U.S. energy storage market grows 162% year-on-year in Q2 2021

According to a new U.S. Energy Storage Monitor report released by research firm Wood Mackenzie, Inc. and the Energy Storage Association of America (ESA), the U.S. deployed 345 MW of installed capacity energy storage systems in the second quarter of 2021. And that’s a 162% increase compared to the same period in 2020, making the second quarter of 2021 the second-highest quarter for U.S. energy storage system deployments.

And the energy storage market continues to gain momentum as the installed capacity of energy storage systems deployed and opened in the U.S. in the second half of this year will set new records, with Wood Mackenzie expecting more than $5 billion worth of energy storage projects to open for operation in 2021 alone.

Despite the momentum in the U.S. energy storage market, the residential battery energy storage market declined slightly in size, the first decline in the segment in nine quarters (since the fourth quarter of 2018). While the number of new residential energy storage vendors is growing rapidly, the segment’s growth is hampered by battery production constraints (e.g., shortage of Tesla Powerwall battery storage systems).

The non-residential energy storage market, comprised of on-site and community-scale energy storage systems, saw a 31% year-over-year increase in deployments in the second quarter of this year, driven by growth in the Massachusetts community energy storage market.

The U.S. grid-side (FTM) energy storage market deployed 218 MW/729 MWh of energy storage systems in the second quarter of 2021, with California, Texas and Arizona leading the market. California continued to lead the grid-side market in the second quarter, with the most installed capacity in the second quarter coming from Arevon’s 100MW/400MWh Saticoy energy storage system deployed in Ventura County. The deployment of solar+storage projects in Texas and Arizona also boosted the installed capacity of grid-side storage systems in the second quarter.

Vanessa Witte, a senior energy storage analyst at Wood Mackenzie, noted, “The U.S. energy storage market remains on track to set new records this year, further demonstrating the growing popularity of battery energy storage systems in the electricity market and underscoring their importance to the energy transition.”

Jason Burwen, an interim CEO of the American Energy Storage Association, said, “Energy storage deployment achieves both U.S. decarbonization and resiliency goals, and storage systems are becoming increasingly necessary to accelerate the deployment of wind and solar power facilities – according to the U.S. Department of Energy’s recently released study on the future of the solar power industry, the U.S. is expected to need to deploy up to 400GW of installed capacity of solar power facilities by 2035.

Energy storage systems can also ensure that electricity delivery can withstand increasingly frequent and intense weather disruptions, such as the heat waves and hurricanes and other severe weather in the United States last summer.

While the U.S. energy storage market has seen tremendous growth this year, public policy has yet to support the pace of deployment needed to meet decarbonization and resiliency goals.

Investment tax credits have driven growth in sectors such as solar and wind. They have done the same for the energy storage industry – with the added benefit of guiding more investment decisions in the energy storage supply chain.”

Policy support in the U.S. continued to strengthen in the second quarter of this year by introducing several new incentives for residential and non-residential energy storage systems.

But the energy storage industry is still awaiting the results of budget adjustments. It is expected that the Investment Tax Credit (ITC) extension for solar generation facilities or the Investment Tax Credit (ITC) for the stand-alone deployment of energy storage systems may be approved by Congress this winter. Such a positive result will enhance the research agency’s forecast for developing the energy storage market.


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