Hydrostor’s extended storage technology is ‘bankable’ today, but ‘not every market is ready for it’: CEO

New York announced a tender for the amount of 5 million dollars last month for grid-connected long-term energy storage projects, continuing the allocation of more than $30 million under LDES from 2022. provides up to 6 GW of energy storage capacity in the New York Independent System Operator’s network until 2030, when renewable energy sources replace fossil fuel-fired power plants being retired.

However, the Empire State’s 2030 goal pales in comparison up to 37 GW of LDES power The California Energy Commission said in January it could be needed by 2045 if the state retires natural gas-generating assets.

Grids like California’s — already heavily weighted toward renewable energy and almost certain to continue decarbonizing — are “leading lights” for Hydrostor, a Toronto-based company that develops and operates energy storage systems that use compressed air, rock and water, co-founder and CEO Curtis VanWalleghem told Utility Dive.

Hydrostor is moving forward plans for a $1.5 billion, 500 MW/4 GWh storage project in Kern County, Calif., which is “well on track to meet California’s long-term energy storage needs by the end of the decade,” Hydrostor CEO Jon Norman said he said in MarchThe project, called Willow Rock, is Hydrostor’s third planned utility-scale project, following an operating demonstration facility in Ontario and a 200 MW/1.6 GWh facility in progress in AustraliaVanWalleghem said.

Innovation in compressed air energy storage

The energy storage facilities being built by Hydrostor, which has its U.S. headquarters in Denver, use a patented “advanced compressed air energy storage solution,” VanWalleghem said.

Under this system, excess grid or off-peak energy is used to produce warm, compressed air and the heat is then extracted for use in a later discharge process. review on the Hydrostor websiteIt then sends the cooled, compressed air deep underground for temporary storage in specially constructed caverns, which use a reservoir of water to increase the density of the surrounding ground and maintain pressure in the system. When the system is ready to discharge, it releases the weight of the water, sending the air back to the surface to be recombined with the stored heat and passed through a turbine to generate electricity.

“The optimal data retention time” for this technology is eight to 24 hours, VanWalleghem said.

According to the company, both compressed air storage and thermal storage are less expensive than lithium-ion batteries for periods longer than eight hours. May Report from BloombergNEFMeanwhile, compressed air is one of only three longer-lasting energy storage technologies — along with lithium-ion batteries and pumped-storage power plants — which VanWalleghem says can now easily get project financing.

“Not every market is ready”

However, just because Hydrostor’s technology is “bankable” today, according to VanWalleghem, doesn’t mean it will be cost-effective to deploy anywhere.

“Not every market is ready for long-term storage yet,” he said.

While Hydrostor’s capital costs are relatively low — just over $3,000/kWh for a 10-hour system and about $50/kWh for each additional hour of storage currently, with a “clear path” to a further 20 percent cost reduction, according to VanWalleghem — the challenge for any longer-duration storage technology is the lack of market incentives for periods longer than 10 hours, said Vanessa Witte, senior analyst of energy storage research at Wood Mackenzie.

“The economics of storing data longer is actually very important because such systems are expensive,” Witte said.

Grid operators can encourage longer storage through programs that compensate storage owners for providing grid services or meeting resource requirements for longer periods of time, Witte said. Versions of the Electric Reliability Council of Texas’ grid services program, which effectively encourages 2-hour sessionsand the California Independent System Operator’s resource adequacy rules that support 4-hour time periods could provide market signals for LDES systems, she said.

“We need to start recognizing the full contribution that LDES and other flexible resources provide to the grid,” including support during periods of low renewable generation, resource adequacy and grid services such as frequency regulation and inertia, former Federal Energy Regulatory Commission chairman and current Hydrostor adviser Rich Glick wrote in Utility Dive last month.

Recent procurement activities such as: CAISO’s December Freedom of Information Request for eight-hour storage assets, show that some grid operators are taking the need for longer-term capacity seriously, VanWalleghem said. But others are acting with less urgency, even as existing thermal assets are retired and state and provincial climate goals make new gas generation a more challenging proposition, he added.

“Sometimes you have to see the blackouts before the will comes,” he said. “In the next two to five years, I have a hard time imagining a large market that won’t be in dire straits without long-term storage.”

VanWalleghem is optimistic that public and private incentives, including Inflation Reduction Act: Tax Relief for Investments for energy storage technologies and 24/7 clean energy purchasing by major corporate electricity consumers, LDES developers like Hydrostor will benefit. In particular, private companies with aggressive decarbonization goals are “taking this into their own hands (and going) wherever there are clean electrons,” he said.

Adapting to a lower carbon future

Hydrostor takes into account occasions such as this year’s Microsoft-Google-Nucor Advanced Clean Energy RFI and its technology is well-suited to serving high-demand industrial customers such as steel mills, data centers and green hydrogen plants, VanWalleghem said. But in North America, the company’s “bread and butter” for now is making up for shortfalls in renewable energy generation, he added.

Hydrostor’s value proposition is different in Australia, where it is planned Silver City Energy Storage Center has a long-term contract with the country’s largest transmission provider to serve as a “wireless alternative,” VanValleghem said.

Silver City “is a storage solution, not a transmission solution,” he said.

As Hydrostor’s website states, the 1.6 GWh project “will eliminate the need for large investments in expensive new transmission lines and the need to discontinue the use of highly polluting diesel generators.”

In North America, Hydrostor has withdrawn its application to build a 400 MW/3.2 GWh facility on the California coast last year amid permitting challenges, but the company has about 15 other utility projects underway in North America and Australia that it hopes to announce contracts for in the next year or two, VanWalleghem said.

He added that although Hydrostor’s network services area is currently best suited to CAISO and, more broadly, Western Interconnection, the company is seeing “interesting signals” in the networks of Ontario, New York and PJM Interconnection.

Unlike lithium-ion battery installations, which do not have turbines, Hydrostor devices can in principle be configured to operate for much longer periods than their nominal discharge cycles, VanWalleghem noted.

“Hydrostor has a way for us to transform a compressed air plant into a ‘run forever’ plant (that uses) hydrogen, renewable natural gas or any other fuel,” he said. While the standard Hydrostor process stores and releases heat without combustion, it is possible to modify the system to power a turbine with a fuel source to provide reliability beyond the rated storage life, he added.

“Instead of loading the system (with excess renewable energy), you’re plugging into that fuel source … so it can be powered indefinitely,” VanWalleghem said.

That capability, which VanWalleghem said is unique to Hydrostor’s technology, provides “many days or more of supply, for multiple times a year when that might be necessary,” he added.

Whether users modify their plants to add backup combustion or not, VanWalleghem believes Hydrostor is poised to enable deeper decarbonization while supporting grid reliability. He sees a mature energy storage market dominated by lithium-ion batteries with discharge times of less than six hours, solutions like Hydrostor with medium duration, and a collection of emerging technologies like zinc and iron-air batteries with multi-day durations.

But these multi-day technologies are still five to 10 years away from “meeting grid requirements and making a viable business case,” and paths that seem promising now — such as “hot rock” systems that convert electricity to stored thermal energy and back again using a steam cycle, or hydrogen-based systems that cycle only a few times a year — may never make economic sense for electricity generation, VanWalleghem warns.

Hot rock technology could be used to decarbonize industrial process heat, “but the ‘back to electricity’ part is too inefficient,” he said.