Grid-Scale Energy Storage Reached Document Installations in Q2

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Chloe Holden

According to Wood Mackenzie, a Verisk enterprise, and the American Clean Power Association’s (ACP) newest U.S. Energy Storage Monitor report, the U.S. energy storage market set a brand new file within the second quarter of 2022, with grid-scale installations totaling 2,608 MWh – the best put in capability for any Q2 on file.

Grid-scale storage was boosted by a sequence of deployments in Texas, with the state contributing 60% of put in capability this quarter. However, challenges to the sector stay as a result of delays.

“Despite impressive growth, the U.S. grid-scale energy storage pipeline continues to face rolling delays into 2023 and beyond,” says Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage crew. “More than 1.1 GW of projects originally scheduled to come online in Q2 were delayed or cancelled, although 61% of this capacity, 709 MW, is still scheduled to come online in Q3 and Q4 of 2022.”

“Supply chain issues, transportation delays and interconnection queue challenges were the main drivers behind delays in the commercial operations date (COD) for many projects,” Witte provides. 

Given the prevalence of hybrid deployment between storage and solar, ongoing commerce points negatively impacting the solar trade contributed to headwinds for energy storage deployment. Namely, the present enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), just lately enacted by U.S. Customs and Border Protection (CBP).

The U.S. Congress handed a solar funding tax credit score (ITC) extension and standalone storage ITC as a part of the Inflation Reduction Act. This important piece of laws will assist all segments of the energy storage trade, growing deployment of solar-plus-storage methods whereas additionally incentivizing standalone amenities. As a consequence, Wood Mackenzie forecasts 59.2 GW of energy storage capability to be added by 2026.

“The U.S. energy storage industry is reaching maturity,” feedback Jason Burwen, vice chairman of energy storage at ACP. “Energy storage is now regularly being installed at over a GW per quarter. In addition, Texas overtaking California this quarter should serve as a reminder that generators, customers and grid operators in all geographies are increasingly relying on energy storage. Combined with the tailwinds of newly available tax credits from the Inflation Reduction Act, the question for investors and grid operators now is not whether to deploy storage, but how much storage to deploy – and how fast.” 

Residential storage additionally had its strongest quarter up to now with 375 MWh put in in Q2, beating the earlier quarterly file of 334.1 MWh in Q1 2022. 

Demand is rising within the residential section with over 150 MW of residential storage put in for the primary time, however ongoing provide shortfalls and rising costs have suppressed deployment. New solar installers proceed so as to add storage to their product choices, regardless of ongoing procurement points.

“The solar ITC extension is good news for the residential storage industry, preventing a drop in residential solar-plus-storage installations that would have otherwise arrived in 2024,” says Chloe Holden, analysis analyst at Wood Mackenzie, and one of many authors of the report. “The standalone storage ITC will also boost storage retrofits on homes with existing solar.”

Community, business and industrial (CCI) storage continues to lag behind different market segments, with solely 59.4 MWh of CCI storage installations seen this quarter, making it the bottom quarter recorded for MWh capability since 2019.

“Market players look forward to the emergence of a more diverse market, but current deployment remains limited to a few policy leaders in California, New York and Massachusetts,” Holden continues.

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