as well as cross-technology reports including the White House Pathways to Net Zero,Princeton Net Zero America,NREL Clean Electricity,and the Long Duration Energy Storage(LDE
32、S)CouncilPathways to Commercial Liftoff:Long Duration Energy Storage1Technology LandscapeThis report defines LDES market segments by duration of dispatch in a power contextthe most standard way of defining LDES across the industry to discussing different storage types.Many existing classifications g
33、roup storage technologies intotwo categories(diurnal and seasonal),but this report uses four storage classifications(short,inter-day LDES,multi-day/week LDES,and seasonal)as many new technologies are focused on the LDES categories.This report focuses on those two intermediate duration market segment
34、sinter-day and multi-day/week LDES.Inter-day LDES is defined as shifting power by 1036 hours and includes almost all mechanical storage technologies and some electrochemical technologies(e.g.,flow batteries).These technologies primarily serve a diurnal market need by shifting excess power produced a
35、t one point in a day to another point within the same or next day.Multi-day/week LDES is defined as shifting power by 36160+hours and includes many thermal and electrochemical technologies.It fills a market and end-use customer need where there may be an extended shortfall of power(e.g.,multiple day
36、s of low wind and solar or resiliency applications)several times per year;Multi-day/week LDES can also reduce the required curtailment/interconnection over-build to support variable renewables.NOTE:Two other market segments of storage are not directly covered in this report,short duration and season
37、al balancing.Short duration is defined as shifting power by less than 10 hours,often through Li-ion storage(primarily in the 04-hour range,while other storage such as pumped storage hydropower competes for 4-10 hours).Seasonal balancing is defined as moving energy for an extended time period,mostly
38、over several months(e.g.,summer to winter)and is a need likely to be filled by a fuel-based technology(e.g.,hydrogen or natural gas with carbon capture).Both short duration and seasonal storage are accounted for as competitive technologies to prove and disprove in various business cases for inter-da
39、y LDES and multi-day/week LDES.Pathways to Commercial Liftoff:Long Duration Energy Storage2Value Proposition and Requirements for“Liftoff”LDES has the potential to play a significant role in the decarbonization by the U.S.power system-from bulk power to resiliency and behind-the-meter applications.B
40、y following the path outlined in this report,LDES technologies could be the least-cost option to provide stability and flexibility to the grid as a variable renewables expand.In addition,LDES could be the best solution to improve local and regional resiliency with increasing frequency of extreme-wea
41、ther events while also reducing the cost and risks around grid expansion.LDES represents an attractive future asset class to investors given the expected scale of capital investment required and the diversity in end-use application and business models.The end-use applications are broad enough to ena
42、ble the potential for more than one type of LDES technology to be part of a net-zero solution.The technologies are often modular and flexible,which reduces investment risk over long-time horizons.While LDES technologies provide the high-potential way to decarbonize a range of use cases,there are oth
43、er technologies competing for the same use cases(e.g.Li-ion for inter-day uses,natural gas paired with carbon management technologies for multi-day uses).Pathways that deploy LDES are$10-20B cheaperithan those that do not based on system savings in operating costs(reduced renewable curtailment and f
44、uel spend)as well as reduced capital investment for dispatchable firm generation.To realize its full potential and play a leading role in a net-zero grid,LDES must achieve a technology“liftoff”.As mentionedabove,“liftoff”is the state where private capital can take over due to development in three ar
45、eas:significant improvements intechnology cost and operating parameters,market recognition of LDESs full value-through increased compensation or other means-and industrial-scale manufacturing and deployment capacity(Figure 1)Figure 1:Liftoff by 2030-2035 requires improvements in technology,cost decl
46、ines,regulatory support,and supply chain development.Notes:PUC stands for Public Utilities Commission,RA for Resource Adequecy.1Liftoff is defined as the point where the LDES industry becomes a largely self-sustaining market;2Need for multi-day/week LDES technologies remains in both Li-ion scenarios
47、,and aggressive Li-ion will reduce the need for supply chain build out.3$/kW year varies by geography.Achieving liftoff1by 2030-2035 requires improvements in technology,cost declines,regulatory support,and supply chain development 3Performance and compensation improvements will need to be more accel
48、erated and significant if Li-ion technologies improve more aggressively2Time203020352022Market®ulatory mechanismsTechnology performance&cost curve12Supply chain development and planning45-55%capex reductionThe cost of an LDES system needs to come down by 2030,as well as 7-15%improvement in roundt
49、rip efficiency in order to compete with Li-ion storage and hydrogen.Equivalent to 6-15 GW of project deployment by 2030.Liftoff threshold$50-75/kW year3Resource adequacy compensation in markets or through PUC valuation of$50-$75/kW per year would motivate private financing.Other policy and regulator
50、y mechanisms(e.g.,carveouts,carbon payments)would reduce the need for direct RA compensation.10-15 GWAnnual manufacturing&deployment capacity needed by 2035 to support mature technology deployment at scale.Planning(e.g.,workforce training,tax abatements or loans for manufacturing facilities)will be
51、a priority over the next 5 years.Pathways to Commercial Liftoff:Long Duration Energy Storage3LDESs share in the long-term net-zero economy depends on meeting significant milestones in the near-term,which would require concentrated and coordinated efforts across the LDES ecosystem from LDES companies
52、,regulators,investors,and organizations.These critical milestones are described below:Technology performance and cost curves must improve to attract sustained investment.Early public and private investment support in commercial-scale project demonstration and deployment are necessary to generate the
53、 economies of scale and manufacturing improvements that will drive further improvement in LDES cost and performance beyond what is possible in-lab.These technology cost curves must come down by 4555%by 2028-2030 relative to costs reported by leading technologies today,and both the performance and th
54、e working lifetime of LDES technologies must improve.2,3By 2030,inter-day LDES technologies must reduce costs from$1,1001,400 per kW to$650 per kW and improve round trip efficiency(RTE)from the 69%seen in best-in-class technologies in 2022 to 75%.Likewise,multi-day technologies must improve from$1,9
55、002,500 per kW and 45%RTE today to$1,100 per kW and 5560%RTE by 2030.Demonstration and deployment projectsprimarily deployed by utilities,developers,Independent Power Producers with the support of outside fundingare essential for achieving technology performance and cost-curve improvements and makin
56、g LDES a competitive option in a net-zero pathway(Section 4a.i).Where these improvements are likely to come from in the next decade varies by technology;there are some technologies where conventional research and development could drive a substantial portion of the cost declines needed.However,most
57、technologies will likely reduce costs by developing large,standardized installations and unlocking manufacturing efficiencies.These learnings will depend on scaled demonstration and commercialization projects.2 Technology improvement and compensation goals outlined in this report are in-line with ex
58、isting DOE Energy Storage Grand Challenge(ESGC)goals of$0.05/kWh for long-duration stationary applications.3 Newer companies may need to reduce costs as much as 75%relative to their 2021 reported costs.4 This is based on a 15-20%unlevered IRR;For more details on modeling please go to Appendix 4.Comp
59、ensation for the range of economic and reliability benefits would need to be realized.State,regional,and national interventions could ensure that LDES is valued for the benefits it provides to energy markets and infrastructure utilization(e.g.,dynamic capacity markets,differentiated capacity product
60、s,and a recognition of storage for its dual role in generation and transmission systems).There are many reliability and transmission benefits that LDES systems can provide that markets do not yet fully compensate.Predictable compensation for LDES resource adequacy benefits(roughly equivalent to an a
61、dditional$5075 per kW per year by 2030iwhen considering other potential energy market payments)would be one of the direct ways to support a business case for investment.4This compensation could come directly from market participation or could be indirectly valued in its selection as part of an integ
62、rated resource planning process outside competitive energy markets.The regulatory and market change also requires identification of the differentiated need for longer duration,firm,dispatchable power in addition to the monetary compensation(e.g.,expanding from 46-hour firm capacity products to longe
63、r duration such as 12 hour and 24-hour firm based on market need).In order for that value and need to be realized,many jurisdictions would require changes to modeling methodology for integrated resource planning(e.g.,regulated utilities receive approval to deploy LDES as a part of a lowest-cost syst
64、em),resource adequacy studies and their associated methodology for evaluating the firm and variable resources,and transmission planning.New,more transparent market products and more open procurement processes are also likely needed.Market and regulatory mechanisms would need to evolve if LDES econom
65、ics are to be supported;priority interventions are needed to increase market certainty and improve risk-adjusted returns(Section 4a ii).Power markets(e.g.,Independent System Operators ISOs/Regional Transmission Organizations RTOs)would need to adjust compensation and planning methodologies to value
66、different types of reliability resources in their resource adequacy studies(e.g.,hourly energy attribute certificates,nodal and locational pricing).Regulators(e.g.,public utility commissions PUCs)would need to adapt system modeling to account for integrated and longer-term net-zero needs(e.g.,resour
67、ce planning,resource adequacy studies,and transmission planning looking out beyond the typical 15-year horizon).They could also need a common,standardized recognition of storage as a generation,transmission,and distribution asset.Supply chain formation must quickly follow the above two milestones to
68、 support at least 3 GW of annual LDES manufacturing and deployment capacity per year by 2030(compared to 10 hours,but at a much higher marginal cost per additional hour.Section 2.b:Technology LandscapeKey takeawaysLong-duration Energy Storage(LDES)can be defined by duration of dispatch.DOE includes
