U.S. Energy Storage Market Growth Continues Impressive Gains
According to the latest “U.S. Energy Storage Monitor” report, published by the American Clean Power Association (ACP) and Wood Mackenzie, the U.S. energy storage market set a new record in the second quarter of 2022. Strong growth was seen in two of the three market segments.
Grid-Scale Storage: According to the report, grid-scale storage installations totaled 2,608 megawatt hours (MWh) – the highest installed capacity for any Q2 on record. However, despite impressive growth, the U.S. grid-scale energy storage pipeline continues to face rolling delays into 2023 and beyond. “More than 1.1 gigawatts of projects originally scheduled to come online in Q2 were delayed or cancelled, although 61% of this capacity, 709 megawatts, is still scheduled to come online in Q3 and Q4 of 2022,” said Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team. “Supply chain issues, transportation delays and interconnection queue challenges were the main drivers behind delays in the commercial operations date (COD) for many projects.”
In addition, because of the prevalence of hybrid grid-scale storage deployment (storage and solar), ongoing trade issues that have been negatively impacting the solar industry contributed to headwinds for energy storage deployment.
However, Congress passed a solar investment tax credit (ITC) extension and standalone storage ITC as part of the Inflation Reduction Act. According to the report, this critical piece of legislation will support all segments of the energy storage industry, increasing deployment of solar-plus-storage systems while also incentivizing standalone facilities. As a result, the report forecasts that 59.2 GW of energy storage capacity will be added through 2026.
Residential Storage: Residential energy storage also had strong gains, with its strongest quarter to date – 375 MWh installed in Q2, beating the previous quarterly record of 334.1 MWh in Q1 2022.
The report added that demand is rising in the residential segment, with a total of over 150 MW of residential storage installed for the first time. However, as with grid-scale storage, ongoing supply shortfalls and rising prices have suppressed deployment. Still, new solar installers continue to add storage to their product offerings, despite ongoing procurement issues.
“The solar ITC extension is good news for the residential storage industry, preventing a drop in residential solar-plus-storage installations that would have otherwise arrived in 2024,” said Chloe Holden, research analyst at Wood Mackenzie, and one of the report’s authors. “The standalone storage ITC will also boost storage retrofits on homes with existing solar.”
Community, Commercial and Industrial (CCI) Energy Storage: While grid-scale and residential energy storage continued strong gains, CCI storage continued to lag behind these other two market segments, with only 59.4 MWh of CCI storage installations seen this quarter, making it the lowest quarter recorded for MWh capacity since 2019.
In sum: “The U.S. energy storage industry is reaching maturity,” said Jason Burwen, vice president of Energy Storage at ACP. “Energy storage is now regularly being installed at over a gigawatt per quarter. In addition, Texas overtaking California this quarter should serve as a reminder that generators, customers, and grid operators in all geographies are increasingly relying on energy storage. Combined with the tailwinds of newly available tax credits from the Inflation Reduction Act, the question for investors and grid operators now is not whether to deploy storage, but how much storage to deploy – and how fast.”