US energy storage market breaks installation record in Q4 2023

The US energy storage market shattered previous records for deployment across all segments in the final quarter of 2023, with 4,236 megawatts (MW) installed over the period, a 100% increase from Q3 according to a new report released today.

For the first time, the grid-scale segment exceeded 3 gigawatts (GW) deployed in one quarter and nearly topped 4 GW, according to Wood Mackenzie and the American Clean Power Association’s (ACP) latest ‘U.S. Energy Storage Monitor’ report. With 3,983 MW of new capacity additions, the quarter saw a 358% increase compared to the same period in 2022.

“The energy storage industry continues its incredible growth trajectory, with a record quarter helping drive home a banner year for the technology,” said John Hensley, ACP’s Vice President of Markets and Policy Analysis. “These additions bring with them critical benefits to our power grid. Energy storage has unique capabilities to address grid resilience, with the ability to serve as generation, load, and transmission. These benefits to the grid have been evident, especially in recent years, as storage has provided reliability and stability during critical moments like historic heatwaves. With a robust pipeline, the future for energy storage deployment is strong.”

Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team, said: “Q4 2023 was extremely strong for the US energy storage market, helped by easing supply chain challenges and system price declines. The quarter was commanded by deployments in the grid-scale segment, which recorded the highest quarter-on-quarter growth of any segment, ending the year with a 113% increase over Q3 2023. California continued to lead installations in both MW and MWh terms, closely followed by Arizona and Texas.”

For the US residential segment, deployments reached 218.5 MW, which barely exceeded the previous quarterly installation record of 210.9 MW set in Q3 2023. Market gains in California were offset by a contraction in Puerto Rico, which follows a “roller-coaster” as incentive funds open and close.

The Community, Commercial, and Industrial (CCI) segment remained stagnant QoQ with 33.9 MW installed in Q4, where installed capacity was split relatively evenly between California, Massachusetts, and New York.

According to the report, total deployments in 2023 across all segments reached 8,735 MW and 25,978 MWh, representing an 89% increase over 2022. While just shy of doubling year-on-year, this record-breaking achievement was projected earlier in 2023 and very much aligns with Wood Mackenzie and ACP’s expectations outlined in previous reports.

Witte added: “Total grid-scale installations reached 7,910 MW and 24,000 MWh for 2023, which is a 98% increase over 2022 installations. Our updated five-year forecast now extends to 2028 and projects 59 GW of new capacity additions in that timeframe.”

According to the report, distributed storage exceeded 2 GWh in 2023, which is another first for the market. This was helped by a higher than average first quarter for the CCI segment, and over 200 MW of installations in Q3 and Q4 each in the residential segment.

Over the next five years, the residential market will continue to boom, with more than 9 GW due to be installed. While the cumulative volume installed for the CCI segment is forecasted to be less than that, at 4 GW, the growth rate is over double, at 246%.