69、all durations of 10 hours or more as LDES.This report focuses on inter-day LDES(i.e.,power shifted by 1036 hours)and multi-day/week LDES(i.e.,power shifted by 36160 hours).Short duration storage(i.e.,10)are vying to be dominant in the Inter-day and Multi-day LDES market segments;the technologies can
70、 be sorted into three typesmechanical(e.g.,pumped storage hydropower),thermal(e.g.,sensible heat),and electrochemical(e.g.,flow batteries).Three main groups of stakeholders are assessed across the ecosystemtechnology original equipment manufacturers(OEMs),project developers,and market makers(e.g.,po
71、wer market operators,customers).Pathways to Commercial Liftoff:Long Duration Energy Storage11LDES systems can be conceptualized based on the form of energy they store and release:Electricity(commonly referred to as“power”)the focus of this reportis defined as energy stored for the purpose of becomin
72、g electricity at a later point in time.Direct Thermalnot the focus of this reportis defined as thermal or electricity storage for end-uses that requires direct heating or cooling and is most relevant in discrete-industrial or district-heating use cases.Fuelthe focus of a separate pathways reportis d
73、efined as the chemicals,primarily hydrogen,stored for the purpose of generating usable energy such as electricity or heat at a future time with minimal time-dependent energy loss.The market services provided by fuel based LDES(e.g.,hydrogen)could overlap significantly with seasonal shifting(160+hour
74、)LDES systems.This report defines storage in the context of duration of dispatch in a power context(Figure 4)the most standard definition used across the industry for discussing different storage types.This report focuses on two duration categoriesinter-day LDES and multi-day/week LDES(i.e.,dark gre
75、en and light green portions of Figure 4).Note that Pumped storage hydropower and mechanical storage can also be used for short durations.Inter-day LDES is defined as shifting power by 1036 hours and includes almost all mechanical storage technologies and some electrochemical technologies(e.g.,flow b
76、atteries).This market segment fills a diurnal(e.g.,day-to-night)need by shifting excess power produced at one point in a day to another point within the same day or the next day.Figure 4:LDES technologies can be used for inter-day and multi-day use cases at a variety of scales.Technologies and marke
77、t use cases may span across duration categories(e.g.,technologys duration may encompass both multi-day LDES and seasonal shifting).1Pumped storage hydropower and mechanical storage can operate effectively as both short-duration and inter-day LDES systems;2LDES systems with 36+hours of duration are c
78、onsidered multi-day/week LDES as they can discharge to cover 2+full days of peak demand(e.g.,8am to 8pm).Capacity range100 kW1 MW10 MW100 MW1 GW1 kW10 kW1234Codifying the technology Short duration:Durations up to 10 hoursInter-day LDES:Sometimes called“diurnal”Multi-day/week LDES:Commonly called“sea
79、sonal”Seasonal shifting:Generally included in“seasonal”,but distinct in that this does function as a conventional,storable fuel0-10hours10-36hours36-160hours2160+hoursMore detail followsDuration of discharge1DayWeekHourSeasonMinShort duration2Inter-dayLDES3Multi-day/week LDES24Seasonal shifting160ho
80、urs36hours10hoursPrimarily chemical storageMulti-day/week LDESInter-day LDESBattery energy storage systemFly-wheelMechanical storage1Pumped storage1LDES technologies can be used for inter-day and multi-day use cases at a variety of scalesPathways to Commercial Liftoff:Long Duration Energy Storage12M
81、ulti-day/week LDES is defined as shifting power by 36160 hours and includes many thermal and electrochemical technologies.This market segment can be used for energy shifting like inter-day LDES,but also used during an extended shortfall of power(e.g.,multiple days of low wind and solar,resiliency ap
82、plications)several times per year.Multi-day/week LDES can also reduce the required curtailment/interconnection over-build to support variable renewables.NOTE:Other segments of the energy storage market are not directly covered in this report:short duration and seasonal balancing.Short duration is de
83、fined as shifting power by less than 10 hours,primarily through Li-ion storage.Seasonal balancing is defined as moving energy over an extended time period,mostly over several months(e.g.,summer to winter)and is a need likely to be filled by hydrogen or fossil fuels with carbon capture.Both short dur
84、ation and seasonal shifting are accounted for as competitive technologies to prove and disprove in various business cases for inter-day and multi-day/week LDES.Twelve primary types of LDES technologies that were evaluated for this report(Figure 5).These technology types are organized based on their
85、duration(Inter-day LDES vs.Multi-day/week LDES)and their energy storage form(Mechanical,Thermal,or Electrochemical).As previously mentioned,Li-ion is not examined as part of this analysis,hence its exclusion from the Electrochemical section.Hydrogen as Multi-day LDES is discussed later in the chapte
86、r.Figure 5:LDES technologies can be grouped based on physical characteristics and are in varying stages of developmentv,vi,vii1Codified based on primary technology type;2Can function as inter-day LDES,but organized based on longest duration potential;3Some flow batteries under development will not w
87、ork for multi-day,but it is categorized given the technologys maximum duration;4Demand potential is limited by the requirement for specific geological formations;5Current LCOS as reported by technology.NON-EXHAUSTIVE HYDROGEN AND HYBRID LONG DURATION STORAGE EXCLUDEInter-dayMulti-day/weekLess Desira
88、bleMore DesirableNot enough public datapoints to obtain a reliable valueMin.deployment size,MWEnergy storage formAverage RTE,%Nominal duration,hrsLCOS5,$/MWh TRLDurationMechanicalThermalElectrochemicalInter-dayMulti-day/week70807090407040707080XX55902050508040705575508005424XX10-200225100
89、252008060XX300XX7017096-87-96-94-6XX6-93-54-94-94-95-8200 400201,000 200500 50100 10500XX010100TechnologyTraditional pumped hydro(PSH)Gravity-basedCompressed air(CAES)Liquid air(LAES)1Liquid CO21Thermochemical heat(e.g.,zeolites,sil
90、ica gel)Sensible heat(e.g.,molten salts,rock material,concrete)2Latent heat(e.g.,aluminum alloy)Aqueous electrolyte flow batteriesMetal anode batteriesHybrid flow battery,with liquid electrolyte and metal anode(some are Inter-day)2,3Novel pumped hydro(PSH)Faces geologic constraints4Can function as b
91、othPathways to Commercial Liftoff:Long Duration Energy Storage13LDES technology can also be divided into three groups based on physical characteristics:mechanical,thermal,and electrochemical.As of late 2022,these technologies exhibit a range of maturities based on technology readiness to be deployed
92、 beyond the lab.Mechanical technologies are generally the most mature,and some are already at the commercial-demonstration stage.Mechanical technologies typically require a relatively large minimum size for a demonstration project(i.e.,50100 MW costing$100M+).Thermal technologies used in power appli
93、cations are moving into commercial demonstrations and also require large demonstration projects.Electro-chemical technologies are largely“in lab”or in the pilot phase(i.e.,10 MW)and can be deployed and tested in smaller,discrete projects and in conjunction with many technologies.This flexibility mea
94、ns that electro-chemical technologies are moving into several first-of-a-kind(FOAK)commercial demonstrations that may lead to more rapid iteration and innovation versus other technologies.In addition,a higher number of small-scale deployments may accelerate learnings in this technology type.For exam
95、ple,ten projects at 10 MW may produce more learning than one project of 100 MW in another technology type.A more detailed assessment of the current strengths for each LDES Technology is included in Appendix 6.Note that there is significant ongoing development across LDES technologies,and this assess
96、ment is based on the current landscape of publicly available information.Figure 5 summarizes technologies focused on the long duration energy storage market.However,technologies developed for other applications are considering electrical power generation applications.Both Hydrogen and Geothermal tec
97、hnologies are discussed for LDES applications in addition to other applications.Pumped storage hydropower(PSH)is a mature and viable option,but has limitationsThere is 22GW of existing PSH operating in the US today,and new needs for LDES have renewed interest in this technology.There is approximatel
98、y 20 GW of PSH in development in the USv.a.;these projects demonstrate how LDES can create value in the context of a large-scale power market.ivThe scale-up potential of traditional PSH(i.e.,using two bodies of water at different elevations)is limited by market compensation for LDES services and the
99、 need for a long-term planning process to get a project approved and built;a typical planning-to-deployment cycle spans 810 years.Novel PSH technologies are working to reduce these challenges by reducing the costs and expanding the geographic topology in which they can be developed.PSH projects coul
100、d be accelerated if assistance was provided in several areas:permitting,pooled IRPs(e.g.,multiple utilities),regional ISO planning,and special carveouts within state/regional markets or utility integrated resource plans(IRPs).Pathways to Commercial Liftoff:Long Duration Energy Storage14Hydrogen is t
101、he primary technology expected to provide seasonal shifting for applications in need of 160+hours duration in addition other end-uses(e.g.,industrials).However,configurations like Hydrogen fuel cells with salt cavern storage(H2+Salt)have been evaluated as a technology to provide Multi-day LDES of ap
102、proximately 48 to 120 hours.viiiHydrogen projects for Multi-day LDES would have large minimum deployment sizes(1GW+)and require specific geological features(i.e.,salt caverns).While LCOS today for H2+Salt has been estimated by one study to be between$200-400/MWh,future costs are projected to be comp
103、etitive with technologies listed aboveix.Locations with Hydrogen Hubs would likely see improved economics.If Hydrogen meets projected costs,it could compete with other Multi-day LDES technologies and Natural Gas CT-CCS for peaking capacity.Hydrogen is particularly attractive where utilization rates
104、are expected to be low.However,energy storage is only one end-use of Hydrogen;for more information on drivers for the Hydrogen industry and power sector applications,please see the Hydrogen Pathway to Commercial Liftoff report.Reservoir Thermal Energy Storage(RTES)a geothermal energy technology-is a
105、n approach that can store excess thermal energy in permeable reservoirs such as aquifers and depleted oil reservoirs.This energy can be dispatched for large-scale district/community direct use(i.e.,heating and cooling),industrial heating and processing,or electrical power generation applications.Geo
106、thermal storage for low-temperature(50C)building and district heating applications has been successfully implemented in the United States and western Europe for decades.There are currently no commercial-scale reservoir thermal storage projects,although demonstration projects being evaluated in the U
