Market structures can be redesigned to better support long-duration energy storage (LDES) by updating market designs and policies to appropriately value and incentivize the unique capabilities of LDES technologies. Current market frameworks often do not adequately reward energy storage systems that provide services beyond short durations, typically under four hours, creating a barrier to the deployment of longer-duration solutions essential for deep decarbonization and grid reliability.
Key elements for redesigning market structures include:
- Incorporating Longer Duration Value Signals: Market rules should recognize the multi-day or seasonal storage services LDES can provide, such as managing renewable intermittency, peak load shifting, and grid resilience during prolonged outages or low renewable output periods. This involves creating products or markets that remunerate storage not just for instantaneous energy capacity but for sustained discharge duration and reliability.
- Flexible Capacity Commitments and Revenue Stacking: Allowing LDES to stack revenues from multiple value streams—capacity, ancillary services, energy arbitrage, and grid services—over extended periods can improve project economics. Market designs need to facilitate participation of LDES in these overlapping revenue opportunities.
- Updating Procurement Policies and Incentives: Governments and grid operators can accelerate LDES adoption by offering targeted subsidies, tax incentives, and procurement mechanisms favoring storage capacity in the 50-100 MW range, which balances scale and cost-effectiveness for grid stabilization and renewable integration.
- Grid Modernization and Enhanced Market Transparency: Modernizing grid infrastructure and improving market data transparency enable better forecasting and operational integration of LDES, ensuring markets reflect the true system value of long-duration storage assets.
By implementing these redesign strategies, markets can better align financial incentives with the operational benefits of LDES, accelerating their deployment and enhancing grid reliability, renewable integration, and decarbonization efforts.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-market-structures-be-redesigned-to-better-support-long-duration-energy-storage/
