Strong Q1 for US Energy Storage Market Despite COVID-19: WoodMac

The US energy storage sector saw a strong Q1, with residential storage setting another record while the non-residential had its 3rd-strongest quarter

The United States (US) energy storage sector saw a strong first quarter, with residential storage setting another record while the non-residential market had its third-strongest quarter on record. According to Wood Mackenzie and the US Energy Storage Association’s (ESA) latest ‘US Energy Storage Monitor’ report, residential deployments hit 44.4 MW, up 10 percent from the final quarter of 2019, as markets such as California and Hawaii remained strong and customers in emerging markets looked to storage for resilience.

Non-residential deployments sat at 31.6 MW, down 25 percent on Q4 2019 but nevertheless placing in the top three quarters for the segment.

Though California led in non-residential storage, Massachusetts and New York staked a strong claim on the storage map with a few large community solar-plus-storage projects. These accounted for most of the capacity installed in Massachusetts and New York in Q1 2020.

While a total of 97.5 MW was deployed in Q1 2020, a 48 percent reduction quarter-over-quarter, and a 39 percent drop year-over-year, the decline was primarily due to a slow front-of-the-meter (FTM) segment which dropped 79 percent in MW terms quarter-over-quarter, the report adds. However, FTM deployments are expected to bounce back significantly in upcoming quarters as larger, longer-duration systems come online thanks in large part to utility procurements.

The effects of the coronavirus did not hit the US market until late March, therefore the impact in Q1 was muted. However, Q2 2020 has already seen challenges relating to customer acquisition, installation and interconnection

“The first quarter numbers indicate that despite dampening effects of the coronavirus crisis, energy storage will ultimately experience a positive growth trajectory in 2020,” said Kelly Speakes-Backman, CEO of ESA. “This is evidenced by increases in both capacity and deployments of the residential and non-residential sectors,” she continued. “While the ongoing pandemic will more seriously affect Q2, we anticipate year-over-year growth as states have continued to pass regulations and legislation to encourage energy storage deployments.”

The report also adds that utilities have reported as much as a 40 percent decline in residential storage applications from March to April 2020. Furthermore, the decline in storage deal flow will have reverberations for the non-residential market into next year given the timelines of such projects.

With a ground-breaking final quarter in 2019 and a strong opening to 2020, Wood Mackenzie and ESA forecast the US energy storage market to grow significantly over the next six years. Market value will cross the USD 1 billion annual thresholds in 2020 despite the impacts of the coronavirus. By 2025, annual market value is expected to sit at USD 6.9 billion, with annual deployments hitting nearly 7 GW. The residential segment is expected to continue its upward trend, beating its 2020 numbers six-fold in 2025.