The U.S. energy storage market saw significant growth in the second quarter of 2024, with grid-scale energy storage leading the charge. A total of 2,773 MW and 9,982 MWh were deployed in this segment, marking a new record for the quarter. This growth was reported by the American Clean Power Association (ACP) and Wood Mackenzie in their latest U.S. Energy Storage Monitor report. Overall, the market deployed 3,011 MW and 10,492 MWh of energy storage across all segments, making it the second-highest quarter on record, following Q4 2023, when 13,437 MWh were installed.
The report highlighted remarkable growth across various market categories. Community energy storage installations grew by 61%, reaching 87 MWh, alongside residential storage, which increased by 12%, totaling 423 MWh. California, Arizona, and Texas played fundamental roles, contributing to 85% of the total installations during this period.
According to John Hensley, Senior Vice President of Markets and Policy Analysis at ACP, energy storage is becoming increasingly pivotal for the U.S. power grid. He commented, "Energy storage is delivering a more resilient and affordable grid, providing cost-effective and reliable solutions to meet the growing energy demand, and addressing challenges from extreme weather events." He conveyed the necessity of overcoming developmental hurdles such as lengthy interconnection queues, permitting, and siting to sustain this growth momentum.
Wood Mackenzie's five-year outlook forecasts continuous growth, predicting total U.S. storage deployments would rise 42% between 2023 and 2024, with overall capacity additions stabilizing to an average annual growth rate of 7.6% between 2025 and 2028. The expectation is for 12.8 GW and 36.9 GWh of energy storage systems to be deployed throughout 2024.
The grid-scale segment is projected to increase by 32% year-over-year, with 11 GW and 32.7 GWh expected to be deployed by year-end. Cumulatively, they anticipate hitting 62 GW from 2024-2028. Distributed storage is also expected to see substantial growth, predicting 12 GW over the next five years, with the residential segment making up 80% of these additions, thanks to 10 GW of storage capacity expected between 2024-2028. Conversely, the community and commercial-industrial sectors face challenges with potential modest reductions from prior estimates.
This quarter demonstrated significant enhancements compared to previous year levels, with over 3,000 MW of storage added across all segments, marking a 74% increase from Q2 2023. Vanessa Witte, senior analyst with Wood Mackenzie, stated, "This quarter showed massive growth compared to year-ago levels and the grid-scale segment continues to be the main driver. Community performed strongly as well. And residential, though growing, remains somewhat sluggish due to slower expansion after California’s growth surge waned, paired with lower installations observed in Hawaii and Puerto Rico, influenced by changing incentives."
The overarching trend suggests sustained interest and investment within the energy storage field, promising strong growth not only this year but extending well beyond. Notably, as intermittent renewable sources like solar and wind expand, the need for efficient storage solutions becomes more acute, enabling the grid to supply energy when most required. Recent governmental initiatives have also amplified this surge, as shown by the U.S. administration's announcement of $3 billion investment targeted at enhancing domestic battery production and materials.
Overall, 2024 looks promising for the energy storage sector, with projections indicating substantial growth and continued consolidation of energy storage as a core component of the United States' power infrastructure. The increased interest from developers and investors hints at the sector's vibrant future, even as it contends with hurdles along the way. The energy storage market is undeniably on the rise, underscoring the revolution we're witnessing as the country pivots toward more sustainable and resilient energy sources.
