When it comes to battery bankability,Li-ion is king. Investors favor it forits low upfront costs, good track record,
and relative ease to deploy in a variety of different settings, from grid-scale to commercialand residential.
Proponents of flow batteries are fully aware of the uphill battle it takes to achievethe level of commercial success Li-ion enjoys, but they argue that flow batteries can offer advantages that Li-ion may not.
Flow batteries often use non-flammable,water-based electrolytes, meaningthey don’t have the fire risks associated with lithium-ion batteries. This reducesspacing restrictions, allowing them to be deployed right next to or even inside buildings, said Jesse Terry, policy officer at Flow Batteries Europe.
In addition, power and energy scaleindependently for flow batteries. Terrysaid this makes them ideal for large energy users like data centers. Electrolyte tanks can be built bigger, to whatever size is needed for the large energy user. Vertical scalability – building the tanks taller – is also an advantage if the batteries are needed in a space-limited location.
“Flow batteries can be built to fit the data center, or industrial complex as needed, with no spacing or safety restrictions,” said Terry. Their durability and long lifetimes are another big plus for industrial energy users.
Finding investment
Terry argued market and policy design have much to do with Li-ion’s dominance and that both tend to favor lithium-ion and short duration technologies. He said he believes more support for LDES is needed for potential beneficiaries to unlock the advantages. “Today’s electricity markets were designed around dispatchable fossil generation, and their incentive structures overwhelmingly reward short-duration assets, creating a structural bias that favors lithium-ion’s two to four hours over flow batteries’ four to 12-plus hour capability,” he argued.
Terry also said there is a bias toward considering initial capital expenditure when making investment decisions, but
argued flow batteries look more favorable when lifetime costs are considered, recognizing their strengths of “long 20-plus year lifetimes and minimal degradation, even under heavy cycling.”
To encourage flow battery market growth, LDES projects need revenue certainty, long-term contracts, and fair grid access and grid tariffs, he added, citing the United Kingdom’s cap-and-floor scheme announced in 2024 as an example of good LDES policy. The first successful projects in the UK LDES cap-and-floor scheme are expected to be announced later in 2026.
The main policy goal, said Terry, is to provide revenue certainty and longer-term contracts to de-risk investment.
Colocation models and LDES policy initiatives would be beneficial, he added.
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By Blathnaid O’Dea
