U.S. Energy Storage Market Deploys Record 4.8 GW Capacity in 2022
The U.S. energy storage market has seen a record year in 2022 with capacity deployments totaling 4.8 GW, nearly equaling the total of 2020 and 2021 taken together at 5 GW, according to the most recent U.S. Energy Storage Monitor report from Wood Mackenzie and the American Clean Power Association (ACP). In the fourth quarter of 2022, the market commissioned 1,067 MW, the fifth-highest quarterly total across segments, 33% below that of the fourth quarter of 2021, the current quarterly record holder.
“Energy storage had its best year yet in 2022. Cumulative operating utility-scale storage capacity increased by 80%. While we saw a slight dip in installations toward the end of the year, the trend is clear: Energy storage is on a rapid growth curve and is already a key component of building a resilient grid that supports abundant clean energy,” said John Hensley, ACP Vice President of Research & Analytics.
The utility-scale segment, also known as US grid-scale, deployed 848 MW in capacity in the fourth quarter of 2022, lower than the 1 GW in deployments undertaken in both the second and third quarter of 2022. Interconnection and supply-chain bottlenecks were the main drivers of this decline and these constraints are still impacting the pipeline of projects, with project capacities in excess of 3 GW, slated for commissioning in the fourth quarter, cancelled or postponed.
The residential segment bucked this trend and reported an 11% (17 MW) sequential increase in capacity deployments in the fourth quarter of 2022 taking the total to a record 171 MW. The demand for reliability and back-up power drove capacity deployment figures in this segment across all quarters in 2022.
Installations in the community, commercial, and industrial (CCI) storage segment grew 78% in the fourth quarter of 2022, on a sequential basis, totaling 48 MW, up from a substantial decline in the third quarter. The increase was driven by higher installation levels in states such as New York, which are known to be robust in the CCI segment.
“Despite a slow fourth quarter, total 2022 installations were still 44% over 2021. Grid-scale installations increased by 7% year-over-year, CCI by 3%, and residential experienced the strongest growth with installations up 36%. Looking ahead, we expect the US storage market to install almost 75 GW between 2023 and 2027. Grid-scale installations account for approximately 60 GW, 81% of the new capacity added,” said Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team.
Strong demand for energy storage and the commissioning of projects that were originally slated for 2022 will ensure an over 100% increase in projected capacity in the CCI and grid-scale segments in 2023. The report forecasts an approximately 88% increase in residential capacity in 2023, with the capacity deployments within this segment set to quadruple in 2027 against 2022 levels. Witte adds that California will possess first place in terms of market share, at 47% through 2027. During the same period, Puerto Rico will finish second with a share of 11%.
The bustle to acquire queue positions has diminished to a degree in relation to the interconnection queue, with developers retracting applications and independent system operators (ISOs) sifting through applications. As a result, project volume in this regard in the period 2023 to 2028 has fallen by close to 10% sequentially in the fourth quarter of 2022.
A rise in costs and the failure of developers to obtain equipment within the requisite time frame has resulted in the cancellation or postponement of deployments, totaling 7 GW, denoted with an original 2022 Commercial Operation Date (COD).
The price of lithium carbonate, a key battery precursor, climaxed in the fourth quarter of 2022 but a correction in the price of batteries is expected soon as a decline in commodity prices is underway. In 2023, a fall in system costs is expected though concerns, such as shortage in the labor market and supply delays, must be considered.
