For months, the energy storage market has lived in very few places, making it hard to get too excited about updates to the market leaderboard. But that’s starting to change.
In rankings calculated by GTM Research for its cumulative 2016 edition of the Energy Storage Monitor, several states that are not California have broken onto the scene. California doesn’t have to worry about losing the throne any time soon, but the stronger showing from relative newcomers heralds the onset of a more geographically diverse industry.
For a while now, the top three markets for the various storage segments have shuffled between California, the PJM Interconnection (minus New Jersey, which is counted separately), and the catchall term “All Others,” while Hawaii has made a strong mark in residential.
Hawaii still holds the No. 3 slot for cumulative residential power capacity, but Arizona unseated it for deployments in 2016. With 633 kilowatts, Arizona put up essentially half as much home storage as California last year.
That’s an impressive performance from Arizona given the relative generosity of storage policy incentives between the two. Overall, Arizona controls 9 percent of the residential storage market and Hawaii has 18 percent. That’ll be the matchup to watch going forward to understand the non-California centers of gravity for home battery buyers.
Meanwhile, New York has gained ground in the commercial and industrial space. The Empire State’s 2.3 megawatts earned it third place for cumulative megawatts deployed, unseating PJM, which held the spot with 2.2 megawatts last quarter.
Again, California still has a potentially insurmountable lead with 66.5 megawatts. As GTM Research’s behind-the-meter storage expert Brett Simon put it, “I don’t think we’ll see California lose its grip on the nonresidential market, but we’ll start to see its market share erode a little bit as states like New York and Hawaii claw their way up in the storage market.”
The new numbers show that New York isn’t waiting for its comprehensive Reforming the Energy Vision policy effort to wrap up before moving ahead with storage deployments. We can expect the pace of deployment to accelerate further as more fully formed market-based grid reform policies come into effect.
Just across the river, New Jersey actually outbuilt New York for C&I energy storage in 2016 (although New York is still ahead in cumulative deployments), with 1.4 megawatts compared to New York’s 1.2 megawatts.
After the wreckage of Superstorm Sandy, New Jersey allocated several million dollars to encourage solar-plus-storage backup on critical municipal facilities, creating safe hubs during blackouts.
There was one last surprise appearance in the ESM rankings: Massachusetts popped up as the No. 3 market for utility-scale power capacity in Q4 2016, thanks to a 2-megawatt installation of NEC batteries by the municipal utility in Sterling, Massachusetts. This project got some help from that state’s clean energy resiliency program; it will provide backup to critical public safety facilities in the town.
This means a few things. One, though PJM leads in all-time utility-scale deployments with 248.3 megawatts, that market has cooled down. It only added 16 megawatts last year, compared to 90 in California, which now trails by 133.2 megawatts in front of the grid. As PJM posts more no-show quarters, newcomers like Massachusetts can sneak onto the leaderboard for a given quarter on the virtue of single projects.
More importantly, the New England states’ strategy of incentivizing storage for town-center resilience has started to register for the storage industry on the macro-level.
California chose a centralized approach, mandating storage deployments statewide and creating large-scale incentive programs like the Self-Generation Incentive Program. The big investment has paid off with big leads in getting storage up and running for the grid.
East Coast states have not put that kind of political capital behind the issue yet, but small (multimillion-dollar) programs to incentivize storage at the local level have helped New England markets to expand their foothold in the storage rankings.
That will increase once Massachusetts figures out its own storage mandate. Nonetheless, for other states interested in trying out energy storage but uncomfortable with a big mandate, the local resilience approach can achieve noteworthy results with less of an upfront commitment.
GTM Research has calculated that 21 U.S. states have at least 20 megawatts of energy storage projects proposed, in construction or deployed, and that 10 states have pipelines greater than 100 megawatts. If those pipelines make their way into reality, they will dwarf the numbers that fill the rankings today, and make the spring leaderboard release just a bit more like March Madness.
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