US Capacity Markets Undervalue 8-Hour Batteries, Hindering LDES Financing

1 articles · Updated · Energy-Storage.news · Aug 19

Raafe Khan said US capacity-market design leaves long-duration storage hard to finance because revenue gains from longer discharge times are too small to justify much higher capital costs.
PJM’s latest auction gave a four-hour battery 59% ELCC, a six-hour system 68%, and an eight-hour system 71%, while one- to three-year contract terms and a roughly $325-per-MW-day price cap further squeeze returns.
Khan said data-centre demand is boosting battery deals but mainly as an interconnection-speed and margin play, not the core driver of storage growth, which he tied to arbitrage opportunities from heavy solar and wind buildout.
Beyond 10 to 12 hours, he said non-lithium technologies can beat lithium-ion when projects are paid for availability and cycle only 100 to 200 times a year, while fire safety and 50-year asset life can also shift economics.
Khan contrasted US rules with Britain, where an eight-hour battery gets about 84% accreditation and can secure contracts up to 15 years, underscoring how market design shapes LDES deployment.