The grid was designed for a different era, built on a straightforward premise: generate electricity when needed, move it to where it is consumed, and keep the system in balance in real time. For decades, that model held. Demand was quite predictable, and generation could be dispatched on command. Stress events were measured in hours, and the tools for managing those events were well understood.
That premise is under pressure from every direction. Data centres are coming online at a pace that is reshaping regional load forecasts overnight. Electrification of transport and industry is adding demand that did not exist in prior planning cycles. Weather events are becoming more persistent, more severe, and increasingly capable of suppressing both generation and demand response simultaneously. The fundamental obligation remains unchanged: the lights stay on at an affordable price.
The clean firm power gap
Adding to complexity, renewables have reshaped the generation mix across North America at remarkable speed, and that progress matters. But generation that depends on wind and solar remains an incomplete answer to what this new grid situation requires. The grid needs clean, firm, dispatchable power that can be called on at any hour, across any weather event, for as long as the system requires it.
Gas peakers have historically filled that role, but they carry fuel price exposure that is hard to hedge (especially with the 2026 geopolitical climate), they emit when the grid is already under its greatest stress, and they are becoming progressively harder to permit and site. The honest assessment is that the grid lacks the flexible capacity resource needed at scale.
Long duration energy storage (LDES), defined as 8+ hours or more, both intraday and multi-day, can fill the specific capability that the grid is missing: the ability to store energy across hours or days and dispatch it precisely when and where the system needs it most. When a multi-day event pushes the system beyond the limits, grid operators need stored energy that can sustain delivery across the full duration of the event. Four-hour batteries simply fall short.
LDES is a diverse set of technologies. Flow batteries, compressed air, iron-air, thermal storage, and gravity-based systems each carry different cost profiles, duration capabilities, material inputs, and geographic requirements. A remote community with constrained transmission access needs a different solution than a dense urban load centre managing week-long heat events, and technology-neutral procurement frameworks give the market the best chance of matching the right solution to the right application.
Let’s consider LDES as infrastructure, shall we?
One reframe that consistently matters in policy conversations is to view LDES as infrastructure.
Transmission lines move power through space, but LDES moves power through time. A project sited at a constrained point on the grid:
- Absorbs surplus generation
- Reduces congestion
- Defers capital expenditure on new lines and substations
In many cases, LDES can replace the need for gas peaker plants entirely. Evaluated as infrastructure across a 30-to-50-year asset life, the system value of LDES is considerably larger than most wholesale market revenue stacks currently reflect, and that gap between system value and market compensation is where the most important work lies. A singular focus on first cost misses the broader infrastructure opportunity.
Market design is the structural barrier
To make this point, let’s talk about market design because LDES projects providing intraday and multi-day reliability contributions routinely struggle to recover adequate revenue through these structures, and the financing gap that results is a market design problem. Consider these issues:
- Wholesale electricity markets were made to fit short duration resources
- Capacity markets reward availability during narrow peak windows
- Ancillary service products value speed of response over depth of discharge
- Energy arbitrage mechanisms were built for daily cycles
The bottom line: The market structures are the constraint.
But FERC and the independent system operators have the tools to address these challenges by extending capacity market valuation windows, creating products that value intraday and multi-day contributions, and updating interconnection processes. How quickly can those reforms move forward?
The bankability challenge
I am frequently asked about which LDES technologies are “winning” and perfectly suited for project financing. My answer is straightforward: many are approaching or even beyond commercial readiness milestones. But a persistent bankability gap remains that continues to limit access to non-recourse debt: the structured evaluation of LDES.
Investment and credit committees evaluate LDES technology providers across three dimensions: credit risk, deployment maturity and track record, and technology risk validation. Structured evaluation of infrastructure matters because it translates technology performance into the language of capital markets. The LDES Council’s Bankability Assessment Framework (https://ldescouncil.com/accelerating-long-duration-energy-storage-bankability/) identifies five dimensions lenders evaluate when assessing LDES projects:
- Revenue certainty
- Technology risk
- Contractual structures
- Regulatory treatment
- Market design
Although complex, these are each solvable. The LDES Council is making the case that the barriers to financing at scale are both structural and addressable.
What the policy landscape looks like right now
This spring, I have been engaged in New York and Massachusetts as both states advance new LDES carveout legislation that explicitly creates space for longer duration resources. Virginia passed both Senate and House bills this session that incorporate LDES into their resource adequacy frameworks. I think Pennsylvania and Arizona are on the cusp of embracing LDES as well. I see these as genuine shifts in how state policymakers understand the grid reliability challenge and risk, which is a hard-fought recognition that existing frameworks were designed to value a different class of solutions than what the moment requires.
These developments represent genuine shifts in how state policymakers understand grid reliability risk and the growing limitations of existing planning frameworks. In conversations with utilities and state regulators this year, reliability concerns consistently come up before decarbonization targets. California’s 1,000 MW LDES procurement mandate from January 2026 is already producing real projects. States creating clear demand signals are seeing technology providers and project developers respond positively and capital beginning to follow. The states that have yet to establish procurement targets or update their resource adequacy plans i.e., waiting on the sidelines risk paying more for reliability later.
At the federal level, manufacturing incentives and investment tax credits remain for now, and have built a meaningful foundation. What the industry needs, however, is stability. Uncertainty about whether existing incentives will persist gets priced into every project as a risk premium, raising the cost of capital and slowing deployment. Keeping incentive structures technology-neutral, valuing longer durations, and keeping current incentives in place while the policy environment shifts are among the most consequential things federal policy can do in 2026.
The commercial momentum is already here
The deals closing in recent months are commercial commitments, and they are speeding up in pace. Hydrostor has received final permits for its 500 MW / 4,000 MWh compressed air project in California, with a power purchase agreement already in place. Noon Energy’s deal with Meta, structured with a pipeline of up to 1 GW, signals that hyperscalers are locking in long-duration supply at scale and that data centre procurement is becoming a significant demand driver for the industry. Form Energy’s 300 MW / 30 GWh iron-air project with Xcel and Google is the largest battery deal ever announced.
Project costs are projected to fall between 5 and 47% by 2030 across LDES technologies, based on 2025 Benchmarking Report (https://ldescouncil.com/cost-benchmarking-for-long-duration-energy-storage-solutions/) that the LDES Council issued with EPRI. These are 30 to 50 year assets with zero fuel price exposure, without the degradation concerns that affect shorter-duration batteries, primarily free of FEOC and thermal runaway concerns, and with upgradeable duration as grid needs evolve. The economics look fundamentally different when evaluated across the full asset life rather than against first cost alone.
The path forward
Policy, financing, and market rules are finally starting to pull in the same direction. The finish line is closer than it has ever been. The bankability gap is structural and solvable. The policy frameworks and commercial signals and tools needed to close it are all in motion. LDES technologies are ready to meet the moment, and the grid we need is within reach.
