The U.S. energy storage market set a new record in the fourth quarter of 2021, with a total of 4,727MWh of energy storage capacity deployed, according to the U.S. Energy Storage Monitor recently released by research firm Wood Mackenzie and the American Clean Energy Council (ACP). Despite the delayed deployment of some projects, the U.S. still has more battery storage capacity deployed in the fourth quarter of 2021 than the previous three quarters combined.
Despite being a record year for the U.S. energy storage market, the grid-scale energy storage market in 2021 has not lived up to expectations, with supply chain challenges facing more than 2GW of energy storage system deployments delayed until 2022 or 2023. Wood Mackenzie predicts that supply chain stress and delays in interconnect queue processing will continue into 2024.
Jason Burwen, vice president of energy storage at the American Clean Energy Council (ACP), said: “2021 is another record for the U.S. energy storage market, with annual deployments exceeding 2GW for the first time. Even in the face of a macroeconomic downturn, interconnection delays and a lack of positive Proactive federal policies, increased demand for resilient clean energy and volatility in the price of fuel-based electricity will also drive energy storage deployments forward.”
Burwen added: “The grid-scale market remains on an exponential growth trajectory despite supply constraints that have delayed some project deployments.”
In recent years, battery energy storage system cost reductions have been almost offset by rising raw material and transportation costs. Specifically, battery prices rose the most of all system components due to increased raw material costs.
The fourth quarter of 2021 was also the strongest quarter to date for U.S. residential energy storage, with 123MW of installed capacity. In markets outside of California, growing sales of solar-plus-storage projects helped boost a new quarterly record and contributed to the deployment of total residential storage capacity in the U.S. to 436MW in 2021.
Annual installations of residential energy storage systems in the US are expected to reach 2GW/5.4GWh by 2026, with states such as California, Puerto Rico, Texas and Florida leading the market.
"It's no surprise that Puerto Rico is at the top of the U.S. residential solar-plus-storage market, and it demonstrates how power outages can drive battery storage deployment and adoption," said Chloe Holden, analyst on Wood Mackenzie's energy storage team. Thousands of residential energy storage systems are installed every quarter, and competition among local energy storage installers is intensifying.”
She added: “Despite high pricing and a lack of incentive programs, the power outage in Puerto Rico has also prompted customers to recognize the resiliency added value that solar-plus-storage systems provide. This has also driven solar in Florida, the Carolinas and parts of the Midwest. + Energy storage market growth.”
The US deployed 131MW of non-residential energy storage systems in the fourth quarter of 2021, bringing the total annual deployment in 2021 to 162MW.