Some of the contents of this article were originally delivered during a panel discussion at the Lockton Bankable Energy Storage Summit, on 12 November 2025 at Sea Containers House, London.
As renewable energy plays an increasingly vital role in the global energy mix, forms of long-duration energy storage (LDES) are vital to meet overall energy demand, manage price volatility, and ensure reliable supply during periods of low generation. But as energy demand continues to grow, developers are increasingly targeting longer durations, and more complex projects. Inevitably, this introduces new challenges and risks that must be managed to make LDES a bankable prospect.
The UK’s Clean Power 2030 (opens a new window) plan sets a target of 4–6 GW of operational LDES by 2030, up from approximately 2.9 GW today – all of which is pumped-storage hydro (PSH) – with that figure growing to 5–10 GW by 2035. The LDES cap and floor scheme (opens a new window), launched in October 2024, is designed to further boost large-scale UK-wide deployment. Lithium-ion is by far the dominant form of proposed LDES technology, having benefited from a significant reduction in capital expenditure costs due to economies of scale, manufacturing advances, improvements in energy densities, and global supply chain maturity. But alternatives also exist – including vanadium flow batteries, sodium ion batteries, compressed-air energy storage (CAES), liquid air energy storage (LAES), and PSH.
Beyond eight hours – the challenges of longer duration
LDES introduces a distinct risk landscape that differs from 1-4 hour systems. While shorter-duration systems benefit from mature technologies, clearer revenue mechanisms, and extensive operational data, LDES projects stretch across longer timeframes and wider uncertainty bands.
The first major challenge for alternatives to lithium-ion and PSH is technology maturity. Many proposed solutions, such as vanadium flow batteries, sodium ion batteries, CAES, and LAES, are still scaling from pilots to commercial deployment. Limited track records raise uncertainty around long-term performance, operational risks, and maintenance requirements. That said, it is believed these technologies have a lower risk of thermal runaway than LFP, which if proven at scale will make them a very interesting proposition.
Secondly, LDES also faces market and revenue uncertainty. The value of multi-hour or multi-day flexibility depends on grid congestion, policy incentives, and the pace of renewable deployment. While the UK’s cap-and-floor scheme aims to improve revenue stability, long-duration assets still face material uncertainty about how future market structures will reward seasonal or multi-day resilience.
Capital intensity also increases with duration, raising exposure to cost overruns, construction delays, financing conditions, and errors in long-term performance assumptions. Small changes in long-term assumptions, such as curtailment patterns and grid infrastructure, can significantly affect returns.
Finally, the operational-risk profile changes as stored energy increases. Longer-duration projects require more total energy on site, achieved by deploying more containers or higher-energy-density units. Higher total stored energy increases the consequences of catastrophic events such as thermal runaway. This does not mean that longer duration inherently increases the probability of thermal runaway, but it does mean that design choices, including spacing, ventilation, gas detection and suppression systems, become more critical to containing potential incidents.
Why risk management is key to bankability
Effective risk management is critical for increasing investor confidence, and making LDES projects more bankable. Project owners can take several key steps to reduce operational, technical, and financial risk:
Project design – Prioritising thermal management, adequate container spacing, high-density layout considerations, and advanced energy management systems helps prevent cascading failures, ensures adequate ventilation, and allows easier access for maintenance. Thoughtful design reduces the likelihood of operational interruptions and enhances overall safety.
Comprehensive testing and validation – Extended pilot testing and independent validation of technology performance under multi-day operating scenarios provide confidence in real-world reliability. Simulating extreme events and prolonged discharges uncovers potential weak points before full-scale deployment.
Operational protocols and monitoring – Implementing continuous monitoring, predictive maintenance, and clearly defined emergency response procedures enables early detection of anomalies. Sophisticated software and sensor integration ensure that potential faults, thermal issues, or imbalances are identified and mitigated before they escalate. Documenting compliance with recognised standards (BS EN IEC 62619; BS EN IEC 62933 series) and results from large-scale fire propagation tests (e.g., UL 9540A) strengthens lender confidence.
Stakeholder alignment and transparency – Clear communication with lenders, regulators, and off-takers about technology choices, expected performance, and contingency plans builds confidence in project viability. Transparent reporting on testing results, operational protocols, and risk mitigation measures strengthens trust and facilitates financing.
Phased deployment and modularity – Deploying capacity incrementally allows teams to learn from early operations, adjust designs, and incorporate improvements before scaling up. This approach reduces financial and operational exposure, mitigates unforeseen risks, and ensures smoother integration into the grid.
Talk to us
The need for energy storage is greater than ever. As developers pursue longer-duration projects, the challenge is to ensure bankability in the face of new risks. Early engagement with the insurance industry can help identify and mitigate these exposures, guiding system design, operational protocols, and contingency planning. Our specialists work with you to translate these insights into practical risk management strategies. The result is clarity for lenders and investors, and protection for your capital investments.
For more information, reach out to a member of our team.
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