With carbon neutrality becoming a global goal and countries around the world encouraging the development of renewable energy, the worldwide energy storage market is booming. The US energy storage market started early and has developed rapidly, becoming one of the world’s leading energy storage markets.
According to Interact Analysis’ energy storage project statistics, 29 MW of pumped hydro storage projects commenced operation in the United States as early as 1929, and small-scale electrochemical energy storage projects for industrial and commercial use (lead-acid batteries) began to appear in 1970s. Since 2010, with the rise of solar photovoltaic power generation, the installation of electrochemical energy storage has accelerated fast and installed capacity in the US reached a new high in 2022. It is estimated that by the end of 2023 cumulative energy storage installation in the United States will reach about 84.9 GW, of which an estimated 49.5 GW will be in operation and roughly 31.4 GW will be under construction or in the planning phase. Furthermore, around 24.7 GW out of the anticipated 31.4 GW in pipeline projects is expected to comprise electrochemical energy storage (it should be noted that there is a degree of uncertainty about the future implementation of projects which are currently in the planning stage).
California and Texas are leading installation of energy storage projects
In the US, California and Texas have the highest installed capacity for energy storage, representing a combined share of 51% of the total installed power of energy storage projects (including pumped hydro storage/PHS, and energy storage projects in the planning stage, under construction, and in operation).
For electrochemical energy storage, California and Texas have 16.3 GW and 16.4 GW respectively of storage installed (including projects at the planning stage, under construction and in operation), each accounting for 36% of total installed power for electrochemical energy storage projects in the country. Among them, more than 6.4 GW and 11.8 GW are under construction/planning projects in California and Texas respectively. These projects are expected to be put into operation in the next 3-4 years, and both states continue to have strong growth potential in the future.
The rapid development of electrochemical energy storage in California and Texas is mainly due to three factors. Firstly, abundant renewable energy resources like wind and solar energy provide the natural resources required for energy storage projects. Secondly, favourable state policies and regulations are driving local energy storage development. For example, California’s state government aims to achieve carbon-free electricity by 2045, and is also promoting battery storage through mandatory installation of photovoltaic and energy storage systems for building renovation, alongside financial incentives for residential energy storage (see Analysis of Energy Storage Policy for details of US energy storage policy). Thirdly, California and Texas are two of the most populous areas in the United States and strong demand for electricity, grid stability, and user-side applications boosts demand for energy storage.
In addition, electrochemical energy storage in Arizona has developed rapidly in recent years, driven by the local utility sector. The state government announced plans for renewable energy to account for 15% of total energy by 2025. By the end of 2023, electrochemical energy storage projects in Arizona are expected to reach 2.2 GW (including projects at the planning stage, under construction and in operation), accounting for about 5% of total capacity in the United States and putting Arizona in third place for installed energy storage capacity.
New York state currently has more than 3.1GW of energy storage projects in operation and 1.4GW of projects under construction and planning, which is well track to meet the New York State government’s 2022 goal of achieving 6GW of energy storage by 2030.
Diversified technological routes to energy storage goals
Electrochemical energy storage is booming. The United States began to explore electrochemical energy storage technology around 1970 through small-scale projects using lead-acid batteries, sodium-based batteries and nickel-based batteries. Lithium battery storage projects have taken off since 2010 and are now the major type of electrochemical energy storage, boosted by increases in the installation of renewable energy power generation. According to data regarding incomplete projects, more than 10 GW of electrochemical energy storage projects are set to be installed in 2023, taking cumulative installation to an estimated 20.3 GW by the end of 2023. Furthermore, around 24.7 GW of electrochemical energy storage projects are under construction and planning status, commencing operation in 2024 and 2025, with 13.4 GW and 8.0 GW respectively.
