Energy storage is increasingly finding its place in the sun. As a technology, it simply offers too many advantages and meets too many needs to be overlooked: it can ramp faster than a gas plant, it can stabilize voltage and frequency, and it can carry electrons from solar generation to deliver power after dark.
When you add to this the dramatic cost declines for lithium-ion batteries, the combination becomes unstoppable.
Regulators, utilities and state governments are beginning to understand this, and among other policies the Federal Energy Regulatory Commission’s Order 841 is opening wholesale markets to the participation of energy storage. Add in the tax advantages of coupling energy storage with solar under the Investment Tax Credit (ITC), and you have the perfect storm.
According to IHS Markit, the U.S. grid-tied energy storage market is poised to nearly double this year to 712 MW from 376 MW last year (note: This forecast does not include behind-the-meter energy storage). The company says that this will allow the United States to surpass South Korea, which was the world’s largest grid-tied energy storage market in 2017 and 2018.
And that is just the beginning. IHS expects nearly 5 GW of energy storage – 90% of which will be lithium-ion batteries – to be deployed in the United States from 2019 to 2023.
ITC drop down drives growth
The consultancy says that a big driver of the growth of energy storage deployments over the next four years will be batteries coupled with utility-scale solar, which it expects to comprise more than 40% of battery deployments, or roughly 2 GW.
This is made possible by multiple factors, including falling costs. But a main driver of the growth over this period will be the narrowing window of opportunity presented by the ITC, which drops down to 10% at the end of 2022 and can be used for paired solar + storage if the batteries are mostly charged using solar.
The full 30% ITC can only be claimed if projects start construction by the end of this year, however because of this provision the completion of many large-scale solar projects is expected to be stretched over the full four years, and it is likely that solar plus storage will follow this pattern.
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