AI Is Stress-Testing The Grid. Can Energy Storage Diversify
The U.S. is facing a critical gap in long-duration energy storage as electricity demand surges. Experts warn that current supply chains and production methods are struggling to keep pace with needs driven by AI, data centres, and grid expansion. Meanwhile, new investments and technologies are emerging to address these challenges.
Electricity demand in the U.S. is climbing faster than the grid can handle, pushed by AI workloads, data centres, and widespread electrification. While electric vehicles still dominate lithium demand, grid-scale energy storage is now growing as a major driver. The global lithium market, valued at around $28 billion in 2024, is expected to expand further as battery use increases across transport and energy systems.
Legacy methods for extracting and refining lithium are proving too slow and costly to match the speed of AI growth and grid upgrades. Industry leaders stress that faster production cycles and better recovery rates are essential for scaling storage solutions. Teague Egan, CEO of EnergyX, noted that the real bottleneck for lithium-based systems lies not in resource shortages but in supply chain delays.
To accelerate production, companies are investing heavily. Lilac Solutions, based in Oakland, is raising $250 million to build its first commercial lithium processing plant at the Great Salt Lake, aiming for 5,000 metric tons of output annually by 2028. Standard Lithium also secured $130 million in October 2025 to fund projects in Arkansas and Texas, including a facility capable of producing 22,500 tons of lithium carbonate per year.
Beyond lithium, vanadium flow batteries are gaining traction as a scalable solution for long-duration storage. Several large-scale deployments have moved past pilot phases, offering extended discharge and frequent cycling capabilities. Scott Childers of Stryten Energy highlighted the U.S. shortage of such systems, emphasising the need for technologies that can handle prolonged energy release.
The next phase of U.S. energy storage hinges on whether materials processing, manufacturing, and regulations can adapt quickly enough. With demand outpacing current infrastructure, the focus is shifting to faster deployment of storage technologies. Success will depend on overcoming supply chain hurdles and scaling up production to meet the grid’s evolving needs.
