US Grid-Scale Energy Storage Installations Drop by 33% in Q1 2023

The installations witnessed a second consecutive quarterly drop


The energy storage market in the U.S., including grid-scale, residential and community, commercial, and industrial segments, experienced a 26% decline in the first quarter (Q1) of 2023 compared to the previous quarter, adding a total of 2,145 MWh, found the latest report by Wood Mackenzie.

In the grid-scale segment specifically, installations reached 1,553 MWh during Q1 2023, marking the second consecutive quarterly decrease and a 33% drop compared to the installations in Q1 of 2022.

In the community, commercial, and industrial (CCI) sector, installations rebounded in Q1 after four consecutive quarters of below-average activity.

The CCI market recorded its second-highest quarter on record, installing a total of 203.3 MWh, which represents a 145% increase compared to the same period last year.

Residential storage also had its second-highest quarter on record, reaching 388.2 MWh. However, there was a decline in installed capacity compared to the previous quarter, marking the first quarter-over-quarter decline for the residential sector in nearly two years.

The most recent U.S. Energy Storage Monitor report, published by the American Clean Power Association (ACP) and Wood Mackenzie, reveals that California and Texas remain key drivers of the energy storage market, representing 84% of the activity in Q1.

The report highlights project delays as a significant reason behind the declining state of the market.

John Hensley, the Vice President of Research & Analytics at ACP, emphasized the interconnected nature of energy storage development with solar and wind projects, noting that the recent slowdown in the storage market highlights how trade and policy issues in those sectors can impact storage deployment.

Hensley stressed the importance of addressing supply chain and interconnection challenges and expressed confidence in the sector’s long-term growth trajectory.

He mentioned that the forecast until 2027 is optimistic, as the demand for energy storage will continue to rise with the integration of more clean energy technologies into the grid.

Wood Mackenzie has projected that the grid-scale project pipeline will contribute approximately 8.9 GW of energy storage capacity in 2023. Across all industry segments, the forecasted capacity for 2023 is expected to reach 10.5 GW.

Although there has been a slight decrease in the quarter-over-quarter forecast, the total additions for all segments are still anticipated to double by the end of 2023 compared to the previous year, indicating significant growth in the industry.

Vanessa Witte, a senior analyst with Wood Mackenzie’s energy storage team, commented on the current state of the market, noting that supply chain issues and interconnection queue backlogs have hindered market growth.

This decline in the energy storage market over consecutive quarters is the first since 2015, although installations were smaller in volume and less predictable back then.

However, Witte expressed optimism for the second quarter, as many projects with delayed completion dates are still viable and expected to contribute to a stronger quarter.

Despite near-term challenges, these issues are expected to be resolved, and the activity in the market to increase as the demand for storage rises with the expansion of renewable generation.

A recent U.S. Energy Information Administration report suggests that power developers and project owners would add utility-scale battery storage capacity of up to 30 GW in the United States over the next three years.

Earlier, the National Renewable Energy Laboratory said that the prices of storage systems soared in Q1 of 2022 mainly due to the Covid pandemic, which complicated supply chain constraints, industry-specific events, and trade policies. It added that the resultant volatility affected stakeholders differently, making capturing representative photovoltaic and storage costs challenging.