by Julian Spector
June 11, 2019

California enjoys plenty of time in the spotlight. It’s the center of film culture, technology, North American viticulture, basketball prowess, and of course, the U.S. energy storage industry.

It’s a vital sign for the health of that industry that last quarter was the least California-centric in recent memory.

The Golden State registered as just a blip on the chart of utility-scale energy capacity, overtaken by Massachusetts, Arizona and New Jersey, in ascending order. It still crushes all competition in the commercial and industrial sector, but its share of megawatts deployed dropped from 96 percent the previous quarter to 80 percent in Q1. On the residential front, California now supplies less than half of megawatts and megawatt-hours, followed by Hawaii and a motley crew of other states.

This week in Storage Plus, we’re mining Q1 data from the newest Energy Storage Monitor, from Wood Mackenzie Power & Renewables and the Energy Storage Association, to piece together how the industry is making the jump from its biggest and friendliest state market to a truly national, geographically diverse operation.

Why does this matter? Well, it saves us from having to write about California at all times, to the exclusion of states elsewhere in the union that I'm sure are perfectly lovely in their own right. More significant, this dispersion proves that storage can thrive outside of the highly supportive policy environs of California, and that it can solve problems for different kinds of communities. 

There's risk in geographically limited operations — just look at the quarterly ups and downs of the C&I storage industry. And there's bounty to be claimed by setting sail for new markets, which is what finally seems to be happening.

First, the pipeline

The new issue of the ESM breaks down the projected pipeline for utility-scale projects over the next five years. It's important to note that these numbers draw from interconnection queue applications, which can prove speculative and subject to change, but they give a general sense of the scale of interest in different places.

First things first: California isn't going anywhere as the ultimate storage leader. Its front-of-the-meter pipeline jumps from 452 megawatts this year to 4,126 megawatts in 2020, five times more than the next runner-up.

The thesis of this article is not that California will diminish in importance anytime soon — the weight of evidence defies that theory. Rather, many other states are rising in significance, such that the unipolar dominance will give way to a more distributed system of market hubs, with California remaining foremost among them.

Texas will emerge as a key player, if the interconnection queues are to be believed. What's today a sleepy storage backwater is forecast to shoot to 770 megawatts in 2020 and double that in 2021.

That's a bit surprising, because hardly anyone has made a strong business case work in the rough-and-tumble ERCOT market, where little incentive exists for batteries today. That said, the real-time prices are getting spikier, more solar is getting built that could be time-shifted, and a bill working through the legislature could finally allow distribution utilities to contract for batteries to serve grid reliability.

Arizona will sustain an annual market of hundreds of megawatts through the mid-2020s, with a hopping year in 2023. Arizona Public Service's commitment to regular storage procurements totaling 850 megawatts goes a long way here.

Colorado has a couple of years with 200+ megawatts coming its way, thanks to Xcel Energy's clean energy push. Nevada has a similar boom coming from a large-scale procurement, and Florida got on the map with a single project that will dump 409 megawatts on the grid in one stroke, in accordance with the wishes of Florida Power & Light.

New York and Massachusetts are set to blossom into nationally renowned markets in the early 2020s. Hawaii has a decent pipeline, but will soon look small compared to the others.

We'll see how much of this pipeline actually gets built. Erring on the side of caution, let's just say that developers are dedicating the time to file these eye-popping requests in 10 leading states, plus several gigawatts across the remaining states. These profit-driven types aren't likely doing that just for fun.

Policy takes root elsewhere

Those are the states attracting developer interest already, meaning they have brushed past the early hurdles to storage adoption. Another group of states has begun grappling with those market-opener questions, proposing policies that could launch them in the coming years.

  • Washington: Signed a law calling for integrated distribution system planning, which could give storage more opportunities to compete.
  • Colorado: Passed a distribution system planning law to include storage.
  • Maryland: Enacted HB 650, requiring utilities to develop four types of storage projects by February 2022. This will forcibly provide the utilities experience developing, owning and contracting for storage technology.
  • New Hampshire: The legislature mulling a bill to use storage to reduce peak demand.
  • Federal government: Several bills are in play to give energy storage its own tax credit. This has been tried before without success, but a Democratic House changes the bargaining situation.

Utility procurements in places you might not have expected

An enthusiastic utility can go a long way toward putting a state on the storage map — especially when it's the only game in town. In addition to those mentioned previously, these companies are adding batteries to the mix in a big way:

  • The Oklahoma Municipal Power Authority picked solar and storage for a 2021 capacity requirement.
  • Hawaiian Electric Company followed up its landmark storage procurement from earlier this year with another, potentially larger solicitation to replace coal generation.
  • Vermont's Green Mountain Power added 50 to 100 megawatts of storage to its long-range resource plan, to help it reach 100 percent clean by 2030. Previously, the company deployed hundreds of Tesla Powerwalls in customer homes to reduce system peak costs.
  • The Tennessee Valley Authority laid out the pathway to include storage in bids for its 200-megawatt renewable energy procurement, part of a growing interest among Southern utilities documented in a previous Storage Plus.