US energy storage market sets Q2 record for deployments

The United States energy storage sector saw its strongest second quarter on record for deployments.

According to Wood Mackenzie and the U.S. Energy Storage Association’s (ESA) latest ‘US Energy Storage Monitor’ report, 168 MW were deployed in Q2 2020. This is an increase of 72% quarter-over-quarter, 117% year-over-year and is the second-highest quarterly total ever seen, falling just behind Q4 2019 (186.4 MW).

One large front-of-meter (FTM) project coming partially online in California, accounting for more than two-thirds of the total FTM MW deployed, helped to drive this level of quarterly activity. The large-scale system puts California back on the map after a quiet 2019 and, according to the report, the state is expected to remain there over the next six quarters.

The US FTM market grew more than fourfold compared to Q1. Deployments notched their fifth-best quarterly total (89.8 MW) and the largest Q2 on record.

Another record quarter for residential storage deployments, which increased 28% YoY, illustrates that California and Hawaii successfully kept installations progressing through coronavirus lockdowns.

“We are encouraged by the growth the energy storage market has seen this quarter,” said Kelly Speakes-Backman, CEO of ESA. “Despite any setbacks from the coronavirus pandemic, the market for energy storage is poised to see significant growth in 2020. Looking out to future growth, we are confident that our expanded vision of 100 GW of new energy storage by 2030 is entirely reasonable and attainable, pushing us closer to reaching a more resilient, efficient, sustainable and affordable electric grid.”

Dan Finn-Foley, Wood Mackenzie Head of Energy Storage, said: “The US energy storage market has proven remarkably resilient to impacts from coronavirus lockdowns. The commercial and industrial (C&I) space was the only segment that showed a slowdown. This was primarily because of a decline in the C&I California market due to permitting and other delays. We expect the rest of the year to come in strong as growing interest in residential storage, emerging new markets for C&I and massive FTM systems are set to break quarterly records.”

The non-residential market demonstrated more volatility than the residential market in the second quarter of 2020.

At 29.5 MW, the segment notched its second quarterly decline in deployments. Quarterly deployments fell by 7% QoQ as the market absorbed the shocks from coronavirus lockdowns more acutely than the residential segment. However, despite the segment’s setback, it still achieved its fifth-highest level of quarterly deployments thanks to surging installations in Massachusetts.

With Q2 deployments setting a record this year, Wood Mackenzie and ESA forecast the US energy storage market to grow significantly over the next six years.

The US market will grow more than sevenfold by 2025 compared to the annual market in 2020. In that timeframe, MWh growth is expected to accelerate faster than MW growth as average discharge durations increase over time due to a focus on services such as capacity increase.

The FTM segment will continue to make up the bulk of the market through 2025, driven by massive investment from vertically integrated utilities in regulated markets and developers taking advantage of wholesale market opportunities and incentives in key markets.

The residential segment will continue its upward trend, beating its 2020 numbers sixfold in 2025. The non-residential segment will see an annual market in 2025 that is eight times bigger than the 2020 market.

A significant amount of non-residential upside is tied to community solar-plus-storage. The majority of this is concentrated in Massachusetts and New York and driven by those states’ strong incentive programs and access to wholesale markets.

Key findings from the report:

  • In Q2 2020, US energy storage deployments hit 168 MW.
  • In Q2 2020, US energy storage deployments increased 72% QoQ and 117% YoY (MW terms).
  • In Q2 2020, the FTM market grew more than fourfold compared to Q1 2020.
  • US residential storage deployments increased 28% YoY.
  • Coronavirus impacts may trickle through to Q3 and Q4 of this year.

About the U.S. Energy Storage Monitor

Delivered quarterly, the U.S. Energy Storage Monitor is the industry’s only comprehensive research on energy storage markets, deployments, policies and financing in the U.S. These in-depth reports provide energy industry professionals, policymakers, government agencies and financiers with consistent, actionable insight into the burgeoning U.S. energy storage market.

About Wood Mackenzie

Wood Mackenzie, a Verisk Analytics business, is a trusted source of commercial intelligence for the world’s natural resources sector. We empower clients to make better strategic decisions, providing objective analysis and advice on assets, companies and markets.

About The U.S. Energy Storage Association

The U.S. Energy Storage Association (ESA) is the national trade association dedicated to energy storage, working toward a more resilient, efficient, sustainable and affordable electricity grid – as is uniquely enabled by energy storage. With more than 190 members, ESA represents a diverse group of companies, including independent power producers, electric utilities, energy service companies, financiers, insurers, law firms, installers, manufacturers, component suppliers and integrators involved in deploying energy storage systems around the globe.

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