Dive Brief:

• Grid-scale energy storage installations quadrupled in the first quarter of the year, compared to the same period in 2021, but geopolitical and domestic conflicts kept figures from being higher, according to the U.S. Storage Monitor report published by Wood Mackenzie and the American Clean Power Association on June 15.
• Overall storage installations rose 955 MW and 2,875 MWh during the first quarter, outpacing last year’s results. Large-scale storage is expected to reach 41 GWh by 2026, and residential battery installations are projected to reach 2.3 GWh by that same time year. 
• California has the most large and small scale storage installations of any state, while Texas has the next highest level of grid storage and Puerto Rico has the second highest level of behind-the-meter storage.

Dive Insight:

Ongoing challenges, including constraints on imported battery elements, will continue to affect the pace of energy storage installations, according to analysts.

Developers that pair grid storage with solar took a hit from the federal investigation of the anti-circumvention petition alleging photovoltaic solar arrays from Southeast Asia include parts from China, potentially bypassing anti-dumping restrictions, Wood Mackenzie and ACP’s report added.

The report highlights a number of storage applications that prompted continued development despite a slowdown in installations. Energy storage is growing in importance because it can reduce the electricity sector’s carbon emissions by sending stored power to the grid and homes in place of fossil fueled generation when solar power drops, researchers and advocates say. Batteries also increase the value of intermittent solar and wind resources when they store excess output that otherwise would not be used, feeding it back to the grid when wanted by the utility or home, storage experts and advocates point out. And much more energy storage fueled by renewable resources is needed to help green the grid, according to clean energy and storage analysts.

“Despite all the headwinds, the demand for customer-sited storage will likely be strong for the foreseeable future as we continue to need resiliency in the face of climate change and outages,” said Jin Noh, California Energy Storage Alliance policy director.

Grid-scale installations reached a record high by the end of the first three months of this year, reaching 747 MW, Wood Mackenzie and ACP found. Vanessa Witte, senior storage analyst with Wood Mackenzie, called this new storage peak, which was well above the 177 MW added in the first quarter of 2021, “a notable milestone” as most installations typically take place in the second half of the year. During this time, more storage is needed and weather conditions are more favorable, ACP spokesperson Will Sturgeon added

The residential sector saw more than “20,000 installations in a single quarter for the first time and we’re seeing large and small installers forge new vendor partnerships to help meet rising customer demand,” Chloe Holden, Wood Mackenzie analyst, said in a statement. There was 208 MW at 334 MWh of new behind-the-meter batteries, compared to 283 MWh added in the final quarter of last year, which was the previous highest installation rate for small scale storage, according to the report.

However, storage installations, which are predominantly lithium batteries, did not reach their full potential.

“While there is enough equipment to enable most planned projects to come online, deployments would have been higher for the residential and commercial segments if supply chain issues were not as acute,” Holden said in an email. She added that supply constraints “are artificially suppressing demand for behind-the-meter storage as developers, installers and customers move forward with solar-only projects rather than wait for batteries.”

ACP said it is tracking over 1,500 MW of energy storage projects that missed their original commissioning date and may be delivered later this year or even next year.

Dragging down grid-scale storage growth is the threat of proposed increased tariffs on imported solar panels from Southeast Asia, which President Joe Biden suspended for two years. Still, the Department of Commerce’s investigation of Auxin Solar’s claims of illicit panel dumping lowered projections for solar and battery projects “significantly in 2022, and to a lesser extent in 2023, as procurement stalled,” the report stated.

While grid storage is projected to reach 41 GWh in five years, and behind-the-meter capacity is expected to climb to 2.3 GWh, commercial and community storage is forecast to grow 2.6 GWh in 2026, Witte said.

California has been the leader in storage installations, reaching 1,489 MWh of grid storage and 149.4 MWh of residential storage. Texas has 334 MWh of grid storage but was in third place for residential battery installations at 24.8 MWh. Puerto Rico has the second highest level of distributed batteries, at 55.3MWh.

The pending California Public Utilities Commission Net Energy Metering proposal, or NEM, would lower the credit paid for power exported from solar rooftops, raise monthly charges but incentivize storage. If approved, the NEM proposal would only have an “incremental impact” on this market sector over the next five years said, Holden said. However, “a different proposal that allowed for more solar deployment, while incentivizing storage, would be the best case outcome for the storage industry,” she added.