Report: Energy storage sees decline in installations in the first quarter
The U.S. energy storage market saw a 26 percent decline in installations in the first quarter compared to the previous quarter, according to Energy Storage Monitor report, produced by the American Clean Power Association (ACP) and Wood Mackenzie.
The industry added 2,145 megawatt hours (MWh) in the first quarter of 2023, with about 1,553 MWh in the grid-scale segment. The overall number was down 26 percent while the grid-scale segment fell for the second-straight quarter – dropping 33 percent below the first quarter of 2022. Project delays contributed to the declining environment.
“The recent energy storage market slowdown illustrates how storage development is already interwoven with new solar and wind projects – and how trade and policy issues in those sectors affect storage deployment,” John Hensley, ACP’s VP of Research & Analytics, said. “It’s crucial we continue to tackle supply chain and interconnection hurdles. The forecast through 2027 is encouraging and we remain confident in the long-term growth trajectory of the sector. The need of energy storage will continue to grow as more clean energy technologies are added to the grid.”
California and Texas accounted for about 84 percent of first quarter activity.
Also, Wood Mackenzie has slated forecasted 2023 additions from the grid-scale project pipeline at 8.9 GW and 10.5 GW across all segments. While the forecasted capacity for 2023 decreased slightly quarter-over-quarter, total additions for all segments are still expected to double by the end of 2023.
“We are seeing the effects of supply chain issues and interconnection queue backlogs hinder market growth,” Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team, said. “This is the first consecutive quarterly decline we have seen in the energy storage market since 2015 when installations were much smaller in volume and more unpredictable. While the market has faced challenges, we do anticipate a stronger second quarter, as many project CODs have been pushed, but are still very viable.”
While grid-scale installations were down in the first quarter, community, commercial, and industrial (CCI) installations were up. In total, the CCI market installed 203.3 MWh for its second-highest quarter on record. It was up 145 percent above year-over-year (YoY) numbers.
Further, residential storage recorded its second-highest quarter on record at 388.2 MWh. However, it was down from a record fourth quarter. It was the first quarter-over-quarter decline for the residential sector in nearly two years.
“Our outlook for the storage sector is still bullish, with projected growth strong through 2027. Near-term we will see some challenges, but we expect them to be corrected and activity to increase as more renewable generation will drive the need for storage,” Witte said.
