Energy Gang — "Flexible, Fast-Responding and Reliable: The Growth of Energy Storage Seems Unstoppable. What Could Possibly Go Wrong?"

Host: Ed Crooks (Wood Mackenzie)
Guests:

• Dr. Melissa Lott (Partner General Manager, Energy Technologies, Microsoft)
• Shweta Sundrum (VP, Solar & BESS Hybrid Systems, RWE; co-author, "The BESS Book")
• Julia Souder (CEO, Long Duration Energy Storage Council)

Release Date: March 4, 2025

Episode Overview

This episode delves into the explosive growth of energy storage—especially battery and long-duration solutions—as a cornerstone of the global energy transition. The panel breaks down what’s driving the rapid expansion, how storage is reshaping grids and renewables, the challenges facing business models and policy, and which technologies might lead the future. The conversation is lively, realistic, and practical, with a mix of optimism and caution about barriers and next steps.

Key Discussion Points & Insights

1. State of the Energy Storage Industry

Timestamps: 00:01–06:29

• Spectacular Growth: Global installed battery storage has “risen roughly tenfold” since 2021—from 17 GW to around 160 GW by 2024 (04:04). Battery storage now constitutes about half of global storage, up from 10%.
• Drivers: Declining lithium-ion costs (except for a brief 2022 supply chain spike), growing renewables (especially solar), tax credits, and regulatory support.
• Geography: China leads, with the US second. Other fast-growing markets: Australia, UK, Saudi Arabia.

"It’s truly been a transformational time for the industry...we’re truly in that hockey stick growth phase." – Shweta (06:29)

2. Types of Storage & Definitions: Short vs Long Duration

Timestamps: 08:16–12:00

• Hydro to Batteries: Shift from hydro-dominated storage (pumped hydro/water batteries) to batteries and diverse technologies.
• Contention over Definitions: Debate about what “long duration” means—some draw the line at 8+ hours, others at 100+ hours or seasonal/weekly scope.
• Technological Diversity: Beyond lithium-ion—compressed air, liquid air, thermal (rocks, salts, bricks), hydrogen, and more.

"We define long-duration storage as eight hour plus because... we have technologies deployed today that need to be incorporated more into the markets." – Julia (10:22)

3. Business Models & Use Cases

Timestamps: 12:52–21:38

• Renewable Firming & Arbitrage: Highest value in pairing with solar—to “firm up” production and perform time-shifting (charge when cheap, discharge when needed).
• Ancillary Services: Flexibility for quick-response grid services ("ancillary services" support reliability and resilience).
• Emergence of Storage-First Designs: Growing maturity in markets designing systems for storage from the outset versus retrofitting existing renewable plants.
• Innovative Applications: Industrial uses, waste heat capture, and “horses for courses”—tailoring technology to use case/location/market.

"It’s not a plug and play, one size fits all... The portfolio approach is really important to have a practical pathway forward.” – Melissa (12:00)
“We're seeing different use cases... repurposing fossil plants, colocating thermal with existing CSPs, and so on.” – Julia (17:08)

4. Replacing Peaker Plants: Can Storage Compete?

Timestamps: 21:38–27:48

• Batteries vs. Gas Peakers: Storage offers high flexibility and rapid response but regional policy, economics, and incentives are all decisive.
• Cost Competitiveness: Thermal storage in Europe now deployable at "$50/MWh or less" (25:46) versus $100–160/MWh for gas peakers.
• Local Impacts: Storage replacement for diesel/gas peakers improves local air quality and public health.

“It’s not a straightforward thing to say that battery systems are here to take over peaker facilities.” – Shweta (22:20)
“Thermal energy storage... are cost comparative and provide services: grid stability, frequency, inertia... There’s no subsidies needed.” – Julia (24:47)

5. The Economics & Role of Storage

Timestamps: 27:48–31:39

• Falling Battery CapEx: Down from $320/kWh in 2023 to $200–250/kWh now, before further credits (27:22).
• Energy System Context: Storage is “an amazing optimizer” but not a generator; system value comes from blending multiple sources (batteries, renewables, firm baseload).
• Value Clusters: Fastest market growth where renewables are high and variable—California, Texas, China—due to volatile or negative prices.

"Energy storage is like an amazing optimizer... But the point is, energy storage is not the whole energy system.” – Melissa (28:28)

6. Trends: AI, Data Centers, Electrification & Speed to Power

Timestamps: 31:39–39:22

• Rising Demand: After years of flat demand, data centers (AI, cloud) are driving need for 24/7 reliable power.
• Storage & Data Centers: Essential for backup, peak shaving, supporting resilient operations—scale must increase to meet hyperscaler requirements.
• EV Charging & Industrial Loads: Storage enables rapid EV charger deployment and supports new/expanded industrial zones where grid upgrades lag.
• Speed Advantage: Storage (esp. modular lithium-ion) can break ground and deploy much faster than conventional new gas generation.

