The U.S. energy storage industry has met many milestones in recent years, but 2023 should be a banner year for battery adoption across all markets. Thanks to the new storage investment tax credit (ITC), systems of any size have access to a 30% installation credit.
Research firm Wood Mackenzie is forecasting 59.2 GW of energy storage capacity to be added through 2026, up from the market’s 13.5-GW cumulative capacity in 2022.
Credit: sonnen
“The U.S. energy storage industry is reaching maturity,” said Jason Burwen, VP of energy storage at the American Clean Power Association, in a press release. “Energy storage is now regularly being installed at over 1 GW per quarter. Combined with the tailwinds of newly available tax credits from the Inflation Reduction Act, the question for investors and grid operators now is not whether to deploy storage, but how much storage to deploy — and how fast.”
Where energy storage previously had to be charged by on-site solar panels to tap into solar’s ITC, now batteries can be installed on their own or at least without strict paired solar requirements to receive financial support. An independent battery can be operated more efficiently alongside large-scale solar sites when not restricted to receiving all of its power from the solar panels, making the entire project more valuable. And residential storage systems can better navigate time-of-use rates and enroll in more grid participation programs straight away, shortening system payback periods.
At the same time, grid programs and virtual power plants (VPP) are entering more markets across the country. Through a VPP, aggregators group numerous residential batteries together, and a utility or grid operator calls on that stored power when needed, compensating the storage customers for that access. These additional incentives make buying a residential energy storage system even more attractive.
VPPs and energy storage adoption are already making a difference to California’s shutdown-prone grid. A late summer 2022 heat wave stressed the California grid, but 76% of the state’s 80,000 customer-sited batteries provided 684 MW of power when the grid needed it most, saving residents from potential blackouts. Just two years earlier, the state only had 30,000 batteries. California’s current customer-sited battery capacity is equal to the state’s Diablo Canyon 1 nuclear power plant.
Speaking of batteries in California, the state’s new NEM 3.0 program, which establishes the rate owners are credited for their solar production, will likely provide a boost to storage adoption in the country’s largest solar market. The new net-billing rates in California extend the payback period for solar — decreasing the economic value of solar-only systems by 85%, according to analysts at Roth Capital Partners. Adding storage to a residential solar system in California would improve its ROI.
Online installation marketplace EnergySage has found that solar coupled with storage is on the rise — 17.1% of its quoted solar systems included batteries in 2022, up from 9.5% in 2020. Now with more grid programs and a stand-alone storage ITC, battery adoption in the United States is climbing to new heights.
This story is part of SPW’s 2023 Trends in Solar. Read all of this year’s trends here.
“And residential storage systems can better navigate time-of-use rates and enroll in more grid participation programs straight away, shortening system payback periods.”
California is forcing this kind of adoption with high electricity prices. It is now (more) important to have some substantial smart ESS installed at one’s home first and go with solar PV second. IF one can’t budget solar PV + smart ESS, then go with the ESS first and get resiliency components first, then go towards solar PV array and depending on system components one can go with A.C. or D.C. coupling and I believe Humless Universal claims they can DO A.C. and D.C. coupling. Basically one can put a chunk of money into an ESS, with the proper energy programs in place the homeowner can use arbitrage for energy cost savings, then add solar PV and store, time shift energy for use at night and during TOU energy costs during the day or night. Depending on electricity use of a particular home, one would probably want from 60kWh to maybe a little over 100kWh of energy storage for arbitrage, TOU price clipping and resiliency due to grid outages like the infamous California PSPS, depending on weather patterns could last from hours to days.