2018 turned out to be a pretty good year for batteries. Prices continued to fall and a handful of states like New York, Colorado and Florida created new policies to drive adoption from storage mandates to new net metering and interconnection policies, as well as new incentives specifically for energy storage.
With more homeowners installing solar in 2018 than ever before – a single quarter of 2018 beat out the entire previous year – are we seeing the turning point for energy storage?
Battery Deployment Enjoys 3x YOY Growth in Q3 2018
Storage installations in Q3 of 2018 continued to grow and for the second quarter, YOY growth tripled, despite dropping 15% under the previous quarter.
According to Wood Mackenzie’s 2018 Q4 Energy Storage Monitor, the U.S. installed 136 MWh of energy storage in Q3 2018, with California leading the way, followed by Hawaii. This is down from Q2’s 160 MWh, but as you can see in the chart below, still miles ahead of 2017 Q3.
Energy Storage Deployment in the US (2013 – Q3 2018)
Source: Wood Mackenzie Power & Renewables/ESA U.S. energy storage monitor
Of that 136 MWh, behind-the-meter installations (BTM, which is customer-sited residential and commercial installations) accounted for 60%, or 82 MWh. That’s equal to over half of 2017’s entire BTM storage deployment – all within a single quarter.
Of those BTM installs, residential installations accounted for over 50% (or about 47 MWh) of that. For a bit of perspective, Tesla Powerwalls can store 13.5 kWh (or 0.0135 MWh) of electricity, so 47 MWh is equivalent to about 3,481 of them.
GTM, which formerly published the reports above, foresaw this huge uptick in 2017, with GTM Research director Ravi Manghani saying, “We’re going to have to strike the word ‘nascent’ from our vocabularies when describing the U.S. energy storage market.”
Once all the numbers are in, GTM actually expects 2018 to see over 1,000 MWh of storage deployment – obviously a record-setting number – with residential installations to hit that number by 2023.
California and Hawaii Continue to Lead in Installations
California and Hawaii continue to lead the way in terms of cumulative storage capacity from residential systems. California leads the pack by far, outpacing Hawaii and the next four states combined. In fact, beyond California and Hawaii, most utilities reported a pittance of residential energy storage.
In 2017 (the last year for which information is available), the EIA reported that the next four states with the most residential storage see between just 0.19 and 0.39 MWh. To put that into more concrete terms, that’s equivalent to 14 and 28 Tesla Powerwalls.
Source: Data from US Energy Information Administration, graphic by Solar Tribune
With their high electricity costs and focus on renewables, it’s no surprise that California and Hawaii take first and second place. Since 2016, though, storage companies have pushed into new territories across the US, as utility prices rise, battery prices fall, and more states and utilities pass regulations and/or incentives to encourage storage adoption.
Falling Prices, New Incentives, and Changing Regulations Key to Growth
With lithium-ion accounting for over 90% of all energy storage in the U.S., the technology’s falling cost is a key component in the storage industry’s growth. In 2020, lithium-ion battery packs cost $1,000 per kWh, according to the National Renewable Energy Lab. In 2017, that number had dropped to just $209 per kWh, a 79% price drop. They further estimate that prices will continue to drop, reaching $70 per kWh by 2030.
Beyond falling costs, new state-level incentives and regulations designed to encourage residential and commercial energy storage have accelerated the storage market.
As of 2018, twenty-nine states have adopted Renewable Portfolio Standards (or RPSs) mandating utilities source a certain percentage of electricity sold from renewable sources. On top of that, five states have passed mandates specifically for energy storage:
California: Adopted the first storage mandate in 2014, which legislators have since updated to 1.8 GW (1.3 GW by 2025).
Oregon: In 2015, the state passed mandates that their two largest utilities, PGE and PacifiCorp must each set up 5 MWh of energy storage by 2020.
New York: In 2018, Governor Cuomo signed into law storage mandates of 1.5 GW by 2025.
New Jersey: 2 GW by 2030
Massachusetts: 200 MWh by 2020
Beyond mandates, several states have also passed regulations to ease the installation process or increase energy storage’s value proposition:
California: Enacted A.B. 546 in 2017 to streamline storage permitting
Florida: Utility JEA approved an incentive for energy storage and new net metering regulations
Vermont: Through their Bring Your Own Device program, utility Green Mountain Power began a program offering bill credits to residential customers who allow GMP to pull electricity from the homeowner’s energy storage systems during times of peak usage.
Arizona: Salt River Project launched the Consumer Storage Incentive Program, offering rebates of $150 per kWh for residential Li-ion battery systems
Colorado: Passed S.B. 18-009 to streamline and reduce barriers to storage interconnection
New York: NYSERDA, CUNY, and DNV-GL published interconnection guidelines for outdoor Li-ion storage in NYC
Virginia: In 2017, the state amended the Virginia Solar Energy Development Authority to include energy storage. In early 2018, Virginia passed S.B. 966 requiring utilities establish energy storage pilot programs to run until 2023.
While we haven’t yet seen the positive effects, all of these policies and incentives set up a solid foundation for the growth of energy storage in the next few years.
Battery Installations Grow Despite Drop in Residential Solar
As we’ve seen, more and more homeowners are deciding to install storage with their solar installations, despite a drop in the total number of households going solar.
And despite Tesla pulling back on growth to refocus on profitability, both they and Sunrun are reporting record quantities of energy storage. Tesla has installed over 1,000 MWh of storage cumulatively, with Sunrun reporting in Q1 2018 that 20% of all their California customers chose to install storage with their solar installation.
While just 1% of all residential solar installations included storage in 2017, Wood Mackenzie expects that by 2024, 24% of distributed solar will include storage.
Some might call 2018 the year of energy storage, but even with this growth, deployment is still localized to just a few key areas that see high utility prices and storage-friendly policies. To continue this growth trajectory, other states will need the example set by the states listed above. Just a decade ago, the solar industry was at the same place, teetering on the verge of an explosion. With the storage landscape changing so deeply in 2018, hopefully we’ll see the positive effects in the next few years.
Image Source: Tesla Press Kit