107、.S.ixIn addition to competition within the LDES category,LDES technologies must compete with alternative grid firming and flexibility sources(e.g.,base-load coal,gas,and nuclear plants;flexible coal and gas peaking plants;a growing base of Li-ion batteries).Inter-day LDES will need to reach cost and
108、 operating parameters such that when paired with the cost of building variable renewables they are financially and operationally competitive with high-efficiency gas plants(e.g.,Combined Cycle Gas Turbines CCGTs).In addition,LDES technologies will need to add enough value during extended periods of
109、power shortfalls to justify the upfront cost differential with Li-ion.In pathways with high penetrations of variable renewables,multi-day/week LDES compete with the cost and operating parameters of new peaking capacity(e.g.,CTs)while providing additional value throughout the course of the year(e.g.,
110、regular cycling for a smaller portion of total discharge depth).88 Discharge depth is capacity that is discharged from the storage system relative to the storage systems total nominal capacity.It is measured as a percent of this total nominal capacity.Section 2.c:Use CasesKey takeawaysSix use cases
111、were developed based on existing business models and existing work from DOEs Energy Storage Grand Challenge(ESGC)to show near-term applications and economics of LDES deployment throughout the United States.Certain use cases(e.g.,behind-the-meter load management services,firming for PPAs)may be more
112、primed for deployment between now and 2025,as they do not require broad market compensation or regulatory change to be deployed economically.Other use cases(e.g.,bulk energy shifting,utility integrated resource planning)have larger potential(i.e.,100 MW+)for deployment but will take longer(i.e.,35 y
113、ears)to plan,approve and deploy.Pathways to Commercial Liftoff:Long Duration Energy Storage15Six use cases(Figure 6)represent possible applications for LDES in the power market context it is also possible for LDES to fill multiple of these use cases at the same time(e.g.,value stacking).Six project
114、templates lay out potential business models to guide market scale-up through 2030(Appendix 1).These templates were based on existing project proposals for energy storage and work done by DOEs Energy Storage Grand Challenge(ESGC)and are discussed in detail in the next chapter on challenges(financial
115、and non-financial)and potential solutions to unlock these business models.Figure 6:The LDES use cases require a varying degree of market change to become competitive.v,x,xx 1Economic(e.g.,IRR for customer)and strategic(e.g.,resiliency needs,ESG goals)competitiveness for LDES compared to Li-ion batte
116、ries;e.g.,high means an area where LDES would potentially outperform a Li-ion battery and eventually be able to solve a need that Li-ion cannot.Section 2.d:Competitive LandscapeKey takeawaysLi-ion batteries may compete with LDES technologies for the Inter-day LDES market.If Li-ion cost reductions hi
117、ghly exceed expectations approximately 85%of Inter-day LDES market will compete with Li-ion batteries.Multi-day LDES systems(36 to 160 hours)play a consistent role in both Li-ion cost reduction scenarios.LDES technologies will compete for applications based on a set of criteria whose importance vari
118、es depending on the final use case.Key criteria for LDES systems include nominal duration,ramp rate,response time,levelized cost of storage(LCOS),minimum deployment size,and footprint.RES/T&D developersAsset owners(IPPs)Debt investorsLeading ESG customersLarge peaking power consumersEnergy services
119、playersVertically integrated&T&D utilitiesUtilitiesT&D developersEquity infra investorsLocal power authoritiesMicrogrid developers or integratorsKey stakeholders(not exhaustive)Direct Competition with Lithiumion1Energy market participationFirming for PPAsLoad management servicesUtility resource plan
120、ningTransmission and Distribution DeferralMicrogrid resiliencyUse caseLDES can play a role in shifting electricity from times of high supply to times of high demand,meet demand during system peak,and provide power system stability(e.g.,inertia,frequency regulation)Renewable PPAs can use LDES to ensu
121、re that businesses can procure 24/7(and additional)renewable electricityLarge energy consumers(e.g.,distribution centers,industrials)could use LDES to manage seasonal or week to weekend demand changes(e.g.,freight charging purposes during peak season)Utilities or CCAs can include LDES as an energy r
122、esource in integrated long-term energy planning to meet VRE balancing needs LDES can offset the need for new transmission and distribution capacity by installing storage in constrained areas to avoid costly,long-term asset upgrades LDES can ensure reliable power in isolated areas or the grid has sho
123、wn to be unreliable/insufficient for a specific set of needsApplicationLikely timing of commercialization2030+2023LowMediumHighPathways to Commercial Liftoff:Long Duration Energy Storage16If Li-ion batteries become very cost-competitive,LDES technologies will compete directly with Li-ion batteries a
124、t lower-duration(approx.10 hours);approximately 85%of the inter-day LDES market being served with Li-ion batteries if Li-ion costs aggressively reducei.LDES technologies will need to have higher risk-adjusted returns than Li-ion to gain market share in this segment of the storage market.As a result,
125、the amount of LDES technologies built and connected to the grid is highly sensitive to its price relative to Li-ion batteries and the design of compensation in energy markets.xiFigure 7 details the relationships between the amount and type of deployed LDES technologies and the cost improvements of L
126、i-ion batteries.Figure 7:Deployments of inter-day LDES technologies depend on whether they can outcompete Li-ions cost and performance.xiiAverage duration of Inter-day LDES systems is lowered if Li-ion costs are in-line with predictions since more 10-hour LDES systems will come online.However,if Li-
127、ion costs reduce aggressively,Li-ion will be built instead of 10-hour LDES systems,and economic LDES systems will be longer duration(20+hour).No duration is shown for 2030 in the aggressive Li-ion scenario due to limited projected Inter-day LDES deployment.1Assumes Li-ion batteries improve costs and
128、 performance at a moderate rate based on current Li-ion cost curves(54%cost improvements through 2030 and 65%total improvements through 2050 relative to 2021 prices);2Assumes capex costs associated with energy component(i.e.,battery cell)are 50%lower than in moderate scenario.2
129、02050203054935645272Aggressive Li-ion cost&performance improvement25527425749966253137Moderate Li-ion cost&performance improvement1Li ionMulti-day/week LDESInter-day LDES203035203020502040National Storage Capacity,GWPathways to Commercial Liftoff:Long Duration Energy
130、 Storage17Average duration of deployed Inter-day LDES systems,hrsThe degree to which Inter-day LDES technologies can compete varies widely with up to 274GW in a moderate Li-ion case and only 35GW in an aggressive Li-ion case(discussed below).Given the uncertainties surrounding the cost trajectories
131、of Li-ion and LDES technologies and compensation mechanisms,two Li-ion deployment scenarios were considered:Scenario 1:Moderate Li-ion cost&performance improvementIn this scenario,Li-ion batteries improve costs and performance at a moderate rate(i.e.,54%cost improvement through 2030 and 65%total imp
132、rovement through 2050 relative to 2021 prices),and LDES technologies continue to compete directly with Li-ion for inter-day use cases.As a result,274 GW of inter-day LDES are deployed by 2050,compared to just 40 GW of Li-ion.iThe average duration of these inter-day LDES systems remains relatively lo
133、w(i.e.,13 hours),reflecting the technologys ability to outcompete Li-ion for some short duration use cases.In addition,multi-day/week LDES is deployed at a lower rate than Inter-day LDES(i.e.,186 GW vs.274 GW).To be competitive in the inter-day market,LDES technologies must consistently achieve mode
134、rately-high RTE roundtrip efficiency(i.e.,60%+,although 7580%is an ideal range)and long system life(i.e.,at least 2025 years).xiii,iScenario 2:Aggressive Li-ion cost&performance improvementIn this scenario,Li-ion batteries experience aggressive cost and performance improvements resulting in 50%lower
135、 CAPEX costs associated with the energy component(e.g.,battery cell)than the in Scenario 1.These improvements enable Li-ion technologies to outcompete LDES technologies for many inter-day applications.As a result,35 GW of inter-day LDES is deployed compared to 317 GW of Li-Ion.iThe average duration
136、of the deployed inter-day LDES is 35 hours,reflecting the fact that Li-ion is a more cost-effective solution for shorter durations.Multi-day/week LDES solutions remain the most effective option for longer durations,with expected deployment of 197 GW.This deployment level is higher than in Scenario 1
137、 and is a result of inter-day LDES not unlocking learnings at the same rate due to reduced deployment.iThese projections demonstrate that LDES solutions that are capable of discharging for durations of 30+hours are needed in all scenarios,even when other technologies experience cost and technology p
138、erformance improvements at a faster rate than LDES.To reach deployment targets,these longer-duration technologies must achieve a sufficient technology readiness level(TRL)and technology performance and cost maturity by 2035,even with limited economic use cases before that time period.Public stakehol
139、ders(e.g.,ISOs,state regulators)may need to provide“make a market”support mechanisms(e.g.,targeted tenders or procurement carveouts for LDES of 3050 hours,risk-reduction mechanisms)to scale certain technologies that will be needed in 2040 and beyond.Scenario 2B:Aggressive Li-ion cost reductions with
140、 supply chain constraints.The rapid expansion of electric vehicles(EVs)may make the aggressive cost curves and deployment of Li-ion in the power sector more likely.However,potential supply chain constraints created by this expansion could limit Li-ions competition with inter-day LDES.If supply chain
141、 constraints continue to create scaling challenges,Li-ion may not realize full cost reductions,and production may be targeted toward auto industry customers rather than the energy sector.Pathways to Commercial Liftoff:Long Duration Energy Storage18In addition to competition with Li-ion and other fir
142、ming options,there is competition within the LDES market for what technologies to deploy.There are six primary competitive factors that will influence which technologies are deployed:Nominal durationMeasure of how long the storage system can discharge at its maximum power rating(e.g.,a 20 MW LDES sy
143、stems with a 30-hour duration can provide 20 MW of energy for 30 hours)Ramp rateThe speed at which a storage system can increase or decrease output(e.g.,5%per minute systems can increase or decrease discharge at a rate of 5%per minute)Response timeThe time it takes for a system to provide energy at
144、its full rated power(e.g.,a system with a 5-minute response time can increase power from zero to full power after five minutes)Levelized cost of storage(LCOS)Cost of the LDES system measured in$per MWh.Derived by accounting for all costs incurred and the total energy discharged throughout the storag
