Dive Brief:
- In 2024, energy storage installations in the U.S. reached 12.3 GW/37.1 GWh, even with a 20% decrease in the fourth quarter, according to a recent report by Wood Mackenzie and the American Clean Power Association.
- The projections for the whole of 2025 estimate 15 GW/48 GWh of energy storage deployments, marking a 25% increase over 2024, fueled by significant growth in both utility-scale projects and a projected 47% rise in residential storage.
- However, uncertainty in state and federal policies presents challenges for the medium-term outlook, creating a 27-GW discrepancy between Wood Mackenzie’s high and low forecasts for the next five years.
Dive Insight:
From 2023 to 2024, U.S. energy storage deployments saw a 34% increase, with all three tracked segments reporting significant growth. The utility-scale segment grew by 32% to reach 33.7 GWh, while the residential segment surged 64%, exceeding 3 GWh. The community-scale, commercial, and industrial segment also rose by 11%, reaching 370 MWh.
While there was considerable growth in the residential and CCI segments during the fourth quarter of 2024, utility-scale deployments declined by 28%, impacting overall installations for the period. Delays in project development meant about 2 GW of anticipated projects were pushed into 2025, which has led to an 11% increase in Wood Mackenzie’s forecast for utility-scale deployments next year.
Interestingly, the fourth quarter of 2024 showed a notable rise in installations outside of California and Texas, the leading markets for energy storage in the U.S. These two states made up only 61% of deployments in Q4, down from 91% in Q3, as states like New Mexico, Oregon, Arizona, and North Carolina contributed significantly to the growth.
In the residential market, the attachment rate for storage systems climbed to 34%, despite some delays in processing projects under California’s NEM 2.0 tariff, which was designed to encourage self-consumption rather than feeding energy back to the grid. The new NEM 3.0 tariff, adopted in late 2022, continues to support existing residential solar setups.
Looking ahead nationally, unless major policy changes occur, the residential storage attachment rate is expected to plateau in 2025 and 2026 before declining in subsequent years. This shift could be influenced by states like Florida, which have favorable policies for solar-only residential installations.
Challenges surrounding federal clean energy tax credits and tariff policies introduce further complexity to the five-year outlook for energy storage in the U.S. Wood Mackenzie anticipates that annual storage capacity additions could average 13 GW a year over the next five years, contingent on policy developments.
The “high case” scenario from Wood Mackenzie assumes stability in federal tax credits and no new import tariffs, potentially leading to an additional 10 GW of installations in the next five years. Conversely, the “low case” suggests a phaseout of tax credits starting in 2028 and increased costs from import tariffs, predicting a 22% decrease in total installations by 2029.
In the longer term, changes in state policy could benefit the higher-cost CCI segment in the 2030s, although these shifts are unlikely to impact the segment’s outlook in the next five years.