U.S. energy storage capacity—both front-of-the-meter (FTM) and behind-the-meter (BTM)—is set to grow by leaps and bounds, according to Wood Mackenzie’s Q4 2018 U.S. Energy Storage Monitor.
Energy storage deployments in the United States will accelerate dramatically over the coming years, growing from 338 megawatts (MW) in 2018 to 659 MW in 2019, before more than doubling to 1.7 gigawatts (GW) in 2020, according to the report, a publication of Wood Mackenzie Power & Renewables and the Energy Association. The quarterly monitor is comprised of data on U.S. energy storage deployments, prices, policies, regulations and business models “intended to provide the most comprehensive, timely analysis of energy storage in the U.S.”
A large FTM pipeline is set to come online in 2020, accounting for “the massive jump over 2019,” write Wood Mackenzie senior analysts, Brett Simon and Dan Finn-Foley. “Furthermore, the next few years will see implementation of a variety of incentives, utility tariff shifts, net energy metering changes and other state initiatives that will drive the market forward. In particular, states like Massachusetts, New York and New Jersey are instituting policy regimes over the next few years to bolster their storage markets. Other states will no doubt follow.”
The FTM market will drive the majority of value through 2020, according to the report. However, starting in 2021, the BTM market will account for over half the annual market value in dollar terms.
For the third quarter, the United States saw 61.3 MW deployed. California led the market, and Hawaii and New York followed closely behind.
BTM deployments accounted for 57 percent of deployed megawatts, with a 198 percent year-over-year growth.
“Continued solar-plus-storage demand, particularly in the wake of new net metering programs, changing utility rate tariffs and customer desire for resilience are pushing this segment ahead,” the analysts write.
FTM meter deployments in the third quarter nearly doubled from the second quarter, primarily because of a single large project in California, according to the report.
Measuring by megawatt-hours (MWh), the U.S. energy storage market in the third quarter dropped 15 percent from the prior quarter, from 159.9 MWh to 136.3 MWh. BTM deployments accounted for 60 percent of total megawatt-hours deployed, while FTM megawatt-hours were dominated by a single eight-hour project in New York.
The report also detailed both FTM and BTM policy and market developments within the fourth quarter. For FTM:
- The U.S. Department of Energy announced the selection of 10 projects through the ARPA-E Duration Addition to the Electricity Storage program. Senators Tim Scott (R-S.C.) and Michael Bennet (D-Col.) sent a letter to Treasury Secretary Steven Mnuchin, asking him to clarify the renewable energy investment tax credit eligibility for storage systems.
- Nevada Energy’s latest renewable energy request for proposals (RFP) includes the opportunity for energy storage to be paired as a capacity asset. Voters rejected deregulation of the market, while increasing the state’s renewable portfolio standard.
- The California Public Utilities Commission approved 175 MW worth of storage contracts split between Southern California Edison and Pacific Gas and Electric Co. California ISO continued market participation rulemaking for energy storage, while the Federal Energy Regulatory Commission rejected portions of Southern California Edison wholesale distribution tariff.
- The Northern Indiana Public Service Co. launched its latest integrated resource plan, including potential energy storage.
- New York Gov. Andrew Cuomo announced $40 million under the NY-Sun program to support storage deployment. The New York Public Service Commission accepted environmental review of the state’s storage road map. The New York ISO is considering storage participation and capacity market eligibility.
- The Virginia Department of Mines, Minerals and Energy issued an RFP to evaluate the benefits of storage for the state.
- In New Jersey, Public Service Electric and Gas announced its $4 billion Clean Energy Future program, including $180 million for energy storage.
- In both North Carolina and South Carolina, Duke Energy said it would invest $500 million in energy storage over the coming years, with total deployments expected at 300 MW.
- Alabama Power’s latest capacity RFP shows energy storage is increasingly being recognized across the Southeast.
BTM policy and market developments within the fourth quarter include:
- Nevada Energy launched a storage incentive for both residential and non-residential systems.
- The California Building Standards Commission issued new fire code regulations that greatly impact non-residential storage deployments. The GHG Working Group issued a report outlining proposals for the GHG signal under SGIP. The California Public Utilities Commission denied a proposal for changes to metering requirements of NEM generating facilities with paired storage. Gov. Jerry Brown signed SB-700 into law, which reauthorizes the Self-Generation Incentive Program through the end of 2025.
- Arizona Public Service announced its Storage Rewards program to support adoption of residential storage in its territory.
- The Massachusetts Department of Public Utilities issued the order finalizing the SMART program, which offers storage systems that are paired with solar an incentive of between 2.5 cents per kilowatt-hour and 7.5 cents per kilowatt-hour.
- In Colorado, XcelEnergy published its 2019/2020 Demand Side Management Plan, which includes a residential storage demand response pilot.