HOUSTON/WASHINGTON, June 14, 2023 – Across all segments of the industry, the U.S. energy storage market added 2,145 megawatt hours (MWh) in the first quarter of 2023, a 26% decrease from Q4 2022. The grid-scale segment installed 1,553 MWh in Q1 2023, recording the second-straight quarterly decline and falling 33% below first quarter 2022 installations, according to a new report released today.
According to the American Clean Power Association (ACP) and Wood Mackenzie''s latest U.S. Energy Storage Monitor report released today, California and Texas continue to drive the market, accounting for 84% of Q1 activity, but 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," said John Hensley, ACP''s VP of Research & Analytics. "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."
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 (QoQ), total additions for all segments are still expected to double by end-of-year 2023 from 2022.
"We are seeing the effects of supply chain issues and interconnection queue backlogs hinder market growth," said Vanessa Witte, senior analyst with Wood Mackenzie''s energy storage team. "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."
Community, commercial, and industrial (CCI) installations bounced back in Q1 after four consecutive quarters of lower-than-average activity. In total, the CCI market installed 203.3 MWh for its second-highest quarter on record and 145% above year-over-year (YoY) numbers.
Residential storage recorded its second-highest quarter on record at 388.2 MWh but there was a decline from Q4 2022 installed capacity. This marked the first QoQ decline for the residential sector in nearly two years.
Said Witte: "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."
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In 2023, the United States set a record for the most clean energy installed in a single year,
with 33.8 gigawatts (GW) installed – over three-fourths of all new electricity capacity added.
Explore the 2023 Annual Market Report interactive summary
The NC Clean Energy Technology Center covers the latest trends in US solar policy.
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State-level policy is a key factor in distributed solar and energy storage markets across the United States. Policies change frequently across the 50 states, and tracking these changes are essential for businesses looking to maximize the value they provide.
The North Carolina Clean Energy Technology Center maintains DSIRE, or the Database of State Incentives for Renewables and Efficiency, to keep businesses and consumers up to date on distributed energy regulatory structures and related incentives. Below are 2023 trends as reported by DSIRE in a January 2024 report.
"Many states and utilities are transitioning away from traditional net metering structures and are researching or implementing new rate structures, whether that be net billing, time-of-use based net metering, or something in-between," said Rebekah de la Mora, senior policy analyst. "These changes are not just affecting residential customers, but also non-residential customers."
A total of 273 state and utility level distributed solar policy and rate changes were proposed, pending, or decided in 2023, said the NC Clean Energy Technology Center.
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