In what will likely be a repetitive, quarterly headline, the U.S. energy storage market has had its biggest first quarter yet. According to Wood Mackenzie and the U.S. Energy Storage Association’s (ESA) latest “U.S. Energy Storage Monitor” report, 910 MWh of new energy storage systems were brought online in Q1 2021 — an increase of 252% over Q1 2020.
“It’s clear that the energy storage market is poised for tremendous growth in 2021 and beyond. The ‘Storage Decade’ is upon us, with the convergence of a transforming power and transportation system, and the growing need for decarbonization and resilience,” said Jason Burwen, ESA Interim CEO.
After a record-setting quarter for deployments in the final quarter of 2020, the pace of storage deployments slowed in Q1. However, despite the dip this quarter, the U.S. storage market still notched its third-highest megawatt-total for one quarter.
Looking ahead to the rest of 2021, deployments are expected to accelerate dramatically. Wood Mackenzie forecasts that nearly 12,000 MWh of new storage will be added in 2021, which is three-times the amount of new storage added in 2020.
One of the most significant storage market developments in Q1 was the introduction of a stand-alone storage investment tax credit (ITC) in Congress. If passed this year, a stand-alone storage ITC would result in a 20 to 25% upgrade to Wood Mackenzie’s five-year market outlook in megawatt terms.
“An extra 20 to 25% growth for the U.S. market over the next five years would supercharge an already fast-growing energy storage market,” commented Chloe Holden, Wood Mackenzie Energy Storage Analyst. “The front-of-the-meter (FTM) segment would see the largest incremental growth, with an extra 6 GW of capacity expected through 2025, which is 25% of our base-case market forecast. Without the stand-alone storage ITC, we forecast that the FTM segment will add 3,674 MW in 2021 and 6,915 MW in 2026.”
As noted in the report, the U.S. residential storage market set yet another quarterly record in Q1 2021. The residential market has grown for nine quarters in a row and broke 100 MW deployed in a single quarter for the first time in Q1 2021.
“Backup power to complement rooftop solar systems has become the key selling point for residential battery systems in all U.S. markets,” said Holden. “Although other states also have growing markets, California will continue to lead the residential segment by a significant margin through 2026.”
The non-residential market (commercial and community-scale) is not seeing the same growth as other sectors, with between 25 and 35 MW of new projects installed in each of the last five quarters.
The report also notes that the FTM interconnection queue now sits at over 200 GW. Though most projects in the queue will not come online, the queue is the largest it has ever been and is a testament to the rapid growth of the U.S. FTM storage market. There is a clear trend of increased geographic diversity of interest in FTM projects, with a surge of interconnection queue requests sitting outside of incentivized markets.
News item from ESA
Billy says
The storage system is increasing during 2021 based on the quantity from China lifepo4 battery storage system production.
Solarman says
This is where deployment of large scale energy storage systems becomes important enough, that the rote utilities can’t make a sentient excuse for not having dispersed micro or macrogrids. PG&E is the “poster child” of the practice of giving dividends and ignoring grid O&M, hardening over decades. 70,000 square miles of service area and in Northern California there are still many utility feeds into areas of a few homes that will suffer every time a PSPS is invoked. The options are, keep the old feeders into wildfire regions to feed a few homes or abandon the old feeders and put in a full blown Micro grid to keep these homes in power. Pretty sure PG&E isn’t the only one behind in grid and infrastructure hardening, just looking at Texas in February proves that point.
At one time, a large scale energy storage system like the TESLA system installed in Australia in 2017 was something like $1,100 a kWh installed. Saw an article on the Moss Landing project in California and the claim with using TESLA megapacks, this 300MW/1,200MWh project was $359/kWh installed. The “packaged” BESS in power blocks, manufactured on lines that can crank out several hundreds to several thousands of these “power blocks” daily is bringing prices down. Battery packs have been the hold up in the past. Now that EVs seem to be the future path of transportation, then making product to power EVs will also benefit making product for energy storage also. Would it be possible to get micro grids with all appurtenances down to $250/kWh installed? Oh, yeah, 25kW/100kWh for $250/kWh installed. That’s a nice home system for the majority of folks out there.