Emerging Strategies for Flow Batteries

­Energy storage technology deployments are dominated by pumped hydro storage (PHS) and Li-ion battery energy storage systems (BESS). Despite the growing demand for BESS to support penetration of renewable energy sources, the oversupply of Li-ion cells has contributed to falling costs of final BESS technologies, creating challenges for other non-Li-ion battery storage technologies to penetrate grid-scale energy storage (ES) markets. However, Li-ion technologies pose safety risks amidst their use of flammable organic electrolyte, degrade over time, and cannot have their energy and power naturally decoupled. This reduces their feasibility for certain emerging applications, such as data centers and long duration energy storage (LDES).

Other battery storage technologies, such as redox flow batteries (RFBs) may be better suited. As shown in IDTechEx's market report, "Redox Flow Batteries Market 2026-2036: Forecasts, Markets, Technologies and Players" if RFB developers can leverage the advantages of their technologies to deploy them for such applications, the RFB market would be expected to be valued at US$9.2B in 2036.

Flow Batteries for Data Centers

In the medium-term, IDTechEx expects RFB developers to target data centers as a key customer-base for their technologies. Data centers may have to manage MW-scale swings in load several times per minute, and using Li-ion batteries (LIBs) for this frequency of cycling can rapidly degrade the cells. Flow battery developers have commented that LIBs have been retired from data centers in as short as six months after deployment due to severe degradation. Data center operators may also see higher premiums to cover the safety risk of LIBs in data centers.

Instances such as the battery storage-data center fire in South Korea highlight this risk, where a LIB fire took down hundreds of government services. Flow batteries use non-flammable electrolyte, and exhibit minimal degradation over 20,000+ cycles, making them a particularly attractive option for data center deployment.

In fact, a key project being developed is that from FlexBase in Switzerland, where a 2+ GWh RFB technology will be housed underneath an AI data center, and also be grid-connected. This will allow the flow battery to support the data center by optimizing electricity use and costs, while also acting as a grid-flexible asset. Construction and grid connection is expected in 2028. XL Batteries, a US-based organic redox flow battery (ORFB) developer also has projects in their pipeline with Prometheus Hyperscale in the US. As shown in IDTechEx's market report, these are but several of the many identified future projects being developed by flow battery players for various applications globally.

Flow Batteries for Long Duration Energy Storage

As the penetration of variable renewable energy (VRE) sources, such as solar and wind, grows, as will the need to manage longer durations of time when supply of electricity from these sources is not occurring. LDES technologies, providing 6+ hours duration and discharge of storage will therefore see increasing demand. RFBs can have their energy capacity and power output decoupled by scaling electrolyte tanks and stack components independently. This allows for theoretically lower cost systems on a $/kWh basis at longer durations of storage.

Flow battery developers are targeting LDES applications as a long-term strategy, though technology bankability remains a key barrier to the development and deployment of LDES technologies. Programs and policies will be needed to ensure LDES asset owners are remunerated for the range of grid services and benefits that their technologies offer.

IDTechEx expects most initial demand and support for LDES to reside in California and the UK, and where wider deployments of LDES technologies could be observed first. The Cap and Floor Scheme for LDES in the UK will guarantee revenues to LDES technology operators, and several hundred-MWh-scale flow battery projects are under consideration in a first wave of projects in this scheme.

Flow Battery Strategy Outlook

In the short-to-medium term, IDTechEx would expect flow battery developers to target data centers and other commercial and industrial (C&I) applications where a need on safety and minimal battery degradation is emphasized. Flow battery developers may need to target such applications strategically, since short-duration grid-scale ES markets are dominated by widely proven, available, and cheap Li-ion BESS technologies.

Long-term, demand for LDES technologies is expected to ramp up, and as long as flow battery developers can maintain business operations until then, this will be the era where flow batteries may be able to truly showcase their key advantage of decoupling energy and power to realize lower costs on a $/kWh basis. However, it will be critical that profitable business models are established in LDES markets, as this will facilitate improved technology bankability and expedite the commercialization of these technologies.

For more information about redox flow battery applications, projects, policies & programs, technologies, chemistries, benchmarking, developer market shares, material and component innovations, electrolyte supply agreements for flow battery developers, and granular 10-year market forecasts, please refer to IDTechEx's new market report: "Redox Flow Batteries Market 2026-2036: Forecasts, Markets, Technologies and Players".