US Election May Lead To Hike In BESS Costs By 10%: Report

The latest Wood Mackenzie report shared an update on the United States (US) storage market, which installed 3.8 GW of storage capacity in Q3 2024, reflecting an 80% increase compared to Q3 2023. Among the energy storage mix, the US deployed 3,431 MW/9,188 MWh in the grid-scale segment, marking the largest capacity installation in Q3.

Evaluating the impact of the November election, the Wood Mackenzie report speculated an increase in battery energy storage system (BESS) costs by more than 10% by 2026 with potential tariffs. The report doesn’t expect a full repeal of the Investment Tax Credit (ITC), although ITC adders could be at risk. It presents a downside risk in this energy storage market (ESM), but new base case numbers will be forecasted in Q1 2025 as elected officials take office and continue to develop their plans.

The report anticipates that the tariff under Section 301 on lithium batteries from China will increase from 7.5% to 25% starting in 2026. President-elect Trump has proposed a 60% tariff on all imports from China. If executed, turnkey grid-scale storage costs for Chinese systems could range between US$ 1,084 and 1,204 per kW. With the 45X credit and the domestic content adder, U.S.-based turnkey systems would become more competitively priced, but domestic availability falls well short of demand.

In the residential storage segment, the US installed 346 MW of capacity in Q3 2024, witnessing a 63% increase over the previous quarter. States like California, Arizona, and North Carolina led growth, installing 56%, 73%, and 100% more residential storage in Q3 than in Q2, despite residential battery supply shortages.

Community-Scale, Commercial, and Industrial (CCI) Segment

On the contrary, the CCI market remained flat. For instance, states like California failed to surpass Q2 2024’s 14.4 MW installation, despite 10 new battery technology (NBT) projects being installed each quarter. In 2024, across all segments, it is expected to deploy 11.9 GW/34.4 GWh, a slight decrease compared to last quarter’s forecast. Moreover, the total grid-scale capacity forecast over the next five years increased by 2% compared to Q2. The 2024 volume decreased by 5%, but consistent growth is expected from 2025 onwards, driven by new volumes in the Wood Mackenzie project database and previously delayed project capacity.

2024 To Deploy 11.9 GW/34.4 GWh, A Slight Drop From Last Quarter’s Forecast

Over 12 GW of distributed storage is forecasted over the five-year period. The residential segment will install 80% of this capacity as financial value streams open across the country, interest in backup power intensifies, and costs decline. Community, commercial, and industrial storage will grow by 294% over the forecast period. Interconnection challenges in the Northeast could continue to hamper growth.