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U.S. energy storage market sets first quarter record for deployments

According to Wood Mackenzie and the U.S. Energy Storage Association’s (ESA) latest U.S. Energy Storage Monitor report, 910 megawatt-hours (MWh) of new energy storage systems were brought online in the first quarter of 2021, an increase of 252% over the first quarter of last year, making it the biggest first quarter so far for the U.S. storage market.

After a record-setting quarter for deployments in the final quarter of 2020, the pace of storage deployments slowed in the first quarter, but despite the dip this quarter, the storage market still notched its third-highest megawatt total for one quarter.

Looking ahead to the rest of 2021, deployments are expected to accelerate dramatically, according to the report. Wood Mackenzie, a research and consulting group, forecasts that nearly 12,000 MWh of new storage will be added in 2021, which is three times the amount of new storage added in 2020.

Wood Mackenzie and the ESA said that one of the most significant storage market developments in the first quarter was the introduction of a stand-alone storage investment tax credit (ITC) in Congress. If passed this year, a stand-alone storage ITC would result in a 20-25% upgrade to Wood Mackenzie’s five-year market outlook in megawatt terms.

“An extra 20 to 25% growth for the US market over the next five years would supercharge an already fast-growing energy storage market,” said Chloe Holden, Wood Mackenzie Energy Storage Analyst, in a statement. “The front-of-the-meter (FTM) segment would see the largest incremental growth, with an extra 6 GW of capacity expected through 2025, which is 25% of our base case market forecast. Without the stand-alone storage ITC, we forecast that the FTM segment will add 3,674 MW in 2021 and 6,915 MW in 2026.”

As noted in the report, the U.S. residential storage market set yet another quarterly record in the first quarter of 2021. The market has grown for nine quarters in a row and broke 100 MW deployed in a single quarter for the first time in the first quarter.

Holden said that backup power to complement rooftop solar systems has become the key selling point for residential battery systems in all U.S. markets. Although other states also have growing markets, California will continue to lead the residential segment by a significant margin through 2026, she said.

The non-residential market (commercial and community-scale) is not seeing the same growth as other sectors, with between 25 and 35 MW of new projects installed in each of the last five quarters.

The report also notes that the FTM interconnection queue now sits at over 200 gigawatts.