145、e systems lifetime,not accounting for charging costs as they are related to grid prices rather than techno-economicsMinimum deployment sizeSmallest capacity deployment that is technically feasibleFootprintAmount of land needed to deploy the systemPathways to Commercial Liftoff:Long Duration Energy S
146、torage19Figure 8 analyzes the primary LDES use cases against these six competitive factors.Figure 8:The key performance criteria varies across LDES use cases.VRE stands for Variable Renewables.1Net-zero by 2050 with high renewables penetration;2Based on net-zero 2050 scenario with a significant drop
147、 in Li-ion capex according to NREL optimistic projections;3Based on the LDES Council Report use case opportunity sizing and adjusted to meet expected ISO demand;4Adjusted following the same ratio between these use cases,energy market participation and utility resource planning to account for Li-ion
148、improvements.Use caseFootprint,sq.mLCOS,$/MWhNominal duration,hrsMin.deployment size,MWResponse timeRamp rate,%/minAggressive Li-ion demand potential2,GW High VRE demand potential1,GW Highly dependent on state regulatory decisions will be most applicable for multi-day/week LDESFirming for PPAsMicrog
149、rid resiliencyEnergy market participationTransmission and distribution deferralUtility resource planningLoad management services28 2833043010 1031 142424326 264794918137The key performance criteria varies across LDES use casesCritical CriteriaSecondary CriteriaThe most importan
150、t criteria for each use case varies significantly:Load management servicesBehind-the-meter siting will require LDES with a small footprint as well as future modularity to maintain its benefit even with changing needs.Modularity is important for shifting to different uses over time.A longer duration
151、will help LDES outcompete Li-ion,while a fast ramp rate and response time can ensure effective power delivery.Firming for 24-7 PPAsThe decision for load firming solutions will be highly cost-based,and thus LDES with a low LCOS will be necessary.As customer targets are set to require higher time-matc
152、hing granularity within 24-7 PPAs,short duration technologies will lose the LCOS advantage in being able to meet customer demand through all hours of the year(e.g.,multiple systems would need to be stacked for extended periods of low resources/high demand).Microgrid resiliency For local grids,LDES c
153、an be used to provide energy in times of a resiliency event.The most critical success factor is an extended duration with a quick response time to quickly begin providing energy to the grid.A competitive ramp rate will help LDES respond to changes in demand quickly without other intervention methods
154、.For space-constrained urban areas or small islands,a small footprint will also be important.Pathways to Commercial Liftoff:Long Duration Energy Storage20Utility resource planningWhile similar to energy market participation,within utility resource planning,there are different portfolios of existing
155、assets which are considered on a total system cost versus marginal cost basis.Thus,the existing utility assets can shift the timing and type of asset needed to solve for flexibility,reliability,and resilience.This combined assessment of cost and“fit”with existing investment generally puts less empha
156、sis on the cost of the system compared to energy market participation.Like many other applications,this use case will directly compete with Li-ion.Utility and regulatory recognition of need for longer duration,firm,dispatchable power will improve the competitive position of LDES in this use case.Dep
157、ending on existing assets,ramp rate may also be a decision criterion.Transmission and distribution deferralThe ability to site an LDES technology in the location it is needed is most critical to obtaining the highest deferral value.To achieve this,the deployed LDES will need to have a small footprin
158、t and modularity to be able to meet changing needs over time.While less direct,a longer nominal duration,fast ramp rate,and fast response time will help LDES stay competitive with Li-ion.Energy market participationEnergy market applications for LDES are expected to be very cost sensitive.To best sui
159、t this use case,LDES must have a lower LCOS to outcompete Li-ion in the near term.When markets signal a need for longer nominal duration products to serve resource adequacy and reliability needs,a large potential market for LDES emerges.Performance on other characteristics such as ramping could be i
160、mportant in some markets depending on resources available that can also fill that need,e.g.,hydro or natural gas.Section 2.e:Techno-economicsKey takeawaysLDES technologies must reduce costs by 4555%by 20309relative to 2021 costs from leading technologiesand prove efficiency and performance in the fi
161、eld to be seen as competitive,scalable assets.Over the next 510 years,LDESs cost,efficiency and risks are expected to improve with continued R&D,economies of scale of deployment,and manufacturing/supply chain improvements resulting from modularized,industrial-scale facilities and workforces.9 Techno
162、logy improvement and compensation goals outlined in this report are in-line with existing DOE Energy Storage Grand Challenge(ESGC)goals of$0.05/kWh for long-duration stationary applications.10 Reported and studied cost and operating parameters range widely.Conventional compressed-air energy storage
163、can have cost ranges of$9601,740/kW of power capacity capex;$32250/kWh per kWh of energy capex;4080%RTE;and 20,000+cycles over its lifetime.Many technologies are still in lab-stage and will only benefit from continued research&development(R&D)funding.Technology costs across the landscape are highly
164、varied,with commercial-ready players achieving:1.Inter-day LDES:$1,1001,400 per kW of power capacity capex;$2030 per kWh of energy capex;62%RTE;25-year lifetime10,i,iv2.Multi-day/week LDES:$1,9002,500 per kW of power capacity capex;$1015 per kWh of energy capex;45%RTE;27-year lifetimei,ivThree facto
165、rs could drive down costs by 60%by 2040:20-35%from R&D,20-35%from economies of scale,and 10-20%from manufacturing and supply chain improvements.Pathways to Commercial Liftoff:Long Duration Energy Storage21R&D can lead to decreased technology and manufacturing cost through design optimization and imp
166、roved manufacturing performance.Specifically,manufacturing R&D can address manufacturing tool development,improvements in manufacturing processes,and precision control and optimization across production lines.Continued R&D funding for mature technologies(e.g.,advanced flow battery chemistries)is vit
167、al,as R&D advances could contribute 20-35%of the total performance and cost curve improvements.Improving cost efficiency via R&D is especially important for electrochemical and thermal technologies,as many are still in the lab.Economies of scale will be achieved through improved project management,t
168、he scale-up of logistics,and learnings gained through iterative deployment.Unlocking economies of scale depends on demonstration and deployment funding and engagement from ecosystem players(e.g.,project developers;engineering,procurement,and construction EPC).If successful,economies of scale could c
169、ontribute 2035%of the total technology performance and cost curve improvement potential.Economies of scale are likely to be particularly relevant for thermal and mechanical technologies,as these systems resemble large construction projects and will benefit from more efficient project management and
170、logistics scale-up.Manufacturing and supply chain improvements will also drive down costs,as more consistent and predictable project pipelines will yield manufacturing efficiency improvements(e.g.,leaner production processes,cost-efficient sourcing,automated assembly).Successful manufacturing and su
171、pply chain improvements could contribute 1020%of the total technology performance and cost curve improvement potential.These improvements will benefit technologies that can be modularized during manufacturing(e.g.,electro-chemical flow batteries),but these processes could be susceptible to commoditi
172、zation and/or offshoring.When considering these different sources of techno-economic improvement,several technology characteristics of LDES will impact its ability to capture its market potential and total levelized-cost-of-storage.In particular,improving CAPEX,RTE,and lifetime(or cycle life)will ma
173、ke LDES technologies more competitive.CAPEX is likely to decrease as learnings are captured via successive deployments,whereas gains in RTE and lifetime will require additional R&D breakthroughs.Key takeawaysLDES will need to attract at least$912B of investment before 2030(Figure 9).This funding wil
174、l be especially critical to LDESs ability to compete with Li-ion batteries in the short-term and to reduce the risk profile for larger-scale investors in the long term.To scale-up to its potential in a net-zero context,LDES will need to attract$230335B of investment capital from 20232050 to support
175、the deployment and build out of the upstream supply chain.LDES technologies are currently attracting government and venture capital(VC)funding,with increasing interest from utilities,and these will continue to be the main sources of funding in the short term.Technology solutions are still maturingex
176、cept pumped storage hydropowerand considered too early stage for other capital providers(e.g.,Private Equity(PE),infrastructure funds,banks).Near-term project-level commitments and investments are needed to enable technology players to achieve rapid learnings and reach commercial scale,especially fr
177、om early-stage capital providers including:the government;utilities;venture capital;and capital providers interested in tax equity and Inflation Reduction Act(IRA)tax credits.Figure 9:Meeting the most ambitious decarbonization targets could require a cumulative investment of$232336B from 20212050035
178、2520202050453503030040500Cumulative$B2303350354045GW/year202230402050Low Case(optimized)High CaseHigh Case(optimized)Low CaseHigh CaseLow CaseTotal investment need,$BAnnual deployment need,GWAnnual supply chain throughput ramps through the 2030s,while excess capacity post-2040
179、is used for exportForecasted investment needsIndustry players are projected to need at least$912B of investment before 2030 to support R&D,commercial deployments,and supply chain scale-up(Figure 9).iPathways to Commercial Liftoff:Long Duration Energy Storage23Chapter 3:Pathways to Commercial ScaleSe
180、ction 3.a:Implied Capital Formation$100B worth of US investment is achieved in 2037To meet Net Zero by 2050 goals,a cumulative investment of$230335B could be needed from 20232050 and another$160 to 250B of cumulative capital relative to the business as usual(BAU)scenario.iUnlocking capital on this s
181、cale would require LDES technologies to be proved and scaled to the point where relatively risk-averse capital providers(e.g.,infrastructure funds,banks,corporations&utilities,insurers,institutional investors)feel comfortable injecting both equityand debt into LDES companies and assets.Many LDES tec
182、hnologies are still in the pre-commercial demonstration stage.As a result,LDES investments are currently viewed by most capital providers as being outside their risk appetite.As of 2022,funding for LDES players has come primarily from venture capital in the form of equity investments to support tech
