For the first time ever, the U.S. saw more home energy storage than front-of-meter storage deployed in a single quarter.
According to the latest U.S. Energy Storage Monitor from the Energy Storage Association and Wood Mackenzie Power & Renewables (formerly known as GTM Research) 156.5 megawatt-hours of energy storage were deployed in the second quarter of 2018, triple what was deployed in the second quarter of 2017. The residential segment led the way, growing tenfold year-over-year.
Residential deployments were concentrated in two states, California and Hawaii, which together account for 72 percent of megawatt-hours on the quarter. Wood Mackenzie Power & Renewables senior analyst Brett Simon notes that there are no signs these two states will relinquish their residential market lead; however, he posits that there is an exciting race for the No. 3 spot. Simon points to both Massachusetts with its new SMART program and Arizona, which may see some new tariff structures, as key contenders.
“So far in 2018, 24 states and the District of Columbia have taken some form of regulatory or legislative policy action with respect to energy storage, with even more states poised to do so in 2019,” said Kelly Speakes-Backman, CEO of the Energy Storage Association. “The industry is bullish about continued state action designed to ensure fair and equal access for storage to the grid and markets, to enable competition in all grid planning and procurements, and to capture the full value of energy storage. As these barriers to storage are removed in state markets, we will likely see new state names on the leaderboards for residential, non-residential, and front-of-the-meter deployments.”
The report highlights customers’ increased interest in self-consumption and resilience as growth drivers. However, Wood Mackenzie doesn’t anticipate that the segment will continue to experience such massive gains in the near term.
“Over the last few months, we’ve heard consistently from residential installers and distributors that they’re unable to receive residential storage systems in the quantities ordered,” Simon said. “This outcome is heavily influenced by lithium-ion battery supply constraints, which affects all three market segments. As a result, while the second half of each year usually sees growth over the first, in contrast, we expect the U.S. residential storage market in the second half of the year to be comparable in size to the first half.”
However, over the long term, Wood Mackenzie Power & Renewables doesn’t expect lithium-ion battery supply to be an issue, particularly with multiple large battery manufacturing plants set to open in the early 2020s.
While not quite record shattering like the residential market, the non-residential and front-of-meter segments both grew on an annual basis when measured in megawatt-hours.
The non-residential segment rebounded from Q2 and experienced its second-best quarter of all time, with 48 megawatt-hours deployed, and the front-of-meter segment saw 51 megawatt-hours deployed.
When measured in megawatts, the front-of-the-meter segment dropped 30 percent year-over-year, but was up 176 percent year-over-year in megawatt-hours. This is due to long-duration (4+ hour) projects coming online for services such as capacity and load-shifting, compared to shorter-duration frequency regulation projects. Notably this quarter all front-of-meter installations were paired with solar production.
Wood Mackenzie Power & Renewables expects annual deployments to accelerate rapidly over the next few years, growing from an estimated 774 megawatt-hours in 2018 to more than 11,700 megawatt-hours in 2023.
Download the executive summary here.
The energy storage, grid edge and solar analysts from GTM Research, the wind experts from MAKE, and the global power team from Wood Mackenzie have combined to form Wood Mackenzie Power & Renewables.