Brief:
In a remarkable surge, the United States experienced energy storage deployments exceeding 3 GW/10.5 GWh in the second quarter of 2024. This represents a staggering increase of 74% and 86%, respectively, compared to the same quarter in 2023—the highest recorded for any second quarter, as reported by Wood Mackenzie and the American Clean Power Association just last week.
Of this notable total, utility-scale storage dominated the landscape, accounting for 2,773 MW/9,982 MWh. A whopping 85% of the newly installed capacity emerged from the dynamic trio of California, Arizona, and Texas. Conversely, distributed storage contributed 238 MW/510 MWh, hindered by a sluggish pace in residential installations across California, Puerto Rico, and Hawaii, despite a record quarter for California’s commercial and industrial sectors.
- In an interesting twist, the average price of grid-scale energy storage systems saw a decline of 4% from Q1 to Q2 2024 and a significant 34% drop from Q2 2023 to Q2 2024. This price retreat is attributed to some U.S. battery integrators adopting a “wait and see” strategy regarding further domestic investments, particularly in light of the forthcoming November elections.
Insight:
Even with declining input costs and favorable U.S. policies that could soon render domestically-produced lithium-ion systems competitive with their Chinese counterparts—potentially as early as 2026—uncertainty continues to loom over some battery suppliers. Reports from Clean Energy Associates indicate a trend of delays, downsizing, and even cancellations regarding planned U.S. manufacturing investments.
Nevertheless, this wavering among manufacturers hasn’t extinguished the fervent enthusiasm of both foreign and domestic investors in U.S. battery energy storage projects. As highlighted by fDi Intelligence, a remarkable $11.45 billion was committed to U.S. battery ventures in the initial half of 2024—surpassing the nearly $9 billion allotted for the entirety of 2023.
The utility-scale sector showcased the most rapid growth during Q2 2024, with installations soaring by 91% on a MWh basis compared to the previous year, according to the WoodMac and ACP report. Simultaneously, the pipeline for utility-scale projects expanded by 16%, leaping from 519 GW to 601 GW.
The community-scale, commercial, and industrial (CCI) segment rejuvenated from an atypically sluggish start to the year, achieving a commendable 61% year-over-year growth on a MWh basis. California, in particular, recorded an extraordinary capacity increase of 14.4 MW, even though only 12% of second-quarter installations occurred under the newly adopted, storage-friendly Net Billing Tariff, which won’t fully take effect for commercial and industrial customers until 2026.
In stark contrast, the residential segment only managed a modest 12% year-over-year growth—growing from 377 MWh in Q2 2023 to 423 MWh in Q2 2024. This stagnation can be largely attributed to tariff shifts in Hawaii and Puerto Rico, which have clouded prospective installations. Notably, in California, 60% of systems installed in Q2 2024 qualified for the Net Billing Tariff, elevating the storage attachment rate for solar PV systems to an impressive 70%, significantly eclipsing the national average of 26%.
Looking ahead, U.S. energy storage deployments across all sectors are poised to reach an impressive 12.7 GW/36.7 GWh by the end of 2024. This represents a robust 42% increase on a GW basis and a 35% increase on a GWh basis, as per projections from WoodMac and ACP. The grid-scale installations are anticipated to capture the lion’s share of this total, numbering at 11 GW/32.7 GWh—translating to a 32% year-over-year growth.
- From 2024 to 2028, total U.S. energy storage deployments are estimated to reach 74.6 GW/251.3 GWh. However, CCI activity is projected to fall short of previous forecasts, largely due to the intricate nature of developing such projects and limited financial value streams. The challenges linked to permitting, site selection, and interconnection queues are expected to restrain installations across the industry throughout 2025 and 2026 before robust activity resumes in 2027 and 2028, according to the report.