In the second quarter of 2020, the US energy storage sector saw its strongest second quarter on record for deployments, according to a new study published by research firm Wood Mackenzie.
Up to 168MW of new energy storage capacity were deployed in Q2 2020 marking an increase of 72% quarter-over-quarter and 117% year-over-year.
The second quarter of 2020 is the second-highest quarterly total ever seen in terms of capacity deployed, falling just behind Q4 2019 (186.4MW).
One large front-of-meter (FTM) project in California came online. The project accounts for more than two-thirds of the total FTM MW deployed and helped to drive this level of quarterly activity. The large-scale system puts California back on the map after a quiet 2019 and, according to the report, the state is expected to remain there over the next six quarters.
The US FTM market grew more than fourfold compared to Q1. Deployments notched their fifth-best quarterly total (89.8MW) and the largest Q2 on record.
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Another record quarter for residential storage deployments, which increased 28% YoY, illustrates that California and Hawaii successfully kept installations progressing through coronavirus lockdowns.
The non-residential market demonstrated more volatility than the residential market in the second quarter of 2020. At 29.5MW, the segment notched its second quarterly decline in deployments.
Quarterly deployments fell by 7% QoQ as the market absorbed the shocks from coronavirus lockdowns more acutely than the residential segment. However, despite the segment’s setback, it still achieved its fifth-highest level of quarterly deployments thanks to surging installations in Massachusetts.
With Q2 deployments setting a record this year, Wood Mackenzie and the Energy Storage Association forecast the US energy storage market to grow significantly over the next six years.
The US market is expected to grow more than sevenfold by 2025 compared to the annual market in 2020.
In that timeframe, MWh growth is expected to accelerate faster than MW growth as average discharge durations increase over time due to a focus on services such as capacity increase.
The FTM segment will continue to make up the bulk of the market through 2025, 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 residential segment will continue its upward trend, beating its 2020 numbers sixfold in 2025. The non-residential segment will see an annual market in 2025 that is eight times bigger than the 2020 market.
Kelly Speakes-Backman, CEO of Energy Storage Association, said: “We are encouraged by the growth the energy storage market has seen this quarter.
“Despite any setbacks from the coronavirus pandemic, the market for energy storage is poised to see significant growth in 2020. Looking out to future growth, we are confident that our expanded vision of 100 GW of new energy storage by 2030 is entirely reasonable and attainable, pushing us closer to reaching a more resilient, efficient, sustainable and affordable electric grid.”
Dan Finn-Foley, Wood Mackenzie head of energy storage, adds: “The US energy storage market has proven remarkably resilient to impacts from coronavirus lockdowns. The commercial and industrial (C&I) space was the only segment that showed a slowdown. This was primarily because of a decline in the C&I California market due to permitting and other delays. We expect the rest of the year to come in strong as growing interest in residential storage, emerging new markets for C&I and massive FTM systems are set to break quarterly records.”
Read more about the report.