A new analysis by Verify Markets shows the U.S. Utility-Scale Energy Storage Market was valued at over $160.0 million in 2019 and is expected to growth at a compound annual growth rate (CAGR) of over 40.0 percent from 2019 to 2026, reaching over $2.0 billion in revenues by 2026.
Utility-Scale Battery Energy Storage Systems (BESS) have started to play an important role in the U.S power system in recent years. These systems can improve the reliability, resiliency, and efficiency of power grids by reducing power fluctuations, enhancing system flexibility, and enable the storage and dispatch of electricity generated by variable renewable energy sources such as wind, solar, and hydro power.
By the end of 2019, there was only 952.7 megawatt (MW) of battery energy storage capacity at the utility-scale in the U.S. However, with five gigawatt (GW) of battery energy storage projects currently under different development stages, it is expected that the U.S energy storage cumulative installed capacity will reach over eight GW by 2026. This impressive growth will likely be driven by increasing renewable energy deployment, decreasing capital cost of lithium-ion (Li-ion) batteries, federal and state incentives and mandates, the use of BESS for transmission and distribution upgrade and expansion deferral, and rising interest in BESS for resiliency.
In particular, Li-ion battery prices have seen a dramatic decline in manufacturing costs over the past decade, raising the interest in BESS’ deployment at the utility level. BESS cost is projected to continue decreasing as technology improves and manufacturers expand their capacity and processes. Moreover, the recent decision by the U.S government to reduce import tariffs from 15.0 percent to 7.5 percent on batteries manufactured in China is expected to further improve project costs.
Despite the market potential, the economic downturn due to the Covid-19 pandemic is expected to affect project timelines during the short-term of the forecast period. Another important factor affecting the market is the barrier to BESS’ participation in wholesale electricity markets. In the United States, wholesale electricity market rules, regulations, tariffs, and financial structures were organized around legacy assets, restricting storage from selling all potential services and limiting BESS wholesale revenue streams. To remove barriers to BESS participation in the wholesale electricity market, the Federal Energy Regulatory Commission (FERC) has issued order 841. However, this rule does not cover compensation mechanisms for BESS for transmission and grid balancing service-related value streams of storage, and most of the regional markets lack necessary market design and rules for compensating storage as a transmission asset. As a result, revenue streams for storage resources remain largely dependent on local market dynamics or utility tariffs.
The U.S Utility-Scale Energy Storage Market report has been segmented by region. The Southwest region of the U.S. is the leading market for energy storage. California currently holds 21.1 percent of the total energy storage capacity in the country due to the state’s regulatory mandates and aggressive renewable energy targets. Nevada holds the second largest share, in terms of future energy storage additions, with 210 MW planned and 280 MW already under construction. The report has also been segmented by state, project size, application, and chemistry.
Some of the key companies covered in this report include Tesla, Inc., LG Chem Ltd., NEC Energy Solutions, Inc., and Fluence Corp Ltd, among others. This report provides an in-depth analysis of the overall U.S. Utility-Scale Energy Storage Market. The report captures various market dynamics such as growth drivers, restraints, market revenues and installed capacity forecast, market trends and competitive landscape.
A copy of the U.S. Utility-Scale Energy Storage Market research report can be obtained at www.verifymarkets.com. Follow us for more updates on Twitter @verify_markets. This report is part of Verify Markets’ Energy & Power Equipment market research and consulting practice. Other power rental market reports:
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