Growth in the U.S. battery energy storage market is accelerating, with deployments in the grid-scale, commercial and residential energy storage industries in the fourth quarter of 2021, according to a U.S. Energy Storage Monitor report released by research firm Wood Mackenzie and the Clean Energy Association. 1.6GW energy storage system. The installed capacity of battery energy storage systems in the United States will reach more than 3.5GW in 2021, more than double the amount in 2020. Despite supply chain challenges and project delays, grid-scale energy storage and distributed battery storage have seen record growth in the United States.
According to the report, if the investment tax credit (ITC) for independently deployed energy storage systems and the investment tax credit for solar power generation can be extended, the United States will add 63.4GW of battery storage systems from 2021 to 2026. The massive deployment of solar-plus-storage projects and independently deployed battery-storage projects makes 2021 a breakthrough year for the U.S. energy storage market.
Grid-scale battery storage: Record year despite delays in some project deployments
The U.S. set a new quarterly record for grid-scale battery storage deployed in the fourth quarter of 2021, despite delays in some energy storage projects due to supply chain issues. The 409MW battery energy storage system deployed by the United States in Florida has become the largest energy storage project in 2021. Overall, 2021 is a record year for the deployment of grid-scale battery storage in the U.S., with a total of 2.9GW/9.2GWh, although more than 2GW of storage has been delayed to 2022 and 2023. Delays in some energy storage projects in 2021 have been largely short-term, with some 800MW of battery storage projects scheduled to be deployed in 2021 delayed until the first quarter of this year.
Supply chain and ongoing logistical issues are the main reasons behind delays in the deployment of energy storage projects — issues that are not expected to ease this year. In addition, rising battery module and balance-of-system (BOS) product prices have hit the short- to medium-term plans of many energy storage developers and utilities. They may have mitigated the increased capex by deferring purchases, with a follow-on impact on the Commercial Operation Date (COD).
Markets such as Arizona, Nevada, and New Mexico are more attractive for deploying solar-plus-storage projects, given existing and projected future penetration rates of solar power. The PJM/MISO/Southeast U.S. regional market will see new growth as the market matures, increased load, increased penetration of renewables creates grid fluctuations that drive energy storage deployments.
Distributed battery energy storage systems: steady quarter-on-quarter growth
The U.S. also set another record for residential, community-scale and commercial energy storage deployments in the fourth quarter of 2021. 123MW of residential battery storage systems were deployed in the fourth quarter of 2021, accounting for approximately 7.6% of the total installed capacity of various storage systems deployed in the quarter, and a total of 58MW of community-scale and commercial storage systems were deployed in the quarter.
The residential energy storage space is growing steadily, with more significant diversification of suppliers, installers and state markets. Factors driving the rise in residential energy storage deployment rates include:
• Increased customer concerns about power outages.
• Growing awareness of energy storage as a backup power solution.
• New partnerships between suppliers and solar installers.
• New residential products on the market.
While less than 1 in 10 solar power facilities in most U.S. states are currently equipped with battery storage systems, the percentage is higher in some key U.S. markets. It is expected to climb rapidly through 2026. Among the factors affecting the deployment of residential energy storage systems, the most important factor is the tight supply of batteries. Market participants in 2021 report that project delays will be higher if energy storage providers are not committed to procuring or maintaining inventories, while manufacturing and supply chain issues are bottlenecks for U.S. energy storage installers.
On the non-residential side, energy storage deployments are also growing. Despite the prospect of reduced spending, there is still a high concentration in markets with supportive regulatory frameworks and incentives. 2021 saw significant activity in community-scale segments in Massachusetts and New York. The two states will deploy more than half of all non-residential energy storage systems in the U.S. in the second half of 2021, thanks to Massachusetts' SMART program and New York's distributed energy resource tariffs. And will remain a leader in the U.S. non-residential storage market through 2026. Backed by incentive programs, most of the new energy storage systems added to the energy storage market came from California, most of which were commercial energy storage systems.
