A new Massachusetts Institute of Technology study suggests that liquid air energy storage, or LAES, may emerge as the most cost-effective solution for maintaining a reliable electricity supply on decarbonized power grids dominated by intermittent sources such as solar and wind.

The research, published in Energy and funded by the MIT Energy Initiative, highlights the potential of LAES to provide long-duration, grid-scale energy storage at a lower cost than pumped hydro or lithium-ion batteries, especially under aggressive decarbonization scenarios.

“With limited options for grid-scale storage expansion and the growing need for long-duration storage, LAES could become a crucial component of the clean energy transition,” said Shaylin A. Cetegen, a Ph.D. candidate in MIT’s Department of Chemical Engineering and lead author of the study.

Clean, Scalable Technology

LAES technology works by cooling ambient air to cryogenic temperatures, turning it into liquid and storing it in insulated tanks.

When electricity demand rises, the liquid air is heated and expanded through turbines to generate power. The system uses only air and electricity, making it a zero-emissions storage option that can be deployed in a wide range of locations.

Cetegen and her collaborators — Professor Emeritus Truls Gundersen of the Norwegian University of Science and Technology and MIT Professor Emeritus Paul I. Barton — developed a comprehensive model to evaluate the economic viability of LAES across 18 U.S. regions and under eight decarbonization scenarios stretching to 2050.

Their simulations, based on data from the National Renewable Energy Laboratory, revealed that LAES could achieve positive net present value (NPV) under the most ambitious decarbonization pathway — 100 percent carbon-free electricity by 2035 — in select southern US markets such as Texas and Florida. These regions showed favorable market structures for storage technology adoption.

Policy Incentives Could Unlock Viability

While improving system efficiency offered limited financial benefit, the study found that capital cost subsidies of 40–60 percent could make LAES economically viable under more realistic policy scenarios. That result underscores the importance of targeted financial incentives in driving storage deployment.

“From a broader perspective, it’s good news,” Cetegen said. “You could spend years improving efficiency, but with the right subsidies, this technology could scale up almost immediately.”

The researchers also analyzed different system sizes and durations, finding that weekly storage was generally more economically viable than monthly capacity due to diminishing returns on excess storage capability.

Lower Cost Than Batteries or Hydro

The team calculated the levelized cost of storage, also known as LCOS, for LAES to be approximately $60 per megawatt-hour — about one-third that of lithium-ion batteries and half the cost of pumped hydro.

LCOS measures the lifetime cost of storing each unit of electricity, excluding market revenues.

“From a pure cost perspective, LAES is highly competitive,” Cetegen said. “Even if it’s not ready to attract investment today, it could become an essential low-cost solution as the grid evolves.”

The researchers caution that economic viability will depend on local market conditions and policy frameworks. However, they say their model supports further exploration of LAES as utilities and governments seek scalable, clean storage technologies to ensure round-the-clock electricity in a carbon-neutral future.

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