In an interview with NPM, long duration storage developer Hydrostor’s president Jon Norman discussed growing interest the company is seeing from data center developers in a growing number of areas across the US.

Norman says the firm has “had a lot of interest from data centers and other industrial players,” which he says he expects to continue in the second half of the decade. He says long duration storage like Hydrostor’s advanced compressed air energy storage (A-CAES) technology is a “perfect complement for both the integration of diverse energy generation resources and the consistent, high-load factor dispatch that data centers and other energy-intensive businesses need.”

He says A-CAES is particularly well-suited to providing solutions to data centers given its “large-scale and ability to serve growing utility requirements in parallel including dealing with bottlenecks that can enable further integration of data centers, intermittent resources, and the grid.” Current A-CAES developers are typically targeting 500 MW with 8-hour durations of 4,000 MWh.

While Norman says markets like California, New York, Virginia and the Southwest are “natural fits” for long duration storage with many already announcing needs for 8+ hour durations, he says Hydrostor is also seeing interest from utilities and regulators other markets including the Pacific Northwest and the Southeast driven by data center-related load growth as well as the continued addition of intermittent renewables in these areas.

DOE status and capital raise

Hydrostor is on the heels of two major funding rounds during the first quarter including obtaining a loan guarantee from the US Department of Energy (DOE) of up to USD 1.76bn to help finance its Willow Rock Energy Storage project in Kern County, California and USD 200m to support its pipeline.

Hydrostor said the project loan was not halted, despite efforts by the Trump Administration to freeze payouts from the US DOE’s Loans Programs Office (LPO).

A bulk of the funds from the USD 200m raise, from Canada Growth Fund Inc. (CGF), Goldman Sachs Alternatives, and Canada Pension Plan Investment Board, will be going toward its Silver City project in Australia, which is expected to reach financial close later this year. However, he says some of the funds will also go toward further establishing its pipeline of projects in the US and Canada including projects “entering more advanced development stage” in the Southwestern US, New York, Ontario, the UK, and New South Wales and Victoria, Australia. Norman says the firm is targeting CODs in the early 2030s for most of these projects.

Tariffs

Normal says the firm will continue to advocate for the administration to keep resources like the LPO as well as federal tax credits through the IRA, which are also expected to benefit US projects like Willow Rock. Despite some of the rhetoric and attempts to freeze federal spending, Norman says storage is considered a “bipartisan priority need for the grid and fits well with the energy security and dominance goals of this administration.

“Politicians on both sides of the aisle can see the benefits of reliability and we expect many of these programs to be upheld because of the benefits they bring to American consumers,” Norman said.

As for tariff impacts, Norman says Hydrostor’s A-CAES systems should be insulated as they are constructed with “local resources and materials using off-the-shelf components used in numerous other industrial applications” allowing for “significant domestic resource and labor usage in development and operation.”

“While it is difficult to predict how tariffs will impact manufacturing and development costs, we are confident that our technology has less exposure than those who rely on distant supply chains and rare earth minerals,” Norman said. “The bulk of our manufacturing costs are from construction and labor, which helps insulate our technology from tariffs and global supply chain disruptions.”

Interestingly, Norman says even if the Trump Administration’s antics and other efforts to slow down renewable developments in states like Texas do result in a renewable slowdown, “many other markets are still full steam ahead with their emissions-reductions goals and the need for increased reliability and we see demand for long duration storage growing exponentially by the end of the decade.”