In 2025, compressed air energy storage accounted for 45% of long-duration energy storage installations, thermal energy storage for 33%, and vanadium redox flow batteries for 21%. As lithium-ion batteries continue to dominate the short-duration storage market, long-duration storage systems represented only 6% of the global energy storage installed capacity.
Zheng Jiayue, a storage management consultant at Wood Mackenzie, stated: "Despite the significant growth in installations last year, long-duration energy storage technologies are facing a strategic squeeze." She added: "Lithium-ion batteries, leveraging their cost and supply chain advantages, have captured the economically critical 4-to-8-hour storage market, while long-duration storage lacks sufficient demand and pricing mechanisms to achieve commercial viability."
The report shows that global funding for long-duration energy storage in 2025 decreased by 30% year-on-year, with venture capital dropping by 72%. Wood Mackenzie attributed this decline to high interest rates, increased capital competition from AI data center and grid infrastructure projects, and falling lithium-ion battery prices.
Priya Shrivastava, Research Manager for Energy Storage Supply Chains at Wood Mackenzie, said: "Vanadium redox flow battery project costs are expected to decline by over 30% by 2034, but will still be about 240% higher than 4-hour lithium iron phosphate battery projects." As a key technology for the energy transition, the development of long-duration energy storage continues to face challenges related to cost and market mechanisms.
