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Battery Storage Capacity Set to Nearly Double in 2024, Reflecting Energy Storage Boom

by Anna

The Energy Information Administration (EIA) forecasts a significant surge in battery storage capacity this year, highlighting the growing role of energy storage in facilitating renewable energy integration and grid stability across the United States.

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Amid the rapid expansion of solar and wind projects nationwide, the energy storage market is experiencing robust growth. According to EIA estimates, developers are poised to add over 14 gigawatts (GW) of battery storage to the existing grid capacity of 15.5 GW, nearly doubling the current capacity . This increase follows the addition of more than 6 GW of battery storage in the previous year, representing a substantial 70% year-over-year growth .

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A key driver behind this expansion is the necessity for dispatchable capacity to counterbalance the intermittent nature of renewable energy generation from wind and solar sources. Battery storage systems, optimized for power or energy capacity, are increasingly paired with renewable plants to provide consistent firm capacity and support ancillary services such as frequency regulation, reactive power, and spinning reserves .

The declining prices of batteries have also fueled market growth, with major stationary storage providers entering into multi-year supply agreements for battery cells while benefiting from competitive pricing from Chinese suppliers. The National Renewable Energy Laboratory (NREL) reports that average lithium-ion battery pack prices decreased by 14% in 2023, with an even steeper drop of 17% observed in the stationary storage sector .

In the realm of grid-scale storage expansion, Wood Mackenzie notes record capacity additions in the fourth quarter of 2023, surpassing 3.9 GW and 11 gigawatt-hours (GWh). This represents a remarkable 358% year-over-year increase, with the residential market also expanding, reaching 218.5 megawatts (MW) .

Furthermore, Wood Mackenzie projects that nearly 9 GW of battery capacity was deployed nationwide last year, marking a 90% increase from 2022, and anticipates the addition of 59 GW by 2028 . This growth trajectory is attributed to ongoing declines in battery prices, driven by softening electric vehicle demand and an oversupply of battery-grade lithium raw materials, outpacing demand forecasts .

The recent passage of the Inflation Reduction Act (IRA) has further catalyzed market expansion by introducing an investment tax credit (ITC) for standalone storage projects, previously limited to batteries co-located with solar installations. This measure incentivizes residential battery storage equipment purchases with a 30% tax credit for systems meeting specific capacity criteria .

Enel North America, Texas’s largest utility-scale energy storage operator, is spearheading storage capacity additions with the construction of the Ables Springs Solar + Storage project near Dallas. This project, combining an 186 MW solar array with a 115 MW/169 MWh battery storage system, is poised to generate 320 GWh annually, serving over 30,000 households .

Moreover, the retirement of coal-fired power stations in New Hampshire is paving the way for the development of battery energy storage systems to support peak demand driven by new offshore wind sites in the region .

The investment landscape in energy storage projects is also flourishing, with significant funding rounds bolstering expansion efforts. Notable ventures include Lightshift Energy securing $100 million from Greenbacker Capital Management for a multi-gigawatt battery storage expansion and MN8 Energy receiving a $325 million investment from Ridgewood Infrastructure and Mercuria Energy Group .

In summary, the surge in battery storage capacity underscores the pivotal role of energy storage in advancing renewable energy deployment and enhancing grid reliability, with favorable market conditions and policy initiatives driving unprecedented growth in the sector.

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