183、nology players R&D.Some private equity firms(e.g.,growth equity players)are also starting to make equity investments in technology players.There is small but growing liquidity for commercial demonstration projects,and industry stakeholders(e.g.,utilities)have begun to announce project-level commitme
184、nts.In addition to technology maturity,capital providers are uncertain on the role that LDES will ultimately play in the transition,the demand for LDES being enough to support the development of a robust industry and supply chain,and the ability of LDES technologies to compete with Li-ion.However,so
185、me capital providers think that grid operators and regulators will require and reward longer term energy storage and that LDES solutions will be a critical component of the grid beyond 2030.Others are not yet convinced that these new technologies in R&D and piloting will be ultimately deployed at sc
186、ale.More project-level commitments and investments are needed to enable technology players to achieve rapid learnings and reach commercial scale.Four sources of capital are likely to play an outsized role at this early juncture:the government;utilities;venture capital;and capital providers intereste
187、d in tax equity and Inflation Reduction Act(IRA)tax credits.Securing investment will be critical to ensuring LDESs ability to compete with Li-ion batteries in the short-term and to reduce the riskprofile for larger-scale investors in the long term.It is worth noting that project finance requires a h
188、igh level of repetition and deep benchmarking of engineering and performance data.Banks will only consider financing those solutions already deployed at scale multiple times.Those technologies able to reach scale maturity first will attract more follow-on investment and continue to improve,creating
189、even more distance with the other options and driving them out of the market,unless there are new technology breakthroughs with dramatic performance improvements.Section 3.b:Broader Implications of LDES Scale-up Key takeawaysIf LDES can gain traction in the market before 2030,it has the potential to
190、 generate up to 2.1 million direct job-years in fields such as engineering and construction and create up to$530 billion in cumulative economic benefit over the next 25 years.Thoughtful planning could enable transitions of specialized labor currently scaling variable renewables and electric vehicle
191、manufacturing and potentially take advantage of the transition from the oil and gas industries.The specific workforce risks,skills,and training associated with LDES vary according to the technology.If LDES can gain traction in the market before 2030,supply chain infrastructure must scale significant
192、ly to meet the large deployment needed in this decade.Moreover,multiples of this investment will be needed in the following decade as LDES continues to scale.Supply chains should mature throughout this timeline and grow to resemble current supply chains in utility-scale variable renewables,battery s
193、torage development,and pumped storage hydropower projects.Pathways to Commercial Liftoff:Long Duration Energy Storage24The majority of LDES projects likely require a short period of labor-intensive construction involving engineering,procurement,and construction firms(EPCs).As a result,many LDES tech
194、nologies have the potential to provide upfront economic impacts,including jobs.This holds especially true for mechanical technologies(e.g.,gravity-based apparatus)and thermal technologies(e.g.,sensible heat apparatus using molten salts).Between now and 2050,this buildout of LDES could generate:1.52.
195、1M“direct”job-years in fields such as engineering and construction;between 900k and 1.4M in“indirect”job-years in fields such as industrial-scale manufacturing,and raw materials supply chain;and 1.71.9M in“induced”job-years at restaurants,car dealerships,barbers,and other service jobs that benefit f
196、rom the increased economic activity.iIn the long run,this build-out would amount to a cumulative$510530B impact on GDP through 2050.i“First mover”benefits could occur as these construction jobs are created.For example,states that more quickly establish a“hub”for LDES activity may attract disproporti
197、onately large shares of manufacturing jobs,the best EPC talent,and other positive economic development externalities(e.g.,development of innovation ecosystems around pilot technologies,creation of testing sites,revitalization of distressed communities).According to the 2022 U.S.Energy and Employment
198、 Report,there were 81,000 jobs in energy storage in the U.S.in 2021xiv.Over 95%of these jobs were in electrochemical and pumped storage hydropower,and approximately half of those jobs were in fields other than construction.As the U.S.further develops the supply chain for LDES,the share of non-constr
199、uction(indirect)jobs could increase substantially.As with the creation of all new energy technologies,it will be important to ensure that LDES jobs are high-quality jobs that will attract and retain the skilled workforce required to scale with safe and reliableLDES systems.High-quality jobs provide
200、above-average wages and benefits,strong health and safety standards,investments in worker education and training,and an affirmative commitment to employees free and fair chance to be represented by a union.The Pathway to Commercial Liftoff Societal Considerations and Impacts Overview provides an in-
201、depth discussion of the significance of these quality jobs characteristics and how they can be achieved.The specific risks and hazards associated with LDES vary according to the technology,i.e.,mechanical energy storage,thermal energy storage,and electrochemical energy storage.The workforce needs,in
202、 terms of skills and training required,correspond to these deployment considerations.In addition,engaging workers in the design of health and safety plans is important across technologies.Mechanical energy storage,such as pumped storage hydropower,involves work that is comparable to work in the cons
203、truction and mining sectors.As this technology relies on the mechanical storage and release of energy,there are risks for on-site workers.It is important to ensure that the amount of stored energy does not exceed each systems capacity.Additionally,the potential risks of natural disasters(such as ear
204、thquakes or cave-ins)must be carefully mitigated to prevent changes in topography from releasing the stored energy and injuring workers and surrounding communities.Thermal energy storage involves work with a variety of materials and temperatures used to harness and release energy stored as heat.The
205、processes associated with charging,storing,and discharging energy requires workers trained in the risksassociated with the method they are helping to deploy.Storage systems that arent properly managed or maintained are dangerous for onsite workers,as the heat stored by these systems can injure or ki
206、ll a worker.Since many of the materials used in thermal energy storage come with combustion risks,workers should be trained to recognize and prevent the causes of fires as well as how to extinguish firesxv.Workers should be provided with appropriate protective gear and training on how to interact wi
207、th the specific storage system properly.Precautions must also be taken to prevent the system from being overloaded,which requires accounting for both the dynamic supply of the heated material and the dynamic demand for electricity generated from it.Pathways to Commercial Liftoff:Long Duration Energy
208、 Storage25Electrochemical energy storage is the technology that employs the largest number of workers within the energy storage sector.Of the different types of electrochemical energy storage,the risks and hazards associated with lithium-ion battery chemistry(such as potential for thermal runaway an
209、d toxic exposure)are well known.Like with different thermal storage technologies,companies should hire workers who are trained on the specific chemistry,risks,and handling of a battery technology and its component parts(e.g.,flow vs.lead-acid).Industry consensus on training guidelines or standards f
210、or battery manufacturing and other supply chain jobs will support the growth of a qualified workforce for this industry.For battery installation,it will be important to hire licensed electricians to properly install and connect battery energy storage systems.Energy and Environmental Justice(EEJ)Key
211、takeawaysLDES deployment can provide much-needed benefits(e.g.,reliability,resilience,clean energy access,affordability,and pollution reduction)to overburdened,underserved communities.Depending on the technology deployed,LDES projects must address EEJ concerns including siting decisions and mining i
212、mpacts;there are many ways for projects to maximize benefits and minimize harms covered below and in the Pathway to Commercial Liftoff Societal Considerations and Impacts Overview.More information on the potential benefits and negatives of each LDES technology area can be found in Appendix 8.Investo
213、rs and developers play a critical role in determining whether the deployment of LDES projects supports an equitable energy transition or compounds existing injustices.The Pathway to Commercial Liftoff Societal Considerations and Impacts Overview covers key considerations and actions for equitable an
214、d just projects and provides online resources.This section highlights EEJ considerations specific to LDES(see Appendix 8 for a table on EEJ concerns by technology).LDES deployment can provide much-needed benefits(e.g.,reliability,resilience,clean energy access,affordability,and pollution reduction)t
215、o overburdened,underserved communities.Often rural,low-income,or communities of color,these groups are at the highest risk of experiencing outages,while being least equipped to withstand them;face greater energy burden,energy poverty,and high demand charges;xvihave the least access to clean energy;a
216、nd are disproportionately burdened by fossil fuel power plants.xvii,xviiiDespite this need,these communities have had relatively little access to LDES;as with most technologies,early adopters have been well-resourced communities and companies.xviThis contributes to a long-standing gap between well-r
217、esourced and under-resourced communities in energy access,burden,and poverty;pollution exposure;and grid reliability.xixIf sited and scaled intentionally,LDES can close this gap and support community health and wealth by maintaining non-emitting grids,mitigating fuel price spikes and supply chain sh
218、ortages,and improving grid reliability and resiliency.xviTo support public health and safety,LDES siting decisions must consider impacts on land,air,and water.xxWhile some systems may repurpose existing infrastructure(e.g.,retired mines or quarries),xxiothers(e.g.,compressed air energy systems)may r
219、equire new excavation and construction,generating greenhouse gases,heat,and drilling waste.These impacts may continue during operations,which may also pose risks of seismicity or storage cavity failure.xxiiWhile low,these risks are important as low-income communities and communities of color disprop
220、ortionately faces risks of energy infrastructure failure.xxiiiAnother critical siting concern,especially for tribes,is maintaining the cultural,aesthetic,and ecological significance of land and water.xxivEnergy infrastructure,especially dams,have inundated or limited access to many tribal ancestral
