US Energy Storage Market Sets Power Capacity Record in Q4 2019

The US energy storage sector set a power capacity record in Q4 2019, deploying 186.4 MW and 364.2 MWh of storage.

The United States (US) energy storage sector set a power capacity record in Q4 2019, deploying 186.4 megawatts (MW) and 364.2 megawatt-hours (MWh) of storage. According to Wood Mackenzie and the US Energy Storage Association’s (ESA) latest ‘US Energy Storage Monitor’ report, Q4 2019 marks the largest-ever quarter for storage deployments across all US market segments.

The front-of-the-meter (FTM) market spiked 160 percent in quarter-over-quarter growth, with 103.8 MW deployed in Q4 2019. The FTM market accounted for 56 percent of quarterly deployments, in MW terms, after two consecutive quarters in which it made up less than 50 percent.

On an MWh basis, the FTM storage sector grew by 44 percent quarter-over-quarter, with the implied reduction in average duration, due mainly to new projects in PJM participating in Reg D with 1-hour duration batteries. 

While Massachusetts led the FTM rankings, California ruled the behind-the-meter (BTM) segment. The Public Safety Power Shutoffs (PSPS) in California were a significant driver of growth for the residential segment and create upside going into 2020. The non-residential BTM sector recorded its second-strongest quarter on record, with 42.2 MW deployed. The residential market saw another breakthrough quarter, with 40.4 MW installed in Q4 2019.

“The BTM segment had a banner year,” said Brett Simon, Wood Mackenzie Senior Analyst. “California continues to be a market to watch and we expect almost one in four residential solar systems across the state to have storage attached in 2020. This is due to multiple factors, including the Self-Generation Incentive Program, opportunities from time-of-use rates, continued desire for resilience in the wake of PSPS events and even some upside from the new home solar mandate.

“Hawaii also will continue to see strong growth, with most residential solar installers already reporting pipelines where over 90% of their residential solar systems come equipped with storage.”

With a ground-breaking Q4 2019, Wood Mackenzie and ESA forecast the US energy storage market to grow significantly over the next six years. The market is expected to expand from an annual deployment of 523 MW in 2019 to 7.3 GW in 2025. Additionally, the market’s total size will surge from USD 712 million in 2019 to USD 4.2 billion in 2021 and reach USD 7.2 billion by 2025. This growth will be largely be driven by utility procurements.

The residential market segment, with its higher prices on an MWh basis, will represent a disproportionate share of the market’s dollar value by 2025 – 26 percent of revenue compared to only 16 percent of installed MWh. This will be primarily driven by favourable policies and resiliency concerns in California.