Growth of Energy Storage is Exploding
According to a March 24 report from the American Clean Power Association (ACP) and Wood Mackenzie, which is the organizations’ latest U.S. Energy Storage Monitor report, the energy storage market in the fourth quarter of 2021 set a new record, with new system installations totaling 4,727 megawatt hours (MWh). This represents more capacity installed than in the first three quarters of 2021 combined, despite project delays.
Annual deployments of grid-scale storage nearly tripled year-over-year to 3 gigawatts (GW) / 9.2 gigawatt hours (GWh), said the report. “Despite a record year, the grid-scale market didn’t meet expectations in 2021, with supply chain challenges delaying more than 2 GW of capacity into 2022 and 2023,” it added. The report forecasts that supply chain pressures and delays within interconnection queue processing will persist through 2024.
Jason Burwen, vice president for energy storage at ACP noted, “2021 was yet another record for the U.S. energy storage market, with annual installations of multiple gigawatts for the first time. Even in the face of continued macro-economic headwinds, interconnection delays, and lack of proactive federal policy, increasing demand for resilient clean energy and volatility in the price of fuel-based generation will drive energy storage deployment forward.”
Burwen added, “Despite supply tightness leading to some project delays, the grid-scale market is still on track for exponential growth.”
The report noted that system component price gains experienced over recent years have nearly been wiped out by higher costs for raw materials and transportation. Specifically, battery module pricing saw the largest increase of all system components due to the increased cost of raw materials.
In addition, residential storage had its strongest quarter to date, with 123 MW installed, beating the previous quarterly record of 110 MW, which occurred in the first quarter of 2021. “Increasingly effective solar-plus-storage sales in markets outside of California helped establish the new quarterly benchmark and resulted in a national annual total of 436 MW,” said the report.
By 2026, the report stated, annual installations in the residential segment are expected to hit 2 GW / 5.4 GWh, with frontrunners in California, Puerto Rico, Texas, and Florida leading that market segment.
The report found that the California storage market remains resilient, and, by 2027, California will remain the largest residential storage market, with three-and-a-half times more storage installed annually in 2027 compared to 2021.
Finally, the non-residential storage segment delivered 131 MWh in the fourth quarter of 2021, resulting in 162MW / 350MWh of total annual deployments for the year. Segment demand was driven by increased storage attachment rates within the community solar markets of New York and Massachusetts.