The US energy storage market showed signs of strength in the first quarter, particularly residential energy storage installations, but displayed signs of incipient weakness that is likely to deepen in the second quarter, according to Wood Mackenzie and the U.S. Energy Storage Association’s (ESA) latest U.S. Energy Storage Monitor report.
Longer term, the outlook for energy storage is still robust and Wood Mackenzie and the ESA expect the US energy storage market to grow significantly over the next six years, with overall market value crossing the $1 billion annual threshold in 2020 despite the impacts of the coronavirus crisis. And, by 2025, annual energy storage market value is expected to hit $6.9 billion, with annual deployments hitting nearly 7 gigawatts (GW), the analysts said.
A total of 97.5 megawatts (MW) of energy storage was deployed in first-quarter 2020, a 48% quarter-over-quarter decline and a 39% year-over-year decline, according to the report. The decline was primarily the result of a slow front-of-the-meter (FTM) segment which dropped 79% in terms of megawatts deployed quarter-over-quarter, the analysis said.
Residential deployments, however, reached 44.4 MW, a 10% increase from fourth-quarter 2019, as installations in California and Hawaii remained strong. Non-residential deployments, on the other hand, fell to 31.6 MW, a 25% decline from fourth-quarter 2019 installations but still strong enough to place in the top three quarters for the segment.
“Q1 2020 posted a strong quarter for behind-the-meter (BTM) deployments in the US,” Brett Simon, Wood Mackenzie senior analyst, said in a statement. “However, this is a calm before the storm for the BTM market: preliminary conversations with market players in April and May indicate strong impacts from the coronavirus.”
Utilities have reported as much as a 40% decline in residential storage applications from March to April 2020, the report noted, adding that the decline in storage deal flow will have reverberations for the non-residential market into next year given the timelines of such projects.
Despite the dampening effects of the coronavirus crisis, energy storage will experience a “positive growth trajectory in 2020,” as seen in increases in both capacity and deployments in the residential and non-residential sectors, Kelly Speakes-Backman, CEO of ESA, said in a statement.
“While the ongoing pandemic will more seriously affect Q2, we anticipate year-over-year growth as states have continued to pass regulations and legislation to encourage energy storage deployments,” she said.
Longer term, Wood Mackenzie and the ESA expect the front-of-the-meter energy storage market to “bounce back significantly” in the coming quarters as larger, longer-duration systems come online in large part because of utility procurements.
The FTM segment will continue to make up the bulk of the market, driven by massive investment from vertically integrated utilities in regulated markets and developers taking advantage of wholesale market opportunities and incentives in key markets, the analysts said. The residential segment also is expected to continue its upward trend, beating its 2020 numbers six-fold in 2025.
The American Public Power Association recently launched a Public Power Energy Storage Tracker. For additional details, click here.