Energy Storage Market Sees Decline in Installations

by Paul Ciampoli
APPA News Director
June 15, 2023

Across all segments of the industry, the U.S. energy storage market added 2,145 megawatt hours in the first quarter of 2023, a 26% decrease from the fourth quarter of 2022, according to a new report released June 14.

The grid-scale segment installed 1,553 MWh in Q1 2023, recording the second-straight quarterly decline and falling 33% below first quarter 2022 installations, according to the report released by the American Clean Power Association and Wood Mackenzie.

California and Texas continue to drive the market, accounting for 84% of Q1 activity, but project delays contributed to the declining environment, according to the latest U.S. Energy Storage Monitor report.”

Wood Mackenzie has forecasted 2023 additions from the grid-scale project pipeline at 8.9 GW and 10.5 GW across all segments. While the forecasted capacity for 2023 decreased slightly quarter-over-quarter, total additions for all segments are still expected to double by end-of-year 2023 from 2022.

“We are seeing the effects of supply chain issues and interconnection queue backlogs hinder market growth,” said Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team. “This is the first consecutive quarterly decline we have seen in the energy storage market since 2015 when installations were much smaller in volume and more unpredictable. While the market has faced challenges, we do anticipate a stronger second quarter, as many project CODs have been pushed, but are still very viable.”

Community, commercial, and industrial installations bounced back in Q1 after four consecutive quarters of lower-than-average activity. In total, the CCI market installed 203.3 MWh for its second-highest quarter on record and 145% above year-over-year numbers.

Residential storage recorded its second-highest quarter on record at 388.2 MWh but there was a decline from Q4 2022 installed capacity. This marked the first QoQ decline for the residential sector in nearly two years.

“Our outlook for the storage sector is still bullish, with projected growth strong through 2027. Near-term we will see some challenges, but we expect them to be corrected and activity to increase as more renewable generation will drive the need for storage,” said Witte.