IEEFA Sees Growing Momentum for Long-Duration Energy Storage as U.S. Battery Market Expands

The rapid growth of short-duration battery storage in the United States is creating new opportunities for long-duration energy storage technologies, according to a new briefing note released by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report notes that the widespread adoption of two- to four-hour lithium-ion battery systems has increased interest in storage technologies capable of delivering electricity for extended periods, including systems that can provide up to four days of power. Long-duration storage is increasingly being viewed as a solution for replacing costly and carbon-intensive gas peaker plants while supporting grid reliability during periods of low wind and solar generation.

According to data from the U.S. Energy Information Administration (EIA), installed short-duration battery storage capacity grew from 1,694 MW in January 2021 to 43,419 MW in January 2026. Current forecasts indicate that installed capacity could nearly double again by the end of 2027, reaching approximately 90 GW.

IEEFA said the success of short-duration battery storage has helped establish confidence in the broader energy storage sector and created a pathway for long-duration technologies to enter the market. The report also highlighted growing support from data center operators and artificial intelligence (AI) companies, which are emerging as significant backers of long-duration storage projects due to their increasing demand for reliable, around-the-clock electricity.

In addition, several U.S. states have introduced procurement mandates requiring utilities to deploy long-duration energy storage resources, providing further market certainty for developers and investors.

Dennis Wamsted, Energy Analyst at IEEFA and author of the report, said short-duration battery storage has already demonstrated its value in helping utilities manage reliability and cost challenges. He noted that similar progress could be achieved in the emerging long-duration storage market as technologies mature and deployment accelerates.

The briefing also highlights the geographic expansion of battery storage beyond early-adopter states such as California and Texas. While battery storage has become an integral part of grid operations in both states, helping improve reliability and reduce electricity costs, other regions are increasingly adopting the technology.

Arizona was identified as one of the emerging markets where utilities are expanding battery storage deployment. The report points to the growing use of energy storage by Arizona Public Service as an example of how utilities are leveraging batteries to integrate renewable energy resources and strengthen grid performance.

According to IEEFA, battery storage enables utilities to dispatch renewable energy when demand is highest, reducing dependence on fossil fuel generation while improving grid flexibility and supporting lower electricity prices for consumers.