Report: Energy storage market sets record for added capacity in Q3
The U.S. energy storage market set a record in the third quarter with the most capacity added in a quarter.
Specifically, 7,322 megawatt hours (MWh) of energy storage became operational in the third quarter – an all-time high, according to American Clean Power Association (ACP) and Wood Mackenzie’s latest US Energy Storage Monitor report.
Overall, the U.S. grid-scale segment saw quarterly installations increase 27 percent quarter-on-quarter (QoQ) to 6,848 MWh. Thus, it was a record-breaking third quarter for both megawatts (MW) and megawatt-hours (MWh) installed.
“Energy storage deployment is growing dramatically, proving that it will be essential to our future energy mix. With another quarterly record, it’s clear that energy storage is increasingly a leading technology of choice for enhancing reliability and American energy security,” ACP Chief Policy Officer Frank Macchiarola said. “This industry will serve as the backbone of our modern grid. As we continue to build a strong domestic supply chain, streamlined permitting and evolving market rules can further accelerate the deployment of storage resources.”
The cumulative volume installed between Q1 and Q3 of this year is 13,518 MWh. That total has already surpassed the total volume in all of 2022 which ended at 11,976 MWh.
“However, the Q3 installation record could have been greater were it not for the roughly 80 percent of projects in the pipeline expected for Q3 being delayed to a later date,” Vanessa Witte, senior research analyst with Wood Mackenzie’s energy storage team, added.
The residential segment saw 166.7 MW and 381.4 MWh installed in Q3, a 29 percent increase QoQ in MW-terms. The largest increase was in California, which almost doubled its installed capacity to 78.4 MW. However, the deployment in the community, commercial, and industrial (CCI) storage segment fell 7 percent QoQ to 30.3 MW and 92.9 MWh.
Between 2023 and 2027, the U.S. storage market is forecasted to install approximately 63 GW across all segments. This would represent a 5 percent decline from the Q2 forecast, according to the report.
While the segment’s 2023 forecast increased just slightly due to strong Q3 volume, the remainder of the forecast for grid-scale was lowered by 7 percent on average.
“The segment is facing multiple headwinds that have emerged this year, resulting in a volatile near-term pipeline and difficulty in bringing projects to mechanical completion,” Witte said. “Grid-scale declines were more focused on challenges not only with supply and permitting, but also with the backlog of applications in most ISOs interconnection queues that are preventing projects to move through the development process.”
The 2023 residential forecast increased by 4 percent and is expected to double between 2023 and 2025. However, growth slows later in the forecast period as solar penetration in California heightens. Also, the 2023 CCI segment forecast declined 12 percent QoQ due to low installation volumes between Q1 and Q3.
“The CCI segment is still forecasted to double in 2024 as California opens its community solar and storage program. Commercial and industrial storage is expected to become a larger share of the forecast in 2025 and beyond, which will bring more geographic diversity to the US market,” Hanna Nuttall, research analyst with Wood Mackenzie’s energy storage team, said.
