Long-Duration Storage Installations Surge in 2025

Why It Matters

The rapid scale‑up highlights China’s policy leverage but underscores financing gaps that could stall broader commercial adoption of LDES technologies worldwide.

Key Takeaways

• 15 GWh LDES installed 2025, up 49% YoY
• China contributed 93% of global LDES capacity
• Compressed air storage led at 45% share
• Funding fell 30% while VC investment dropped 72%
• VRFB costs 30% lower by 2034, still 240% higher

Pulse Analysis

China’s aggressive policy framework has turned it into the de‑facto hub for long‑duration storage, with provincial mandates and the Special Action Plan for Development of New Energy Storage (2025‑2027) catalyzing a near‑monopoly in deployments. This concentration enables economies of scale for technologies such as compressed‑air and thermal storage, but it also creates a market skewed toward state‑backed projects, limiting private‑sector diversification and cross‑border technology diffusion.

The technology composition reveals a clear hierarchy: compressed‑air systems now account for nearly half of LDES capacity, while thermal storage and vanadium redox flow batteries fill the remaining share. Yet, cost differentials remain stark. Even as VRFB project expenses are projected to fall over 30 % by 2034, they will still be more than double the cost of comparable lithium‑iron‑phosphate batteries for four‑hour applications. This price gap, combined with lithium‑ion’s entrenched supply chain and falling prices, keeps LDES on the periphery of commercial viability, relegating it to niche, long‑duration grid‑balancing roles.

Financing trends add another layer of risk. Global LDES funding contracted 30 % in 2025, and venture‑capital inflows plunged 72 %, pressured by high interest rates and competing capital demands from AI data centers and traditional grid infrastructure. Without a clear pricing mechanism or sustained investment, the sector may struggle to achieve the scale needed for cost reductions. Policymakers will need to craft targeted incentives and market structures to bridge the financing gap, ensuring LDES can complement lithium‑ion solutions in the transition to a resilient, low‑carbon energy system.