In addition, there are also small-scale projects using lead-carbon battery (PbC Battery), iron-air battery, zinc-based battery and other technologies (e.g. Axion Power International’s 12.5 MW/12.5 MWh lead-carbon battery energy storage project in Pennsylvania and Form Energy’s 10 MW/1000 MWh Iron-Air Battery Energy Storage Project in New York State). These pilot projects will provide more technology options for project deployment in the future.
Mechanical energy storage currently remains the mainstream. Project statistics show that mechanical energy storage still occupies the dominant share of the US energy storage market, with an installed capacity of about 38.4 GW (including projects in the planning stage, under construction, and in operation), of which around 37.0 GW are pumped hydro storage projects. There are also a small number of flywheel energy storage and compressed air energy storage projects.
Pumped hydro storage installation started early in the United States, with projects starting operation at the beginning of the 20th century. During the 1970-80s, PHS ushered in the peak of installation, reaching nearly 20 GW. However, due to various factors, such as geographical location and long construction periods, installation of new PHS projects after 2000 decreased sharply. PHS technology is relatively mature and occupies an important position in the energy storage market, with its large capacity and economic reliability. There are some PHS projects planned and under construction in Nevada, California, Idaho, and other regions.
Thermal energy storage projects also account for a small share of the market, with a total of about 1 GW of projects already in operation, mainly molten salt energy storage projects.
Hydrogen energy storage is in the pilot stage. According to project statistics, there have been small-scale pilot R&D projects of hydrogen energy storage in the United States since 2004 (e.g. the 99KW DTE Energy Hydrogen Technology Park project). Our data shows that there are 20 hydrogen energy storage projects in the United States, of which seven projects are short-cycle demonstration projects (decommissioned), and four projects are at the planning stage. At present, hydrogen energy storage technology is in the early stages of adoption in the United States.
Long-duration energy storage is one of the important directions of development for the US energy storage market. The US federal government’s revision of the “Best Energy Storage Technology Act” in 2019 mentioned that it will focus on the development of highly flexible energy storage systems that continue to discharge for at least 6 hours, and long-duration storage continuously discharging 10 to 100 hours. From the incomplete project statistics, 2-4 hours lithium battery storage technology is currently most common, but there are small-scale long-duration energy storage projects in the market. The continuous discharge duration of energy storage projects increased over the past several years. By 2023, the average duration of continuous discharge is expected to reach around 3.0 hours (excluding PHS projects).
Lithium battery and PHS energy storage will continue to develop as a result of government guidance and support for developing diversified energy storage technologies. At the same time, new technologies such as different battery types and hydrogen energy storage are being explored through various pilot projects. Diversified technologies will help to fulfil storage requirements in different application scenarios, and enhance market vitality.
According to our statistics, the United States will have a total of 31.4 GW energy storage projects in the construction and planning stage as of 2023, of which 21.7 GW of projects are expected to start operation by the end of 2025. From a regional perspective, energy storage projects are mainly installed in California, Texas and Nevada, with some schemes in other states. Texas is expected to complete 11.8 GW of installation and California will add 6.4 GW capacity by the end of 2025. In addition, Nevada, Arizona and New York each have more than 1 GW of energy storage projects under construction or planning. In terms of technology, around 24.7 GW of electrochemical energy storage and 6.8 GW of mechanical energy storage are currently under construction and planning.
As one of the key industries for localized innovation and manufacturing, the US federal government is concentrating on improving the competitiveness of energy storage technology. Driven by a series of favorable policies and beneficial market factors, energy storage installation in the United States will continue to expand. In addition to mainstream lithium battery energy storage, other technological routes such as lead-carbon batteries, zinc-based batteries, hydrogen energy storage, and others will provide more options for the market and drive diversified development of the energy storage market in the country.
Note: Interact Analysis tracks energy storage projects (excluding BTM residential energy storage) in key countries around the world. The statistics of US projects are mainly sourced from EIA, DOE and other official agencies.
For more information on our upcoming report, Power Conversion System in Battery Energy Storage System, contact Principal Analyst Shirly Zhu.