Northeast leads U.S. in storing energy for long periods

Latest update to Cleantech Tracker shows battery boom underway

BY: AMENA H. SAIYID

Read this article and more of the latest on climate & tech at ciphernews.com.

When an undersea cable supplying power to Massachusetts’ Nantucket Island went offline at the end of April, the island was prepared (and not just because there was a second cable as a backup).

Nantucket has a six-megawatt Tesla battery system on the island that was installed five years ago by New England energy provider National Grid to supply up to eight hours of backup power in case of an unexpected outage or to meet surging demand during the busy summer tourist season.

In the years since, the battery storage industry has taken off in the United States, especially following the 2022 passage of the Inflation Reduction Act (IRA), which included generous tax credits for energy storage. The surge in storage mirrors the growth in renewable energy installations, which need batteries to deliver power when the sun isn’t shining or the wind isn’t blowing.

Indeed, the Northeast is a vanguard on this front: The region boasts at least three of the small handful of lithium-ion battery storage systems in the U.S. capable of supplying at least eight hours of stored power during peak times of electricity use, according to the latest update to Cipher’s Cleantech Tracker this month.

The Tracker analyzes data, updated quarterly, from the Clean Investment Monitor, a project led by research firm Rhodium Group and the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research.

Two other eight-hour lithium-ion storage sites are operating on Long Island in New York, opened in 2018 and 2019 by NextEra Energy. Another eight-hour lithium-ion system is backing up New Mexico’s largest solar facility.

Cipher updated its Cleantech Tracker in December to include installed energy storage projects across the country (in yellow). Data for energy storage has a time lag due to reliance on government statistics, so it may take longer for newer projects to appear on Cipher’s tracker.

As greater amounts of solar and wind are added to the nation’s grid and more industries decarbonize, an uninterrupted supply of clean power will be needed to provide balance. For a variety of technical and economic reasons, though, most of the batteries being installed around the country currently have a maximum storage capacity of just four hours.

“Today, there isn’t a market value proposition for installing eight-hour batteries, but it will increase as more renewable energy is added to the grid,” Paul Denholm, senior research fellow with the Colorado-based National Renewable Energy Laboratory (NREL), told Cipher. “Hard to say when, but you don’t want to sit around and do nothing. You want to make sure the technologies are all there.”

The state of storage today

Battery storage has drawn $122 billion in announced investments in recent years, more than half of which have been announced since the IRA’s passage, according to Cipher’s Cleantech Tracker.

Most of those dollars are going into lithium-ion batteries that can supply four or fewer hours of electricity to the grid, generally sufficient to support the wind and solar infrastructure that exists today.

“At present prices, energy storage systems have not been cost-effective for durations longer than six hours as opposed to, say, diesel fuel generators,” Haresh Kamath, director of Electric Power Research Institute’s distributed energy resources and energy storage division, told Cipher in an email.

Another significant reason for the dominance of four-hour battery technology is the low cost and familiarity of lithium-ion technology, the most common type of battery found in everything from cell phones to electric vehicles.

Lithium-ion batteries have seen 90% cost declines since 2010, according to an International Energy Agency report. Indeed, 99% of battery installations in recent years use lithium-ion technology.

But installing enough large-scale lithium-ion batteries to store more than a few hours of electricity can get expensive, partially explaining why we see so few on the U.S. grid today.

This technology has another downside too. These batteries depend on critical minerals largely processed in China. And they are highly flammable; a fire last year at the East Hampton Energy Storage Center kept the site offline until this July.

The other type of energy storage that exists on a significant scale across the U.S. is pumped hydropower, a long-existing technology that stores water in a reservoir and can release it to generate electricity on demand, which allows for longer and flexible storage times.

Although more than four dozen new hydropower projects are eligible for IRA dollars, most of the 43 existing ones remain ineligible unless they are expanded or upgraded, according to the National Hydropower Association (NHA). (Cipher’s tracker includes fewer new pumped hydropower projects than the trade group counts because the tracker relies on the Clean Investment Monitor, which pulls from a different set of government data than NHA.)

The future of storage

Some new technologies, both present and planned, are using metals other than lithium — such as sodium-ion, iron-flow and iron-air batteries — that have much longer storage capacities than lithium-ion batteries. But they also have much higher upfront capital costs, according to analysts.

Battery developers in general must overcome regulatory hurdles, such as delays in permitting, siting and connecting the systems to the grid, according to the American Clean Power Association (ACP).

“Some projects are waiting years to be connected,” Noah Roberts, vice president of energy storage at ACP told Cipher.

See Cipher’s coverage of long duration energy storage hurdles, solutions and growth.

What’s more, President-elect Donald Trump has vowed to roll back tax credits and regulations favoring electric vehicles and has been generally dismissive of wind energy, factors that could generate headwinds for all cleantech, including battery developers.

Still, progress is being made.

Oregon-based ESS Inc. has installed rechargeable iron-flow batteries at multiple California sites and four other states including Michigan. These types of batteries can achieve 12-hour storage capacity, are not flammable and can be charged and discharged multiple times each day with no loss of capacity or reduced lifetime.

“Unlike lithium batteries, which were originally developed for camcorders and then used for cell phones, computers and then cars, our iron-flow batteries are specifically designed for grid applications,” ESS CEO Eric Dresselhuys told Cipher.

Other projects have come from Massachusetts-based Form Energy, which is pursuing iron-air battery systems in seven states including Minnesota and Maine. Meanwhile, Natron Energy is building a gigawatt-scale sodium-ion battery plant in North Carolina and three California facilities developed by Central Coast Community Energy will use the less-common vanadium redox flow battery.

Several other lithium-ion battery projects with capacities of eight hours or longer are being developed across multiple states, such as Oregon, New York, Arizona and others, but those won’t come online until 2025 or later, Vanessa Witte, previously senior research analyst at consultancy Wood Mackenzie and now senior manager of market strategy at Galehead Development, told Cipher.

Undoubtedly, investment in batteries storing more than four hours of energy will grow, but until the economics and demand tilt in their favor, analysts like Denholm from NREL expect shorter duration lithium-ion batteries to be the storage technology of choice.

Editor’s note: ESS Inc’s and Form Energy’s investors include Breakthrough Energy Ventures, a program of Breakthrough Energy, which also supports Cipher.