Hydrostor’s foolproof case for long duration storage, FC in works

Canadian developer Hydrostor has seemingly cracked the code for technically and commercially viable long-duration energy storage with plans to progress its 500MW facility in California to financial close before the end of this year [2025].

The company is developing the Willow Rock Energy Center in Rosamond, California. The facility will host a 500MW advanced compressed air energy storage (A-CAES) system, which will have a minimum duration of eight hours.

Compressed air energy storage (CAES) is one of the established technologies for long-duration energy storage. However, it has so far failed to cross the barrier of commercialisation due to the requirement of specific geological conditions to make these assets efficient.

Traditional compressed air systems are built within naturally occurring salt caverns, which has limited the deployment of these assets and hindered the efficiency of projects that are not in close proximity to energy transmission networks.

Hydrostor proposes to circumvent this issue with a design that incorporates manmade caverns which can be modified to increase both the duration and nameplate capacity of the asset.

Scott Bolton, executive vice president of global policy and regulatory affairs at Hydrostor, added: "We can meet duration requirements as they emerge. At Willow Rock, we estimate the need to be around 8-hours to accommodate for solar tapering down during the night. If an area needs more, we can easily adjust project specs to match demand.

"What gives us the market edge is that we don't rely on geological conditions, we build purpose-built cavers for our storage assets which allows us to replicate the model where the conditions are right, from favourable grid connection agreements to need for dispatchable energy over long periods."

Another notable drawback for CAES is the low round trip energy efficiency profile – the ratio of the electricity output from the storage asset to the electricity input to the device during one charge/discharge – which can be as low as 50%.

Hydrostor promises up to 65% round trip efficiency for its A-CAES system – akin to the energy profile of hydro storage assets – by building the facilities closer to transmission systems.

Bolton continued: "This technology may not be as efficient as lithium-ion, but it is more scalable. We can build deeper caverns to increase the storage and duration at our sites and if we incorporate an energy generation source on site, we can theoretically offer indefinite duration."

The Willow Rock project is in the advanced permitting phase and is expected to receive the final nod from the California Energy Commission in H2 2025.

The project site covers an 88.6acre plot located north of Dawn Road and between State Route 14 and Sierra Highway within unincorporated Kern County.

The facility will include four power turbines "trains" with a 130MW gross capacity. This will equate to 500MW net output at the point of interconnection.

Each train will be made up of an electric motor-driven air compressor, heat exchangers, an air turbine generator, air exhaust stacks, and other ancillary equipment.

The developers mostly only require permits at the state level for Willow Rock as California has some of the most stringent regulations in all of the US, and where state and federal laws overlap, the more restrictive legislation takes precedence.

The 500MW project has an estimated CapEx of around $1.5 billion, which will be used for financing using public debt and equity:

• Circa $1.2 billion - public debt
• Circa $300 million/ cost over $1.2 billion - equity

Hydrostor, earlier this month [8 January 2025], secured conditional approval for a up to $1.76 billion loan from the US Department of Energy (DoE), which will finance up to 80% of the project cost. The loan is structured as follows:

• Principle - up to $1.48 billion
• Capitalised interest over construction period + 25-year tenor - up to $280 million

The cost estimates for the project may be adjusted up wards towards financial close 

Hydrostor plans to onboard additional equity partners to help cover the equity contributions for this project.

DoE has also agreed to cover a bridge loan for the federal investment tax credits that the project will be entitled to when it's operational.

The drawdown from the DoE loan is subject to the project meeting certain construction and offtake conditions.

Hydrostor has locked in an offtaker for the first 200MW capacity of Willow Rock and is understood to be engaged in late-stage negotiations for the remaining 300MW.

Addressing the potential challenges to firming up the DoE loan under the incoming Republican administration, which has historically been opposed to public spending on certain renewable technologies, Bolton said: "On this one, we are threading a political needle; with the incoming administration and the project being in California. Any organisation currently relying on the Inflation Reduction Act is hyper-aware of the changing political scene.

"However, we stand out from a technology standpoint. The use case for long-duration storage is increasing by the day as more renewable generation is added to the energy mix. This will continue to be the case no matter what political party is in power, so we don't anticipate any drastic changes to public funding policies in this sector, but we are keeping a close eye on it."

Hydrostor is working towards announcing financial close for the project before the end of this year [2025].

The construction phase for Willow Rock is estimated to last between three and half to four years and will also include a 19mile, 230kilovolt generation-tie transmission line which will connect the facility to Southern California Edison's Whirlwind Substation.

The project is estimated to be fully operational by the end of 2031 at the latest. Once online, it has a lifespan of over 50 years.

Hydrostor is also currently working on progressing a 7GW pipeline of A-CAES projects across the US.