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ARTICLE · 02 NOVEMBER 2026

Long-duration Energy Storage In Australia: Closing The Financing Gap

DLA Piper
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Australia's energy storage market is expanding rapidly, yet long-duration energy storage (LDES) faces a critical financing challenge. While the technical need for storage systems capable of discharging for eight hours or more is widely accepted, the market does not yet fully reward the reliability, resilience and system benefits these projects provide, creating a gap between capital costs and available revenue that threatens bankability.

AustraliaEnergy and Natural Resources
Alex Regan
Alex Regan
Katie Best
Katie Best
Marnie Calli
Marnie Calli

Key takeaways

  • The key issue is bankability, not need: Australia accepts that long-duration energy storage (LDES) is necessary, but increasing duration raises capital costs without a matching increase in revenue because the market does not yet fully pay for the benefits LDES provides. Many LDES technologies also still have limited operating history at scale.
  • Data centres add urgency: hyperscale and AI-driven data centres need firm, always-on clean power, strengthening the case for storage that can discharge for eight hours or more.
  • Revenue support is helping but not yet fully fit for LDES: the Australian Capacity Investment Scheme does not clearly distinguish true LDES from shorter-duration batteries. NSW LTESAs are targeted but not national, and construction cost increases between bid and financial close can leave bid floor prices and caps insufficient to support debt and equity returns.

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