Missing Money and Market-Based Adequacy in Deeply Decarbonized Power Systems with Long-Duration Energy Storage

The ability of deeply decarbonized power systems to ensure adequacy may increasingly depend on long-duration energy storage (LDES). A central challenge is whether capacity markets (CMs), originally designed around thermal generation, can provide efficient investment signals when storage becomes a central participant. While recent studies have advanced methods for accrediting variable renewables and short-duration storage, the effectiveness of these methods in CMs with substantial LDES penetration remains largely unexplored. To address this gap, we extend a two-stage stochastic equilibrium investment model by endogenizing continuous, duration-based capacity accreditation for storage and apply it to a Great Britain-based case using 40 years of weather-driven demand and renewable profiles under varying emission limits. Results show that well-calibrated CMs can sustain near-efficient investment and mitigate revenue volatility, but their effectiveness diminishes in deeply decarbonized systems, underscoring both their potential and the regulatory challenges of supporting large-scale LDES.