The U.S. energy-storage market set a record for new capacity built in any one quarter with a total of 1,680 MW installed in the second quarter of 2023—propelled by major growth in the grid-scale segment, which added 1,510 MW. 

The overall increase nearly doubled from the 778-MW total in the first quarter of the year, which had declined over the fourth quarter of 2022, and was up 21% year over year.

California led grid-scale installations with 738 MW, 49% of the quarter’s growth, boosted by the 350 MW Moss Landing Phase III that came online June 3 to increase the project’s total to 750 MW, said a new report by energy research firm Wood Mackenzie and the American Clean Power Association. 

The increases came despite a delay in installing an additional 1.7 GW of grid-scale capacity in the quarter and cancellation of 380 MW.

“We saw a huge bounce back in Q2 after consecutive quarterly declines in the market," said Vanessa Witte, senior analyst at Wood Mackenzie, attributing the drops to "supply chain issues" that include difficulty obtaining parts and long waits for grid connections, as well as added financing because of rising costs.

Capacity is expected to grow 158% in 2023 and 2024 before leveling off for the remainder of the five-year outlook, said the forecast for the 2023 through 2027 market. The grid-scale segment will be the main market driver with 55 GW, or 83%, of total installations, but its volumes will be pushed into later years of the forecast by unresolved challenges with supply, backlog and state incentives, Wood Mackenzie and the American Clean Power Association said. 

Storage deployment in the community, commercial and industrial sector fell in the second quarter, but was still up 8% over the second quarter of 2022. The sector is expected to add about 1 GW by 2027.

“The market is on pace to nearly double annual installation ... and it will continue to grow quickly in coming years,” said John Hensley, vice president of research and analytics for the association, noting more utilities and large power users are turning to storage to improve reliability.

While the price of lithium-ion battery storage has declined steeply after commodity prices fell early in the year, labor and balance of plant costs are still increasing, the report said.

Largest Single U.S. Energy Storage System

One major grid-scale energy storage project to come is a long-duration system in Alaska. The U.S. Energy Dept. selected the Westinghouse Electric project to deploy a 1.2-GW-hour utility scale system to support wind generation.

The largest planned single installation of long-duration energy storage in the U.S., it will show how the technology can make firm the intermittent wind power at grid scale while providing local and regional grid resilience, the company said. 

“Our long-duration energy storage system enables a higher penetration of renewables on the grid without sacrificing overall stability,” Westinghouse CEO Patrick Fragman said.  

The project is one of 15 DOE selected on Sept. 22 to share $325 million in funding to accelerate long duration energy storage technologies.

The site in Alaska will demonstrate the viability of high-temperature long-duration energy storage in a cold climate, DOE said.

The project will combine technology components from Westinghouse and technology firm Echogen to create a pumped thermal energy storage system in which a heat pump draws electricity from the power grid and stores it as heat in concrete blocks. The energy is converted back into electricity using a heat engine.

Anchorage-based Houston Contracting Co., a concrete installation company that is part of the Arctic Slope Regional Corp., will lead construction. Golden Valley Electric Association has created a decarbonization plan that maintains stability of the grid. The Electric Power Research Institute and Shell are also partners in the project.