US battery storage is booming

Battery storage installations are growing in the United States thanks to incentives from the Inflationary Reduction Act (IRA), which for the first time provides tax credits for self-storage capacity.

The overall costs of batteries and storage systems have also fallen significantly over the past decade to spur more installations in America.

In addition, pairing battery storage with solar generation systems has become a more popular choice among clean energy developers in the United States.

Last year, for example, solar + storage accounted for 13 percent of residential installations and 5 percent of non-residential installations, the Solar Energy Industries Association (SEIA) said in its review of the first full year of the Inflation Relief Act.

This year, 25% of new residential installations and 10% of non-residential installations will have storage, according to SEIA.

In 2024, US battery storage capacity could increase by 89% from 2023 if developers bring all the energy storage systems they have planned online by their expected commercial operating dates, the Energy Information Administration says from the USA (EIA).

California and Texas are leaders in battery storage installations nationally, as the rapid growth of variable solar and wind capacity in these states supports the growth of battery storage.

In addition to the increase in numbers, battery storage projects are getting bigger in the United States, according to the administration.

Developers expect to bring more than 300 utility-scale battery storage projects online in the United States by 2025, and about 50 percent of the planned capacity facilities will be in Texas, the EIA noted earlier this year.

Separately, the EIA expects solar and battery storage to account for 81 percent of new U.S. electricity generation capacity in 2024. Solar will account for the largest share of new capacity at 58 percent, followed by battery storage at 23 %.

The Inflation Relief Act of 2022 gave new impetus to the US battery storage market by introducing investment tax credits for stand-alone energy storage projects unrelated to a solar or wind generation facility. With the IRA, independent battery storage projects now qualify for tax credits, which has spurred developers to announce and build more projects.

In the first three months of 2024, the US energy storage market set a first-quarter record for installed capacity, with 1,265 megawatts (MW) deployed across all segments. This was the most storage capacity ever installed in the first quarter in the US, representing an 84% jump from the first quarter of 2023, the latest US Energy Storage Monitor report from Wood Mackenzie and the American Energy Association showed. Power Clean (ACP).

The US energy storage market is expected to register 12.9 gigawatts (GW) across all segments in 2024. New capacity additions are set to surpass the 10 GW mark for the first time, with 75 GW expected across all segments by 2028 , according to the report data.

Furthermore, battery storage has seen the second largest generation capacity added to the grid so far this year. Battery storage of 4.2 GW accounted for 21 percent of total U.S. operating capacity additions in the first half of the year, behind solar capacity growth and ahead of wind capacity growth, EIA data showed.

As storage facilities have boomed, their importance to grid balancing has grown.

Grid-connected batteries in California and Texas, for example, have begun to play a significant role in helping balance the system, Ed Crooks, vice president for the Americas at Wood Mackenzie, wrote earlier this year.

“In much of the rest of the United States, the economics to support the shift in pregnancy don’t yet line up the way they do in California and Texas,” Crooks said.

“But as other grids become more reliant on solar and wind, that will change.”

Now, lowering battery costs is also helping increase storage capacity, industry executives say.

While the cost of labor and other equipment has risen, battery costs are falling because of overcapacity in the current soft EV market, John Zahurancik, president of the Americas at battery maker Fluence Energy, told Reuters Events in August.

“We are seeing a continued decrease in both the cost of batteries and the cost of the total energy storage system,” the executive noted.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com