The US energy storage market increased by 252% year-over-year in the first quarter of this year, marking its biggest first-quarter leap so far, global energy consultancy Wood Mackenzie said Tuesday.
Citing the latest US Energy Storage Monitor report by the US Energy Storage Association (ESA), WoodMac said 910 megawatt-hours (MWh) of new energy storage systems were brought online in the first quarter of 2021.
Following a record-breaking quarter for deployments in the fourth quarter of 2020, the agency said the pace of storage deployments declined in the first quarter of 2021, in what has become an annual phenomenon for the sector.
"However, despite the dip this quarter, the US storage market still notched its third highest MWh total for one quarter," it said.
Pointing to dramatically accelerating deployments during the rest of the year, WoodMac said it 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.
The consultancy firm said the introduction of a stand-alone storage investment tax credit (ITC) for energy storage technologies for utilities, businesses and homes was one of the most significant storage market developments in the first quarter.
The Energy Storage Tax Incentive and Deployment Act of 2021 was introduced by a bipartisan group of federal lawmakers on March 9, 2021, to extend certain investment tax incentives to freestanding energy storage systems such as batteries.
The Act would give businesses more confidence and level the playing field between standalone energy storage systems and other energy property that has previously been eligible for federal income tax benefits.
If passed this year, the agency said a stand-alone storage ITC would result in a 20-25% upgrade to its five-year market outlook in megawatt (MW) 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. The front-of-the-meter (FTM) segment would see the largest incremental growth, with an extra 6 GW [gigawatts] 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," said Energy Storage Analyst from Wood Mackenzie, Chloe Holden.
ESA Interim CEO Jason Burwen said the energy storage market is poised for tremendous growth in 2021 and beyond.
Referring to the ESA’s report, Burwen said it provides "a timely forecast of how a federal ITC for energy storage currently being considered by Congress would accelerate our market growth trajectory, making the realisation of our vision of 100 new GW of energy storage by 2030 closer to reality."
"Backup power to complement rooftop solar systems has become the key selling point for residential battery systems in all US markets. Although other states also have growing markets, California will continue to lead the residential segment by a significant margin through 2026," Holden said.
By Sibel Morrow