“We are very excited by this prospect of growing electricity demands... Energy storage systems have proven to be effective for backup solutions...” – Shweta (32:22)

7. Policy & Supply Chain Uncertainties

Timestamps: 39:22–44:28

• US Policy Risks: Potential IRA (Inflation Reduction Act) rollback or faster phase-out, and tariffs on Chinese battery imports.
• Industry Resilience: Momentum and mature scale suggest no collapse, but higher prices/slower growth possible if credits/tariffs shift.
• Supply Chain Geopolitics: Lithium-ion supply chain dominated by China; other techs (esp. LDES) less exposed to one-country risk.
• Policy Innovation Elsewhere: India, Australia, and the EU cited as having creative market/policy experiments underway.

“The industry is at a mature phase... I don't think we'll see an extreme reversal... but we will see higher prices and maybe slower growth if such severe policy actions are taken.” – Shweta (41:00)
"We don't have a supply chain crisis [in LDES]... minerals are environmentally friendly and deployed in many places." – Julia (43:20)

8. Long Duration Storage: What Will Win?

Timestamps: 44:28–48:17

• No Single Silver Bullet: Diversity of chemistries is essential; market needs should drive adoption (no universal “winner”).
• US Lag: The US needs to make markets accessible for LDES value—ancillary markets, capacity payments, planning tools, and storage targets.
• Policy, Markets & Metrics: New frameworks for valuing and incentivizing LDES are needed; current “levelized cost of storage” is insufficient.

“The US is behind... What needs to happen is make the markets accessible to the benefits LDES can provide... Black start, load following, inertia—these do not get paid for their services today.” – Julia (45:55)

9. What’s Next in Storage Tech?

Timestamps: 48:17–49:52

• Hydrogen & Thermal: Growing interest in hydrogen for ultra-long-duration, and in “unsexy but effective” thermal storage to capture waste heat.
• Material Innovations: Interest in materials that can store heat with low losses for industrial processes.

“Heat isn’t sexy. Electrons are apparently. But it’s free energy, effectively, if we’re just chucking away that heat...” – Melissa (48:17)

Notable Quotes & Moments

• On Industry Maturity & Momentum:
  "The industry is at a mature phase... It's not going to be a showstopper, but we will see higher prices and maybe slower growth." – Shweta (41:00)

• On Portfolio Approach to Tech:
  "It's not a plug and play, one size fits all... We need to look at what is the right mechanism." – Julia (47:42)

• On Thermal Storage:
  "Thermal energy storage... are cost comparative and provide services: grid stability, frequency, inertia..." – Julia (24:47)
  "There’s so much waste heat in the system. Can we do some thermal energy storage?" – Melissa (48:17)

• On AI/Data Centers:
  "We are very excited by this prospect of growing electricity demands... supporting the needs for data center requirements." – Shweta (32:22)

Important Timestamps

• 00:01–06:29: Scene-setting, market growth stats, introduction of guests and terminology.
• 08:16–12:00: Definitions and debate over what “long duration” means.
• 13:34–21:38: Business models, maturing markets, project design/retrofitting, industrial and unique applications.
• 22:20–27:48: Peaker plants, price comparisons storage vs. gas, local air quality.
• 27:48–31:39: Cost trends, system optimization, regional market winners.
• 31:39–39:22: Data centers, EV, electrification, speed of storage deployment.
• 39:22–44:28: Policy risks (IRA, tariffs), supply chain outlook, comparison to global progress.
• 45:55–48:00: US market lag, what policies are needed for LDES.
• 48:17–49:52: Promising technologies (thermal, hydrogen), what’s "sexy" in storage.

Conclusion & Takeaways

• Energy storage is indispensable for integrating renewables, supporting grid reliability, and delivering decarbonization at scale.
• Tech and business model diversity are crucial—there is no single “winner,” and the needs are location/sector specific.
• Policy clarity and investment continuity are vital to keep momentum as the industry faces new headwinds from potential subsidy changes and supply chain concerns.
• New frontiers include supporting data centers, industrial loads, rapidly deploying assets, thermal storage innovations, and decarbonizing hard-to-abate sectors.
• Levelized cost is not the only metric—valuing grid services, resilience, and flexibility matters.

Further Reading/Resources & Recommendations

• The BESS Book: Recommended for deep dives in battery storage tech and deployment (Shweta Sundrum, 50:18).
• Threat Multiplier by Sherri Goodman, on climate and national security (Melissa, 51:53).
• Electric Ladies Podcast: Noted for in-depth eco-energy discussions (Julia, 53:15).
• Long Duration Energy Storage Council Annual Report: Features global technology/project maps (Julia, 53:35).
• Wood Mackenzie’s upcoming India energy outlook—watch for new energy market research (Ed, 54:39).

Memorable Moment

“If we can help on the planning—get the right modeling in place—the markets will come. But levelized cost of storage does not work for long duration storage. It's comparing apples to zebras. We’re missing huge opportunities.”
– Julia (47:34)

This episode is a comprehensive, thought-leading primer on the realities, opportunities, and obstacles in the rapidly evolving energy storage sector, with a practical, policy-aware lens and a lively, optimistic tone throughout.