Top 5 Reasons Why the US is Poised To Make An Impact in Energy Storage

In the race towards a sustainable future, battery technology is emerging as a critical component. Batteries are vital for the renewable energy revolution, essential for the functioning of electric vehicles (EVs), and pivotal for energy storage systems that stabilize power grids. For years, China has held a dominant position in the global battery market, but recent trends indicate that the United States is well on its way to becoming the next battery superpower. The US battery storage capacity has been growing since 2021 and could increase by 89 per cent, an expansion up to 30 gigawatts (GW) by the end of 2024. 

Here are five reasons why the US is set to become the next battery superpower after China.

1. Significant Investments in Battery Energy Storage System (BESS)

The United States has been making substantial investments in enhancing its battery storage capacity and developing its electric vehicle battery manufacturing capabilities. The Biden Administration’s Inflation Reduction Act (IRA), the most comprehensive climate policy in US history, has spurred a surge in both public and private investment in battery storage. The developers are poised to add as much as 15 GW in 2024 and around 9 GW in the next year.

Developers plan to bring more than 300 utility-scale battery storage projects online in the United States by 2025, with about 50 per cent of the planned capacity installations located in Texas. The five largest new U.S. battery storage projects set to be deployed in California and Texas in 2024 or 2025 include Lunis Creek BESS SLF (Texas, 621 MW), Clear Fork Creek BESS SLF (Texas, 600 MW), Hecate Energy Ramsey Storage (Texas, 500 MW), Bellefield Solar and Energy Storage Farm (California, 500 MW), and Dogwood Creek Solar and BESS (Texas, 443 MW). In mid-February, Arevon Energy and Blackstone closed a US$350 million deal relating to the 200-MW Condor Energy Storage Project in California.

This influx of funding is not just increasing capacity but also accelerating technological advancements and manufacturing capabilities across the country.

2. Filling the Renewable Energy Storage Gap

One of the biggest challenges in renewable energy is the intermittency of sources like wind and solar power. Reliable battery storage is critical to ensure a steady power supply when the sun isn’t shining or the wind isn’t blowing. California has taken a pioneering role in this area, installing more utility-scale batteries than any region worldwide except China. 

This model is set to expand to other states, enhancing the overall reliability of renewable energy sources. Recently, North Carolina’s Strata Clean Energy secured US$559 million in financing for a 255-MW battery storage project in Phoenix, Arizona. As of now California (7.3 GW) and Texas (3.2 GW) boast the most installed battery storage capacity in the country, while the remaining US states together contribute around 3.5 GW, indicating the scope of future growth in its infancy.

3. Cutting off Reliance on Chinese Imports

The country is shying away from its dependence on China in several sectors. A series of major decisions taken by the Biden administration indicate a shift of focus to the domestic manufacturing sector. By elevating tariffs on Chinese solar cells and batteries, including lithium-ion EV batteries, from 7.5 percent to 25 percent over the upcoming years, a clear directive is set forth to invigorate the American manufacturing landscape.

This deliberate push not only safeguards the interests of local solar manufacturers but also lays the groundwork for a robust domestic battery market. With higher tariffs incentivizing investments in homegrown battery manufacturing, there arises a golden opportunity for the proliferation of domestic battery energy storage systems. It also fosters an environment ripe for innovation and growth within the US battery sector.

4. Ambitious Clean Energy Goals and Policies

Following the active approach of the US government, states too are adopting aggressive renewable energy targets supported by substantial battery storage investments. For instance, California aims to make its grid 100 per cent powered by green energy by 2045. For that, the state plans to almost triple its battery storage capacity by 2035, aiming for 50 GW of battery storage. Texas and Arizona are also following suit, with significant new battery projects that will boost their storage capacities and strengthen their grids. 

Other states are setting renewable goals too which is bound to open the scope of growth for the BESS sector. In 2023, Minnesota and Michigan adopted 100 per cent clean electricity standards, joining California and New York in implementing reforms to facilitate clean energy and transmission projects. Seven states adopted California’s tailpipe-emissions standards, mandating an increase in zero-emission vehicle sales. Additionally, New York banned fossil fuel use in most new buildings starting in 2026, while Washington imposed limits on gas appliances in new construction.

5. Robust Public-Private Partnerships and Industry Growth

The US battery storage industry has seen remarkable growth, with capacity increasing over tenfold over the last three years. In the first quarter of 2024 alone, 8.7 GW of storage was rolled out, indicating a year-on-year growth of 90 per cent. This growth is fueled by strong public-private partnerships, government subsidies, and financial incentives. 

Major corporations and financial institutions, such as BlackRock, Korea’s SK, and Switzerland’s UBS, are investing heavily in US battery projects, expecting significant returns as renewable energy becomes more reliable. Bess Power Corporation plans to finalize a 2.4 GW pipeline of stand-alone BESS projects in early 2024, with projects already underway in New Mexico, Tennessee, Utah, and Texas.

While China currently leads the global battery market, the US is rapidly closing the gap. Through significant investments, strategic policies, shifting focus on domestic growth, and robust public-private partnerships, the US is positioning itself as the next battery superpower. As the world continues to transition to renewable energy, the advancements and leadership in battery technology by the US will play a crucial role in shaping a sustainable and resilient energy future.