221、landscapes and other sites of cultural,medical,or historical significance.xxvPathways to Commercial Liftoff:Long Duration Energy Storage26LDES technologies also have embodied environmental and human health impacts.Mining for materials requires clearing and excavating land and storing mine tailings,w
222、hich can poison water supplies,while mining dust pollutes air and causes respiratory and other health impacts for miners and communities.xxviGrowing global demand has led to the extraction of lower quality ore,producing more toxic waste.Increased mining activity combined with climate-induced extreme
223、 weather has caused more frequent and severe failings of tailings dams,causing deadly flooding.xxviiTo limit harms,mine operators can regularly monitor and inspect waste facilities,including dams;obtain ongoing consent from surrounding communities;and employ strong safety procedures,including evacua
224、tion drills.xxviiThe toxicity of constituent metals and materials creates additional environmental and health impact during LDES(e.g.,battery)construction and end-of-life disposal.xxDeriving scarce minerals from other sources(e.g.,through recycling or extracting from unconventional supplies)could li
225、mit the need for new mines.xxviiBeyond being a moral imperative,EEJ is critical to project successLDES projects may experience delays or cancelation because of community-or organization-led lawsuits or protests.xxiv,xxiiiProjects can mitigate EEJ risksrisks both to the project and caused by the proj
226、ectby being aware of potential impacts,taking steps to maximize benefits and minimize harms,and engaging in early,frequent,transparent,and two-way dialogue with impacted groups.There are many ways for projects to maximize benefits and minimize harms in line with EEJ goals and principles.The Pathway
227、to Commercial Liftoff Societal Considerations and Impacts Overview covers actions related to(1)the distribution of impacts(i.e.,who experiences benefits vs burdens)and(2)procedure(i.e.,giving power to impacted individuals/groups to make decisions about things that affect their lives).One way to prom
228、ote EEJ and ensure community buy-in is by developing business and ownership models that advance community wealth.This includes co-ownership agreements for storage assets by communities and utilities,subsidizing loans to low-income households to participate in community energy storage systems(CES),an
229、d proactively promoting distributed energy resources.xxviiiUtility regulatory decisions impact equity in critical ways by shaping access to electricity,rates and rate design,access to energy efficiency programs and clean energy technologies,and infrastructure distribution,which in turn has implicati
230、ons for peoples health,property,and environment.xxixCES is designed with a community ownership and governance approach to generate socio-economic benefits,including renewable energy penetration,emissions reductions,decreased energy costs,and revenue generation potential.xxviiiPathways to Commercial
231、Liftoff:Long Duration Energy Storage27Chapter 4:Challenges to Commercialization and Potential SolutionsIntroductionLDES technologies are now entering a critical period of accelerating commercialization to achieve technology liftoff.“Liftoff”is defined as the point where the LDES industry becomes a l
232、argely self-sustaining market that does not depend on significant levels of public capital and instead attracts private capital with a wide range of risk.Liftoff is characterized by significantimprovement in technology and operating parameters,market recognition of the value of LDESs services,and in
233、dustrial-scale manufacturing and deployment capacity.These improvements are needed to attract sufficient private capital to meet LDES deployment targets.After“liftoff”,the market will have reached a level of maturity that can support broad financing and beless reliant on government funding.This chap
234、ter discusses the challenges and potential solutions that are needed to reach this liftoff threshold.Section 4.a:Overview of Challenges and Considerations Along the Value ChainKey takeawaysFor LDES to be deployed at a rate that supports meeting net-zero commitments by 2050,three conditions must be m
235、et concurrently through 2030(Figure 10):Technology performance and cost reductions:The cost of an LDES system must come down by 4555%and realize a 715%improvement in roundtrip efficiency.11Predictable compensation for resource adequacy benefits provided by LDES,roughly equivalent to$5075 per kW per
236、year by 2030,to support a business case for investment.12Build-up of LDES-specific supply chains,as 1015 GW of manufacturing and deployment capacity is needed at scale by 2035 and at least 3 GW by 2030.iThree conditions must be met by 2030-2035 for LDES technologies to fulfill their potential role i
237、n the 2050 net-zero pathways(Figure 10):1)Technology performance and cost curves must improve so the economics of LDES technologies are comparable to technologies fulfilling the same need(e.g.,Li-ion,hydrogen,conventional generation).Based on the reported 2021 costs from leading technologies,the cos
238、ts of LDES systems must come down by 4555%and roundtrip efficiency(RTE)must improve 715%.i,12 Newer companies may need to reduce costs as much as 75%relative to their 2021 reported costs.2)Market and regulatory mechanisms must evolve to support the reliability,flexibility,and stability services that
239、 LDES systems provide.The current mechanisms were designed for systems largely served by conventional energy generation(e.g.,coal,natural gas)with very little grid-scale variable renewables or storage.Thus,the dispatch flexibility provided by grid-scale storageespecially flexibility that allows disp
240、atch days or weeks after electricity is generatedis not fully valued by markets or regulatory systems.Predictable compensation for LDES resource adequacy benefits,roughly equivalent to$5075 per kW per year by 2030 would be one of the direct ways to support a business case for investment.i11 This cos
241、t reduction is based on goal-seeking cost curves for leading companies and is based on 2021 numbers.Newer companies may need to reduce costs as much as 75%relative to their 2021 reported costs.Additionally,technology improvement and compensation goals outlined in this report are in-line with existin
242、g DOE Energy Storage Grand Challenge(ESGC)goals of$0.05/kWh for long-duration stationary applications.12 This production figure is based on a 1520%unlevered IRR;for more details on modeling,see Appendix 4.Pathways to Commercial Liftoff:Long Duration Energy Storage28This compensation could come direc
243、tly from market participation or could be indirectly valued as part of an integrated resource-planning process outside competitive energy markets.Unlocking this value in many jurisdictions will require changes to modeling methodologies for integrated resource planning,resource adequacy studies,and t
244、ransmission planning.Market and regulatory dynamics must also evolve to recognize the need for longer duration,firm,dispatchable power.This could be done by providing market products that support the benefits from these longer duration technologies(e.g.,expanding from 4-6 hour firm capacity products
245、 to longer duration such as 12 hour and 24 hour firm based on market need).It is expected that these system changes will take time,and development of these mechanisms must visibly start by 2025.xxx3)Supply chain formationespecially for components that will be needed across technologies(e.g.,engineer
246、ing and construction workforce)must be planned in advance of the anticipated,rapid scale-up to meet market needs in 2030.The provision of an adequate amount of cost-effective raw materials,subcomponents,manufacturing,and assemblyplus a workforce that can put it all togetherwill be necessary to susta
247、in LDES deployment in the long run.The supply chain will need to handle the anticipated growth of LDES in the 2030s10-20 x the amount of LDES deployment in the 2020s.iFigure 10:Liftoff by 2030-2035 requires improvements in technology,cost declines,regulatory support,and supply chain development.1$/k
248、W year varies by geography;2Liftoff is defined as the point where the LDES industry becomes a largely self-sustaining market;3Need for multi-day/week LDES technologies remains in both Li-ion scenarios,and aggressive Li-ion will reduce the need for supply chain build out.Achieving liftoff2by 2030-203
249、5 requires improvements in technology,cost declines,regulatory support,and supply chain development 3Performance and compensation improvements will need to be more accelerated and significant if Li-ion technologies improve more aggressively3Time203020352022Market®ulatory mechanismsTechnology perf
250、ormance&cost curve12Supply chain development and planning45-55%capex reductionThe cost of an LDES system needs to come down by 2030,as well as 7-15%improvement in roundtrip efficiency in order to compete with Li-ion storage and hydrogen Equivalent to 6-15 GW of project deployment by 2030Liftoff thre
251、shold$50-75/kW yearResource adequacy compensation in markets or through PUC valuation of$50-$75/kW per year would motivate private financing.Other policy and regulatory mechanisms(e.g.,carveouts,carbon payments)would reduce the need for direct RA compensation.10-15 GWAnnual manufacturing&deployment
252、capacity needed by 2035 to support mature technology deployment at scale.Planning(e.g.,workforce training,tax abatements or loans for manufacturing facilities)will be a priority over the next 5 yearsPathways to Commercial Liftoff:Long Duration Energy Storage29These three conditions are interrelated;
253、the timing and success of each will affect the others13.For instance,if technology cost curves come down more rapidly than expected,it could reduce the need for electricity market reforms.Or,if there are more market reforms that value LDES attributes(e.g.,capacity payments),there would be less need
254、for accelerated price reductions.The timing of these breakthroughs should inform when and how to begin supply chain planning.Section 4.a.i:Overcoming Near-term Challenges to Improve Technology Performance and Cost CurvesKey takeawaysTo get to a largely self-sustaining market(i.e.,“liftoff”),LDES tec
255、hnologies must go through three phases of commercialization:Demonstrations,Scaling and Selection,and Deployment.These projects must happen in-field,and the market will identify optimal technology cost and operating parameters.The Demonstrations phase(20232025)supports many smaller demonstrations to
256、create a visible set of case studies across the market landscape.The Scaling and Selection phase(20252028)proves out which technologies benefit the most from scaling and creates visibility for technology players standing up supply chains for utility-scale deployment(e.g.,100MW+per year).The Deployme
257、nt phase(20282030+)features large demonstration projects that affirm the viability of LDES technologies and shows the limited need for outside support(e.g.,standalone,bankable use cases).A rigorous,standardized process for in-field demonstration projects is needed for LDES to be most helpful to net-
258、zero ambitions and commercially viable for private investors in the long term.Currently,demonstration projects are run through many different channels,and each demonstration is evaluated on a case-by-case basis.Creating a more centralized evaluation and data-tracking system would improve efficiency
