The State of Energy Storage: From Lithium-Ion to 100-Hour Batteries
In 2016 the Aliso Canyon storage reservoir began leaking gas, which was needed to supply southern California’s peak electricity demand. Within months, over 77 MW of battery storage was installed and commissioned - the fastest new capacity ever been brought online.
Soon, industry leaders referred to battery energy storage as the “Swiss Army Knife” of energy. Lithium batteries can provide multiple services, from capacity to forward reserves and frequency regulation.
As more solar energy flooded the system and cut energy values mid-day, batteries moved nearly valueless solar energy and delivered it into evening peaks when prices were often two to three times as high.
Today, nearly half of all utility scale solar projects are hybridized with storage. Batteries don’t pair as well with wind energy that doesn’t have the same predictable output.
“Storage as transmission” saw batteries in transmission-constrained areas absorbing energy when there were no transmission limitations, and energy released on the far side of the transmission constraint when needed.
Storage is also in the distribution system, supporting stressed grid assets during peak periods. It’s in residential and sometimes commercial markets, especially California: rooftop solar sent back to the grid is valued at next to nothing; it makes economic sense to store the energy and consume it later, avoiding paying over 30 cents per kWh.
There’s also a new and rapidly growing market for batteries with data centers having difficulty connecting to the grid. Data centers add on-site batteries and serve loads from storage during system peaks, enabling faster interconnections.
This matters: one analyst recently commented that accelerating interconnection of a 1 GW of data center for one year may be worth $7 bn.
So, what does the market look like these days and where might it be headed?
Consulting firm Wood Mackenzie and American Clean Power recently issued its U.S. Energy Storage Monitor report, observing that over 50 GW and 144 GWh of energy storage has been installed in the U.S. since 2019.
A record 18.9 GW and 51 GWh were installed in the U.S. in 2025.
Looking forward, WoodMac projects about 500 GWh of storage to be added between now and 2031, with a wide high-low variance of 52 GW of capacity by 2031.
As more variable renewables are added, the challenge of resource adequacy – balancing growing demand with supply – grows. Utility planners must think about “renewable energy droughts,” e.g., a five-day rain event deluging California cutting solar output >50%, or a snowstorm covering solar panels for days. No wind for a few days is also an issue. Longer-duration storage will be needed to firm up those resources.
Some long duration technologies – compressed air, liquid CO2, liquid air – all of which require compressors and lose roughly 30% of the energy with each cycle - may be gaining strength, with commercial projects being announced.
In California, Hydrostor is developing a compressed air energy storage designed at 500 MW and 4,000 MWh.
Italian start-up Energy Dome is using liquid CO2, with a signed contract with Alliant Energy for a 20 MW 10-hour duration project to start construction this year in Wisconsin. In the first week of April, Dome signed an MOU with New Era Energy & Digital, Inc. to support its Texas Critical Data Centers site in Odessa. Energy Dome also has an agreement with Google that will likely include multiple projects across a global footprint.
Highview Power – a liquified air storage company, expects a 50 MW, 300 MWh project in Manchester, England to start flowing power this year. A project in Scotland will is planned to deliver 300 MW and 3.2 GWh, coming online between 2028 and 2030.
Some large pumped storage hydro projects are planned, but take years to permit and build, with none expected online until the 2030s.
Form Energy uses an iron-air battery technology with 100 hours of durations (though with 40% roundtrip efficiencies). A recent announcement with Xcel Energy and Google has 300 MW and 30 GWh coming online in phases between 2028 and 2031. An even more recent deal is with Crusoe for 120 MW and 12 GWh, with deliveries starting next year. Those two deals cover 80% of last year’s total U.S. GWh storage additions.
By 2028, Form plans on 500 MW and 50 GWh of annual factory output, and plans further expansion plans, with past presentations suggesting expansion by 10x.