Calm before the Q2 storm: US energy storage market posts decent Q1

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The business impacts of the coronavirus did not kick into the U.S. energy storage industry until late March — so Q1 looks strong in review, and in alignment with the U.S. solar industry.

And as with the solar industry, Q2 for the storage industry, especially behind-the-meter and residential — is going to be a rough road.

As with the solar industry, large projects are easier to build in a time of social distancing — while sales, interconnection, permitting and installation still present a new set of challenges for socially distanced smaller projects and residential customers.

Battery-based demand charge management is less critical for empty buildings with no demand.

Still, Kelly Speakes-Backman, CEO of the Energy Storage Association (ESA) remains optimistic about growth in 2020 for the building battery business. She said, “While the ongoing pandemic will more seriously affect Q2, we anticipate year-over-year growth as states have continued to pass regulations and legislation to encourage energy storage deployments.”

Here are the key findings from WoodMac and ESA’s energy storage monitor.

  • Q1 residential installs were 44.4 MW, a record — up 10% Q-Q
  • Q1 in front-of-the-meter storage installs dropped 79% Q-Q
  • Non-residential deployments was 31.6 MW, down 25% on Q4 2019
  • 97.5 MW of battery storage was deployed in the U.S in Q1 2020, down 39% Y-Y

California, Hawaii, Massachusetts and New York had a strong storage quarter — driven by consumers looking for resilience as well as community solar-plus-storage projects.

Things have changed

The report expects front-of-the-meter deployments to rebound in the coming quarters owing to utility projects coming online. Anecdotally, the market has been bursting with mammoth utility-scale storage project procurement announcements from HECO, SCE and PG&E.

That same optimism is not found in the residential and behind-the-meter storage business by either installer contacts or utilities. WoodMac dropped 500 megawatt-hours off its 2020 forecast, or 12%, in response to the virus’s impact.

Despite the forecast reduction, WoodMac still expects total U.S. storage installations to double in 2020 and almost triple in 2021 on a year-over-year basis and forecasts the U.S. market to grow to 7 GW in 2025.