Storage Cost and Efficiency Tradeoffs

Lithium-ion batteries have 85-95% round-trip efficiency. Hydrogen storage has 25-35%. By the efficiency metric alone, hydrogen is terrible. But if the input electricity is curtailed solar that would otherwise be wasted (valued at $0/MWh), losing 65% of it still delivers value. The cheapest storage is not always the most efficient, and the most efficient is not always the best.

Storage technologies sit on a spectrum. High efficiency, high cost per kWh of duration: lithium-ion, flywheels. Moderate efficiency, moderate cost: pumped hydro, compressed air. Low efficiency, low cost per kWh of duration: hydrogen, thermal storage. The optimal choice depends on the application.

Match technology to use case. For 2-4 hour daily cycling (solar time-shift), high efficiency matters because the input electricity has market value. Losing 10% is better than losing 40%. For 100-hour seasonal storage, the input electricity may be nearly free surplus. Low efficiency is acceptable if the per-kWh capital cost is low enough to justify rare cycling.

At what duration does efficiency stop mattering and capital cost per kWh dominate?

The crossover. At roughly 8-12 hours, lithium-ion's linear cost scaling begins to lose against technologies with lower per-kWh costs (iron-air, compressed air, hydrogen). Beyond 24 hours, capital cost per kWh overwhelmingly dominates, and low-efficiency but cheap-per-kWh options become the only viable path.

Storage is not a competition with one winner. It is a portfolio matched to different timescales and input electricity values.

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