259、and possibly accelerate learning across LDES systems,especially for deployments of similar technologies.This tracking system would need standard feasibility metrics,cost and performance certification and tracking,and deployment lighthouses to serve as public examples of technology readiness.In addit
260、ion,establishing standardized architectures for the design and deployment of LDES technologies would increase interoperability and possibly accelerate deployment.14To get to the technology performance and cost curves consistent with commercial liftoff conditions by 2028-2030,the market of LDES techn
261、ologies must go through three phases of commercialization:Demonstrations,Scaling and Selection,and Deployment(Figure 11).15These phases of commercialization aim to ensure that LDES technology is perceived as increasingly reliable,bankable,and in possession of a secure supply chain;while decreasing r
262、isk and the need for government support.13 The interconnected nature of these conditions was assessed as part of the modeling effort used in this report.For more details,see Appendix 4.14 The MESA architecture has helped utilities that are deploying battery storage.15 Each phase is characterized by
263、larger projects,fewer non-financial risks/uncertainties,and larger total market size than the previous phase.Pathways to Commercial Liftoff:Long Duration Energy Storage30Figure 11:The learning curve and project size increases as use cases advance from the Demonstrations phase to the Deployment phase
264、.1 Not indicative of total potential market size by this period;2LDES deployments that are supported by public funding(e.g.,governments,philanthropic organizations,other grant-making bodies).All business cases in this section are illustrative and based on publicly available information and work done
265、 by DOEs EnergyStorage Grand Challenge(ESGC).The options proposed are not exhaustive.The following use cases are presented in order of near-term to longer-term applicability.However,project use cases should materialize across Demonstration,Scaling and Selection,and Deployment phases.This report focu
266、ses on deployments in the United States,demonstrations and deployments abroad are not factored into the projected learning curves.However,there may be opportunities to accelerate learnings and lower the number of supported projects if there is significant activity abroad with shared data and learnin
267、gs.The Demonstrations Phase,20232025The first phase of commercialization is the Demonstrations phase and is focused on cost and performance improvements.The primary objective of this phase is to support 1530%improvements among many players(e.g.,50100).This effort may require up to$25M in some form o
268、f concessionary finance per project to ensure projects offer attractive internal rate of return(IRR)and are deployed.iCertain technologies are already beyond the initial demonstration phase(i.e.,may be ready for larger-scale projects)but will need additional support to de-risk project development ca
269、pital for first-of-a-kind(FOAK)projects.1.Not indicative of total potential market size by this period2.LDES deployments that are supported with public or catalytic funding2624202223292825272030051015615Deployments needed with an 18%learning rateDeployments needed with a 12%learning rate2.63.9Low ca
270、seHigh case1.87.5High caseLow case1.63.6Low caseHigh caseExternally supported2LDES deployment per phase,GW Additional LDES capacity1GW,cumulative$9-12B of US investment will be needed by 2030Desire for energy independence could incentivize a faster rate of global investmentBy 2040,US investment alon
271、e could reach$140BSpecific external support of these projects could result in 3-9 technologies achieving aggressive learning targets by 2030Demonstrations 2023-2025Scaling and selections 2025-2028Deployment 2028+Average project size will increase while required external support will decrease over ti
272、me20232030+Pathways to Commercial Liftoff:Long Duration Energy Storage31The Demonstrations Phase,20232025To accelerate the formation of private capital,players that clear the initial screens(e.g.,lab data,existing feasibility studies)can be given funding for in-field pilots,demonstrations,and commer
273、cial-scale projects.At the start of the Demonstrations phase(i.e.,2023),a project and its business model must be acknowledged and supported by a group of stakeholders;have a plan for market formation;provide a projected cost curve;and demonstrate a path to a stable supply chain.At the end of theDemo
274、nstrations phase(i.e.,2025),a project must prove its technical feasibility,demonstrate its progress on the cost curve,and provide an updated assessment of its supply chain.Target project size during this stage should be from 1020 MW and can span many technologies16.Clear targets for all technologies
275、 can help players understand the scope of their challenge as they attempt to meet the stage gates for the second phase:Scaling and Selection.Three example projects for the Demonstration phase are included in Appendix 1:Load Management Services for an EV fleet,Firming for future PPAs,and Transmission
276、 and distribution(T&D)deferral.These illustrative business cases would require smaller amounts of external funding allowing for a greater number of projects during the Demonstrations phase.Appendix 1 includes detail on potential business models,stakeholders,system parameters,expected costs,and targe
277、t returns.16 For some select technologies that are hard to subscale(e.g.,gravity-based,CAES,sensible heat),larger-scale projects(e.g.,50100 MW)may be needed in this phase sooner than would be needed for more modular technologies(e.g.,flow batteries).The Scaling and Selection Phase,20262028The second
278、 phase of commercialization is Scaling and Selection.The primary aim of this phase is to accelerate technology learning(i.e.,reach a 15%cost reduction)for promising technologies.Funding support for these projects will shift from primarily concessionary finance to favorable financing(e.g.,low-interes
279、t loans,guarantees,first-loss equity).In this phase,players that clear the stage gates could be given funding for discrete,grid-scale projects of a medium-large size(i.e.,50+MW).These projects,50100 in total,will remain spread among several technologies,and each will be able to point to prior succes
280、sful demonstrations as justification for funding.At the start of the Scaling and Selection phase(i.e.,2026),aproject must prove its cost trajectory(e.g.,25%cost improvement),its operating parameters(e.g.,meets or beats performance on RTE,limited operations overspend),and its readiness to deploy in a
281、 short timeframe(e.g.,cost,capability,supply chain readiness).At the end of the Scaling and Selection phase(i.e.,2028),a project must prove its progress along itscost curve,demonstrate its ability to reduce or eliminate risk for investors,provide an updated assessment of its supply chain,and deliver
282、 an updated assessment of stakeholder support.Many growth-equity funds,banks,and institutional investors look for companies with proven business models in order to confidently evaluate potential cashflows.Demonstrating the technologys efficacy at grid-scale would help prove which business models hav
283、e the most potential to evolve into standalone,bankable businesses.Two example projects for the Scaling and Selection phase are included in Appendix 1:Microgrid and resiliency on an island and Utility resource planning.These illustrative business cases would require a larger amount of funding per pr
284、oject but allow for greater learnings on economies of scale than project sizes in the Demonstration phase.Appendix 1 includes detail on potential business models,stakeholders,system parameters,expected costs,and target returns.The Deployment Phase,2028 and BeyondThe third phase of commercialization
285、is the full-scale deployment phase.This phase is characterized by much larger“lighthouse”projects(e.g.,projects with publicly available performance data and a referenceable cost-benefit analysis),derived from a smaller subset of the most promising technologies.Funding for these projects will shift f
286、rom public-supported financing(e.g.,low-interest loans,guarantees)toward market-rate financing.Funding in this stage will require less upfront government outlay,although long-run loan support or guarantees may still be required where the private sector is wary of the size of the project.Capital prov
287、iders such as banks and infrastructure funds have indicated that they would like LDES players to demonstrate that they can create strong,predictable cash-flows and the ability to reduce costs at scale.Pathways to Commercial Liftoff:Long Duration Energy Storage32In this phase,players that clear the s
288、tage gates can be given funding for grid-scale projects(e.g.,50+MW).Several projects,1060 in total,could be spread among several technologies,and each of these projects should be able to point to many prior successful demonstrations to support funding.At the start of the Deployment phase(i.e.,2029),
289、a project must prove its cost trajectory,demonstrate its operating parameters,and support its readiness to deploy in a short timeframe.At the start of the Deployment phase(i.e.,2030+),a project must prove its ability to be invested in by the private sector.Projects that meet minimum parameters will
290、move into the market to be investable opportunities for private sector players.Primary aims of this phase are to test and understand the ability of costs to scale with size and to identify the relative needsassociated with industrializing manufacturing for certain key technologies.Other technologies
291、 that are still emerging from lab may still be supported by earlier demonstrations,however,only if they have significant promise to improve upon industry-wide cost and operating parameters.One example project for the Deployment phase is included in Appendix 1:Energy market participation.Appendix 1 i
292、ncludes detail on potential business models,stakeholders,system parameters,expected costs,and target returns.Section 4.a.ii:Lack of Market MechanismsKey takeawaysGeographiesas characterized by state policy,power market dynamics,and grid conditionsin the U.S.have differing levels of readiness for LDE
293、S deployment due to various grid conditions,policies,and market constructs.Interventions across five categorieslong-term market signals,revenue mechanisms,analytics,direct support,and stakeholder supportcan be enacted to improve LDES deployment.The full list can be found in Appendix 5.Interventions
294、can be assigned to stakeholders by locality and prioritized by impactIn 2023,no electricity market supports standalone LDES economics,although each electricity marketand even each locality within electricity marketshas unique characteristics that can improve or reduce the attractiveness of LDES(Figu
295、re 12).Two factors can be used to evaluate market LDES readiness:Grid conditions and policy and market constructs.Grid conditions measure both the desirability and relative feasibility of LDES in a particular state,as well as the overall generation mix.Factors include the percent penetration of vari
296、able renewables,the transmission and distribution investment gap,grid resilience as measured by SAIDI/SAIFI scores,and the ease of interconnection.Policy and market constructs measure the favorability of local policies and revenue constructs for deploying LDES with favorable risk-adjusted return exp
