US battery storage deployment doubles in a single year

Growth in the US battery storage market is accelerating, with 1.6 GW installed in Q4 2021 across grid-scale, commercial and residential storage. In 2021 as a whole, over 3.5 GW of new battery storage was installed in the US – more than double what the market saw in 2020. 2021 was also the first multi-gigawatt year on record for this emerging pillar of the energy transition.

Our latest US Energy Storage Monitor shows that 63.4 GW of new battery storage capacity in the US will be added from 2021 to 2026 – assuming eventual passage of the standalone storage ITC and solar investment tax credit extensions. A combination of solar-paired and standalone storage projects drove a breakout year for the market in 2021.

The US Energy Storage Monitor is a quarterly series from Wood Mackenzie Power & Renewables in conjunction with the American Clean Power Association. Fill in the form for a complimentary copy of the executive summary, and read on for an introduction.

Grid-scale battery storage: a record year, despite project delays

The grid-scale segment had its largest quarter on record by far – despite some project delays. Only 1.4 GW of the expected battery storage came online, with Florida’s 409 MW the largest individual project by volume for the year. Overall, 2021 was a record year for grid-scale battery storage deployments with 2.9 GW/9.2 GWh in total, despite over 2 GW being pushed into 2022 and 2023. The delays that brought down the 2021 forecast are largely short-term, with approximately 800 MW of projects originally slated for 2021 now expected to come online in Q1 of this year.

Transportation and lingering logistical issues were largely to blame for the delays – and those issues are not expected to alleviate this year. Additionally, battery module and balance of system (BOS) price increases have thrown a wrench in short- to mid-term planning for many developers and utilities. They may mitigate increased capex by postponing procurement, with subsequent impacts to commercial operation date (COD).

States outside of California and Texas are beginning to understand the critical role of grid-scale energy storage in their energy futures. This is evidenced by their increasing clean energy goals, subsequent utility response and swelling interconnection queue volumes. Markets in the southern WECC region, such as Arizona, Nevada and New Mexico, are attractive for hybrid storage opportunities due to the existing and forecasted future solar penetration. Other states in the PJM/MISO/Southeast show promise in the back half of the forecast as the markets mature and increased load and renewable penetration create volatility, driving storage deployment.

Distributed battery storage: steady quarter-on-quarter growth

Residential, community-scale and commercial energy storage also saw a record-breaking Q4. Residential homes installed 123 MW of battery storage in Q4, approximately 7.6% of all storage installed during the quarter. Community-scale and commercial storage installed a combined 58 MW.

The residential storage segment is growing steadily and seeing significant vendor, installer and state market diversification. Factors driving up residential attachment rates include:

• Rising customer fears over power outages
• Growing awareness of storage as a backup power solution
• New partnerships between vendors and solar installers
• New residential products on the market.

While currently fewer than one in 10 solar installations has a battery attached in most states, the rate is higher in many key US markets. We expect attachment to climb quickly through 2026. Among the factors suppressing residential storage attachment rates and deployments, the most significant is tight battery supply. In 2021 market players widely report that attachment rates would be higher if storage vendors were not struggling to stay in stock, with manufacturing and supply chain issues together creating bottlenecks that frustrated US installers.

On the non-residential side, storage deployment is also growing. However, it remains highly concentrated in markets with supportive regulatory frameworks and incentives, despite prospects for bill savings. We saw especially notable activity in the Massachusetts and New York community-scale market segments in 2021. Due to the SMART program in Massachusetts and Value of Distributed Energy Resources tariff (and Retail Bridge Incentive) in New York, these two northeastern states delivered over half of non-residential storage capacity in H2 2021 and will remain leading non-residential storage markets through 2026. California contributed most of the segment’s additional capacity, much of it onsite at commercial facilities, with support from the Self-Generation Incentive program.

Take a closer look at the US energy storage market

The US Energy Storage Monitor explores deployments by market segment and state, technology trends, prices, the vendor ecosystem and more. Fill in the form at the top of the page for a complimentary copy of the executive summary.