According to the American Clean Power Association (ACP) and Wood Mackenzie’s latest U.S. Energy Storage Monitor report, in the first quarter of 2023, the U.S. energy storage market added 2,145 MWh across all segments of the industry. The figure represents a 26% decrease from the fourth quarter of 2022.
The grid-scale segment installed 1,553 MWh in the first quarter of 2023, recording the second-straight quarterly decline and falling 33% below first quarter of 2022 installations, the report also states.
California and Texas continue to drive the energy storage market, accounting for 84% of activity in the first quarter, but project delays contributed to the declining environment.
“The recent energy storage market slowdown illustrates how storage development is already interwoven with new solar and wind projects – and how trade and policy issues in those sectors affect storage deployment,” says John Hensley, ACP’s vice president of research and analytics.
Wood Mackenzie has slated 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 (QoQ), 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,” says 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.”
Community, commercial and industrial (CCI) installations bounced back in the first quarter of 2023, 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 (YoY) numbers.
Residential storage recorded its second-highest quarter on record at 388.2 MWh but there was a decline from the fourth quarter of 2022 installed capacity. This marked the first QoQ decline for the residential sector in nearly two years.
Although the energy storage market has slowed, it has not and will not come to a screeching halt say experts like Wood Mackenzie’s Witte: “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.”