Energy Storage Market Sets Q4 Record, But Supply Chain Issues Linger

WASHINGTON — The U.S. energy storage market set a new record in the fourth quarter of 2021, with new system installations totaling 4,727 megawatt-hours, according to a new report from Wood Mackenzie and the American Clean Power Association.

According to their latest U.S. Energy Storage Monitor report, released Thursday, Q4 2021 saw more capacity installed than in the first three quarters combined, despite project delays.

Annual deployments of grid-scale storage nearly tripled year-over-year to 3 gigawatts/ 9.2 gigawatt-hours.

Despite a record year, the grid-scale market didn’t meet expectations in 2021, with supply chain challenges delaying more than 2 GW of capacity into 2022 and 2023. 

Wood Mackenzie forecasts that supply chain pressures and delays within interconnection queue processing will persist through 2024.

“2021 was yet another record for the U.S. energy storage market, with annual installations of multiple gigawatts for the first time,” said Jason Burwen, vice president for energy storage for the American Clean Power Association, in a written statement. 

“Even in the face of continued macroeconomic headwinds, interconnection delays, and lack of proactive federal policy, increasing demand for resilient clean energy and volatility in the price of fuel-based generation will drive energy storage deployment forward,” Burwen said.

He added, “Despite supply tightness leading to some project delays, the grid-scale market is still on track for exponential growth.”

According to the report, system component price gains experienced over recent years have nearly been wiped out by higher costs for raw materials and transportation. 

Specifically, battery module pricing saw the largest increase of all system components due to the increased cost of raw materials.

Residential storage had its strongest quarter to date with 123 MW installed, beating the previous quarterly record of 110 MW in the first quarter of 2021, the analysis said. 

“Increasingly effective solar-plus-storage sales in markets outside of California helped establish the new quarterly benchmark and resulted in a national annual total of 436 MW,” it added.

By 2026, the report continued, annual installations in the residential segment are expected to hit 2 GW / 5.4 GWh, with frontrunners in California, Puerto Rico, Texas, and Florida leading that market segment.

“Puerto Rico’s position in the residential U.S. solar-plus-storage market comes as no surprise, and demonstrates how outages can drive battery adoption, with thousands of new residential installs emerging each quarter and competition increasing between local installers,” said Chloe Holden, an analyst with Wood Mackenzie’s energy storage team, in the press release announcing the report’s release.

 “Outages in Puerto Rico are also driving customers to recognize the added value of resilience that solar-plus-storage systems offer, despite premium pricing and lack of incentive programs. This is also driving solar-plus-storage market growth in Florida, the Carolinas and parts of the Midwest,” she added.

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