297、ectations in the state.Factors include Renewable Portfolio Standards(RPSs),capacity payments,and storage carve-outs.Pathways to Commercial Liftoff:Long Duration Energy Storage33Interventions in five categories can be enacted to improve LDES deployment.See Appendix 5 for the full list.Key interventio
298、ns are highlighted below by category.Long-term market signals address stakeholder uncertainty and are particularly valuable for investors.Some examples of these signals are tax credits,carbon pricing,GHG reduction targets,and transmission expansion to support variable renewables or address bottlenec
299、ks in densely populated areas.Revenue mechanisms also improve investors risk-adjusted return on LDES.Revenue mechanisms include the introduction of capacity markets or other market products that support the deployment of longer duration firm dispatchable power,long-term bilateral contracts,and 24/7
300、virtual PPAs for corporate emissions targets.Analytics help increase transparency and reduce uncertainty among stakeholders to enable long-term planning.By making high-quality models more accessible,modeling insights can be used to improve analytics for all stakeholders.Ideally,all stakeholders can
301、analyze LDES alongside other decarbonization technologies with a similar set of modeling tools and parameters,equip themselves with the same fact base,apply insights across geographies,and access high-grade professional models.Direct technology support and enabling measures boost the market for LDES
302、.These measures include direct grants and incentives(e.g.,PTCs,storage ITCs)and loan guarantees.Stakeholder support ensures the long-term viability of LDES.Stakeholder support can be boosted by increasing the number of people and the amount of capital devoted to variable renewables or storage in a g
303、iven state.Stakeholders are capable of interventions across three archetypes that can impact project economics(Figure 13).Example measures of stakeholder support include jobs related to variable renewables or energy storage and workers in fossil fuels or related industries who could be retrained to
304、work on energy storage.FavorableLate moverEmergingFigure 12:LDES deployment readiness varies among the states,with California,Texas,New York,Maine,Iowa,and Connecticut being high potential in the near-term.Renewables penetration drives favorable grid conditions in the Midwest,while grid reliability
305、issues create compelling LDES opportunities in the Midwest and SoutheastStrong policy on the west coast and in the Northeast/Mid-Atlantic is driving favorable conditions,while capacity payments in MISO potentially create a favorable marketResource-driven favorability:variable renewables generate mor
306、e than 20%of electricity15 GW Californias target for storage by 2030,the highest target in the nationDemand-driven favorability:grid reliability score among bottom 10%Grid conditionsPolicy and market constructPathways to Commercial Liftoff:Long Duration Energy Storage34The interventions can be asses
307、sed across three metrics and prioritized.First,the interventions can be evaluated on how muchthey enhance the viability of LDES projects.The financial models used in this report rated interventions on how they would improve the risk-return profile of an LDES project,relative to external funding.Seco
308、nd,the interventions can be assessed on how attractive they make the LDES market in the long term.The models used in this report rated interventions on how much they increased the overall market size and accelerated the scale-up trajectory of LDES.Third,the interventions can be assessed on ease of i
309、mplementation.The models used in this report rated interventions on thelevel of complexity required for implementation(e.g.,single player implementations,broad consensus,and market change requirements).Figure 13:Each group of stakeholders can intervene to boost LDES economics as the technology matur
310、es.xxxi 1Integrative modeling can make tradeoffs among technologies;2Renewable energy targets can support other monetization(e.g.,through hourly energy attribute certificates);3Loan guarantees,loan-loss guarantees,inflation protection,insurance,return guarantees/securitizing decarbonization tech inv
311、estment.XX=Preliminary priority interventions Stakeholder group capable of interventionArchetypeInitial InterventionsExpanded InterventionsAdvanced InterventionsIntervention impacting economicsGrid planningIntegrative modeling1Renewable energy procurement targets2Build stakeholder supportRisk reduct
312、ion mechanisms3Develop a dynamic capacity requirementRenewable energy and storage subsidiesStorage capacity targetsFast-track permitting and interconnectionExpanded capacity marketsTransparency of T&D deferral dataLDES procurement targetsTargeted tendersState govt.State regulatorDOE/Fed.govt.Other3M
313、arket level(i.e.,ISO)Pathways to Commercial Liftoff:Long Duration Energy Storage35Section 4.a.iii:Need for IndustrializationKey takeawaysCurrently,the LDES supply chain is nascent,85%,the highest value energy shifts become longer than 4-6 hours,which favors LDESPathways to Commercial Liftoff:Long Du
314、ration Energy Storage51Appendix 2 Project Templates Modeling MethodologyExample project 1 Load-management services,EV-fleet use caseRepresentative stakeholderA large organization with emission-reduction targets that uses a significant amount of grid-based electricity and faces peak-demand charges fr
315、om their local utilityLDES use caseLDES could be used to lower peak-demand charges by lowering the organizations peak-electricity consumption from the gridObjective of analysisTo show where such a stakeholder might face peak-demand charges and answer the questions:how often might this happen and how
316、 much would LDES help save compared with the next-best alternative?Expected outputAn estimate of LDESs savings for this stakeholder in this scenarioMethodologyModeled the hourly electricity demand and hourly electricity costs for an illustrative delivery warehouse with a large EV fleet(e.g.,200 deli
317、very vans,10 linehaul trucks)and high seasonal-power demandCalculated a large delivery companys hourly electricity demand data from data on the charging patterns of heavy-duty-fleetsExtended“peak-electricity demand periods”throughout the winter months to reflect increased trucking for this stakehold
318、er during the holiday seasonCalculated the cost of charging the EV fleet based on electricity rates from Con-Edison(New York)Entered the hourly electricity demand and hourly electricity costs into a distributed-energy resource-optimization model to determine how storage could be deployed to lower th
319、e warehouses electricity billConfigured the model to optimize for electricity cost savings by dispatching the battery when electricity prices are the highestCompared Li-ion and LDES scenarios in the distributed-energy resource-model to assess the savings potential of the two technologiesKey inputsAm
320、ount of grid electricity useStakeholders timing and use of electricity Electricity pricing schedule for the local utilityCharacteristics of LDES battery(cost,duration,battery life)Characteristics of next-best alternative(Li-ion battery in this casecost,duration,battery life)Distributed-energy resour
321、ce-optimization modelPathways to Commercial Liftoff:Long Duration Energy Storage52Specific assumptions and outputsEV charging patterns10 linehaul trucks with a charging profile from 5 a.m.3:15 p.m.100 delivery vans with a charging profile from 1 p.m.11:15 p.m.100 delivery vans with a charging profil
322、e from 7 p.m.5:15 a.m.Battery characteristicsCapacity:10 MWDuration:12 hours(LDES);4 hours(Li-ion)Operating life:27 years(LDES);10 years(Li-ion)Round trip efficiency(RTE):69%(LDES);85%(Li-ion)Capital cost:LDES:$20M(energy capital cost:$23/kWh;power and balance of system cost:$1,075/kW)Li-ion:$13M(en
323、ergy capital cost:$235/kWh;power and balance of system cost:$175/kW)ITC,depreciation,and tax rate ITC:30%;assumed that 100%of capex is eligibleDepreciation schedule:5-year MACRSDepreciable basis reduction:50%of the ITC amountTax rate:21%Revenue/savingsDemand charges:Assumed primary savings is from r
324、educed demand charges from the battery lowering the peak demand LDES:$2M per yearLi-ion:$1.9M per yearEnergy charges:Lower energy charges by using the battery to shift power demand from high-price periods to low-price periodsLDES:$17,000 per yearLi-ion:$6,500 per yearOperating expenditures:Operation
325、s and maintenance:$19/kW per year(LDES)and$6/kW per year,escalating at 2%p.a.FinancingDebt:Sizes contribution based on a debt service coverage ratio of 1.8x with an interest rate of 4%for 10 years for LDES and 8 years for Li-ionProject owner:Contributes remaining capital and retains ownership throug
326、h the life of the asset.Owner assumed to have a large enough tax liability to be able to effectively monetize the ITC without a tax equity investor.Illustrative model outputs:Monthly electricity bills across scenarios:Pathways to Commercial Liftoff:Long Duration Energy Storage53Figure 25:Load manage
327、ment with LDES creates the highest level of monthly electricity cost savings.Example project 2 Firming for future PPAsRepresentative stakeholderCompanies with energy-intensive businesses that are looking to procure 24/7 clean energy via a PPA to meet near-term net-zero goalsLDES use caseThe PPA purc
328、hased by the customer would be based on a renewable asset that is paired with LDES to provide around-the-clock renewable energy Objective of analysisTo compare the cost of a 24/7 clean PPA that uses LDES versus one that uses Li-ionExpected outputTo size the intervention needed to bridge the cost gap
329、 between a 24/7 PPA using Li-ion versus one that uses LDESMethodologyAssumed that a data center was interested in signing a renewable PPA that could match their electricity demand at all hours Assumed that the PPA would feature a battery paired with a renewable asset to provide 24/7 clean energy mat
330、chingDeployed a PPA-firming model,which calculates the levelized-cost-of-energy under electricity-demand and energy-resource parameters to determine the costs of this PPA Compared the levelized cost of energy for LDES vs.Li-ion to assess the relative cost of each technology when it is used as part o
331、f a firmed PPA offeringLoad management illustrationPathways to Commercial Liftoff:Long Duration Energy Storage54Key inputsHourly,electricity demand profile of a data centerCharacteristics of the LDES and Li-ion batteries(e.g.,costs,duration)Local solar and wind pricesPPA firming modelSpecific assump
332、tions and outputsAsset characteristicsCapacity:60 MWDuration:10 hours(LDES);4 hours(Li-ion)Operating life:27 years(LDES);15 years(Li-ion)Round trip efficiency(RTE):69%(LDES);85%(Li-ion)Capital cost:LDES:$78M(energy capital cost:$23/kWh;power and balance of system cost:$1,075/kW)Li-ion:$54M(energy ca
333、pital cost:$157/kWh;power and balance of system cost:$264/kW)Illustrative output for a firmed PPA with LDESPathways to Commercial Liftoff:Long Duration Energy Storage55PPA firming illustrationFigure 26:100%PPA firming with LDES can be achieved at an LCOE of$109/MWh.Example project 3 Transmission and distribution(T&D)deferralRepresentative stakeholderA utility that needs to upgrade infrastructuredu