Energy storage Q2 deployments sees second-highest quarterly total on record

by Peter Maloney
APPA News
September 8, 2020

A total of 168 megawatts (MW) were deployed in the second quarter, a 72% increase from the previous quarter and a 117% increase over the same quarter last year.

The increase in year-over-year energy storage installations is the second highest quarterly total recorded, falling just behind the 186.4 MW installed in fourth-quarter 2019, according to Wood Mackenzie and U.S. Energy Storage Association’s (ESA) third quarter 2020 US Energy Storage Monitor report.

The increases came amidst lockdowns and slower business activity as a result of the COVID-19 crisis.

At the outset of the COVID-19 crisis, Wood Mackenzie and ESA lowered their energy storage outlook for 2020, forecasting a 44% decline in commercial and industrial installations and a 39% decrease in residential installations compared with pre-pandemic expectations.

The non-residential energy storage market did decline by 7% quarter-over-quarter, to 29.5 MW, but still booked its fifth-highest level of quarterly deployments because of a surge of installations in Massachusetts, according to the report.

The residential storage sector, however, exceeded expectations in the second quarter with 48.7 MW (112 megawatt-hours) installed in the second quarter, a 10% increase from the previous quarter and a 28% year-over-year increase, which shows that California and Hawaii are moving ahead with installations through coronavirus lockdowns, according to the report.

The increase in residential storage installations is notable because home batteries are almost always sold as an add-on to rooftop solar, and the leading rooftop solar installations fell in second quarter.

Several leading installers saw solar deployments drop by 20% from the first quarter to the second quarter, the report noted. “Even as the solar market has slowed down slightly, the pairing rate for storage continues to grow,” Daniel Finn-Foley, energy storage director at Wood Mackenzie and an author of the report, said in a statement.

The biggest increase in quarterly energy storage installations came from the front-of-the-meter (FTM) sector, which includes utility scale storage projects. The US FTM market grew more than fourfold compared with the first quarter, hitting its fifth-best quarterly total, 89.8 MW, and the largest second quarter total, the report found.

The authors of the report noted that the FTM sector tends to be volatile because large projects can contribute disproportionately to totals. The second quarter was no exception. A single FTM project came partially online in California, accounting for more than two-thirds of the total FTM installations in the quarter.

The first phase of LS Power’s Gateway energy storage project in the East Otay Mesa community in San Diego County came online in June, adding 62.5 MW to the grid. The full 250 MW capacity of the project is expected online in the third quarter, which should help boost total installations for the year. “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,” Finn-Foley said.

“The year is going to close out in a big way,” Finn-Foley said. “We’re going to top a gigawatt of storage deployed annually for the first time in the U.S. market.”

The authors of the report expect the FTM sector will continue to make up the bulk of the market through 2025, driven by investments from vertically integrated utilities in regulated markets and by developers taking advantage of wholesale market opportunities and incentives.

The authors also expect the residential sector will continue to grow, beating 2020 installations by a factor of six in 2025, and they expect the non-residential sector will be eight times larger than the 2020 market by 2025.

The American Public Power Association has launched the Public Power Energy Storage Tracker, a resource for association members that summarizes energy storage projects undertaken by members that are currently online.