Energy Storage Hits Record for New Installations in Q4 2021

The fourth quarter of 2021 saw new installations of 4,727 MWh in the U.S. storage market. This was a new record. According to Wood Mackenzie, a Verisk business, and the American Clean Power Association’s (ACP) latest U.S. Energy Storage Monitor report, Q4 2021 saw more capacity installed than in the first three quarters combined, despite project delays.

Annual grid-scale storage deployments nearly tripled from year to year, to 3 GW/9.2 GWH. Despite a record year, the grid-scale market didn’t meet expectations in 2021, with supply chain challenges delaying more than 2 GW of capacity into 2022 and 2023. Wood Mackenzie predicts supply chain challenges and delays in interconnection queue processing will continue through 2024.

“Year 2021 was yet another record for the U.S. energy storage market, with annual installations of multiple gigawatts for the first time,” says Jason Burwen, ACP’s vice president for energy storage. “Even in the face of continued macro-economic headwinds, interconnection delays and lack of proactive federal policy, increasing demand for resilient clean energy and volatility in the price of fuel-based generation will drive energy storage deployment forward. Despite supply tightness leading to some project delays, the grid-scale market is still on track for exponential growth.”

The recent price gains in system components have been nearly erased by rising transportation and raw material costs. The greatest increase in system component prices was seen in the battery module price, which was primarily due to the higher cost of raw materials.

The residential storage sector had its strongest quarter yet with 123MW installed. This beats the previous quarterly record (110 MW) set in the first quarter. The new quarterly benchmark was established by increasing solar-plus storage sales in markets other than California, which resulted in a national total of 436MW.

Annual residential installations are expected to reach 2 GW/5.4GWh by 2026. The market segment is led by California, Puerto Rico and Texas.

“Puerto Rico’s position in the residential U.S. solar-plus-storage market comes as no surprise, and demonstrates how outages can drive battery adoption, with thousands of new residential installs emerging each quarter and competition increasing between local installers,” states Chloe Holden, an analyst with Wood Mackenzie’s energy storage team.

“Outages in Puerto Rico are also driving customers to recognize the added value of resilience that solar-plus-storage systems offer, despite premium pricing and lack of incentive programs,” adds Holden. “This is also driving solar-plus-storage market growth in Florida, the Carolinas and parts of the Midwest.”

The report found that California’s storage market is resilient despite changes in policy and market developments such as NEM 3.0. California will be the largest residential storage market in 2027, with three-and half times as much storage installed annually in 2027 than 2021.

Non-residential storage generated 131 MWh in fourth quarter. This resulted in 162/350 MWh annual deployments in 2021. Segment demand was driven in part by the increased storage attachment rates within New York’s and Massachusetts’ community solar markets.

You can read the entire report here.

Image: Photo by Mariana Proença on Unsplash