In recent years, one of the biggest challenges the American grid faces is maintaining reliability and stable power pricing amid massive forecasted load growth. Batteries don’t bring new generation to the grid but can store energy to reduce electricity curtailments, smooth pricing, and increase grid reliability while discharging. Utility-scale lithium-ion (Li-ion) batteries have provided a great solution to gas plant ramp rates induced by the end-of-day solar reduction seen in the duck curve, as well as intra-day price smoothing. However, at only four hours of dispatch potential, these batteries are still largely incapable of providing a reliability improvement at times when power demand surges for multiple days at a time, like during a heat dome or prolonged cold front. This gap between market demands and grid infrastructure highlights the opportunity for new technology to be developed and implemented. In this Insight, we investigate the potential use and revenue of iron-air batteries within power markets by assuming a given project would have up to 100 hours of stored energy and roughly a 50% charge-discharge efficiency.
Currently, all iron-air batteries planned in the United States are being developed by Form Energy, which has at least eight projects planned. Xcel Energy, a major natural gas and energy utility, has been a strong supporter of this battery technology. The company is currently set to install 32 GWh of the technology across Minnesota and Colorado, while another 11 GWh is planned for installation by other utilities across the eastern United States, including Virginia, Maine, New York, and Georgia. According to the April Integrated Resource Plan (IRP) published by Great River Energy, it expects its pilot project featuring the technology to reach commercial operations this year in Minnesota after breaking ground over two years ago.
To investigate the use case of iron-air batteries, a model was developed to track the number of individual hours in which it would be profitable for an iron-air battery in a given region to charge for 100 hours followed by a consecutive 100-hour discharge given its 50% efficiency on the charge-dispatch cycle. This was done for both MISO and PJM, two ISOs with planned iron-air battery projects. Two subregions stick out as high-contrast pricing regions across the modeled charge-discharge cycles. MISO Zone 3 saw the most profitable hours under the model with 10% of all modeled hours producing revenue between January 2025 and August 2026. MISO Zone 3 is largely in Iowa, where wind can contribute to a large portion of the generation stack, making a long-duration battery useful in limiting curtailments and providing more price stability. PJM’s Dominion zone also saw higher time ranges with profits over 8%, as recent load growth in the region has resulted in higher pricing when surges in load cut deeper into the region’s reserve margins than in years past.
Although the profitable trading cycles are an interesting metric, they do not cover the scale of the arbitrage opportunity, as larger pricing spreads across multiple days allow for more revenue generation. The figure below models the potential revenue for the single most profitable charge-discharge cycle each month in a given subregion within PJM and MISO and shows two interesting trends. The first trend is the seasonality of the profitability, which should come as no surprise since unpredictable spring weather patterns and high curtailments present ample opportunity to capitalize on long-duration battery storage. The other trend is the scale of the profitability in 2026 compared to the previous year, with both PJM and MISO having already doubled the maximum profitability of a given charge-discharge cycle in 2026 compared to 2025 under the model.
It is worth highlighting that although the model gives some insight into a baseline charge-discharge scenario and captures the essence of long-duration energy storage, we have yet to see how these batteries function in terms of their charging habits, what levels of reserves they hold, how they rely on forecasts, and how capacity payments affect their profitability. But under the current energy market environment, these batteries stand to have their own market niche by bringing more reliability and price stability to the grid as well as making intermittent power generation a more reliable source of energy production. Check back for more Energy Market Insights as FactSet continues its coverage of shifting U.S. power markets.
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