The installed capacity of grid-connected energy storage systems deployed in the United States this year is expected to reach 712 MW, almost double the 376 MW in 2018. This will help the United States to surpass South Korea, and this year South Korea's energy storage deployment capacity may drop significantly below 600MW. The growing US energy storage market is being driven by major regulatory policies, increased major application scenarios, and diversification across regions.
Growth of the US energy storage market
In 2019, the strong performance of the US energy storage market will have a complete transformation compared with 2018, when the US energy storage deployment stagnated and South Korea's energy storage deployment developed rapidly. In 2018, South Korea set a new record in the grid-connected energy storage market. Last year, global installed capacity of energy storage almost doubled, which was mainly driven by the rapid growth of the Korean energy storage market in the first half of 2018. However, the US market grew at a slower rate last year, and energy storage deployments grew by only 22%.
In 2019, there were several major factors contributing to the growth of the US energy storage market, including:
• US federal policy (such as US Federal Energy Regulatory Commission Order No. 841) is promoting regional grid operators across the country to include additional market mechanisms to enable more energy storage resources to participate in wholesale market activities.
• The current investment tax credit (ITC) available for solar energy is driving the rapid growth of grid-scale solar + energy storage projects, especially in the western United States.
• State-level energy storage tasks and incentives are driving the development of the energy storage market, which is also struggling to cope with relatively high levels of renewable energy penetration.
• Utilities are increasing their procurement of energy-storage resources on the user side and grid side to integrate higher levels of renewable energy and provide additional grid services such as demand response.
The deployment of solar + energy storage projects will drive the development of the US energy storage market
IHS Markit expects that from 2019 to 2023, the United States will have installed more than 2 GW of energy storage systems with grid-scale solar power (PV) systems. The combination of investment tax credits (ITC) and solar farms with energy storage systems has driven market development over the past year and will be the main driver for grid-scale deployment of solar and energy storage co-locations. Most of these systems are expected to be deployed in the western US market, including Hawaii, California, and Arizona, allowing solar power to be further integrated in relatively saturated markets.
In terms of installed solar power capacity, it is estimated that from 2019 to 2023, a grid-scale solar power generation facility with an installed capacity of 10 GW will be deployed with the energy storage system, accounting for 16% of the deployment of grid-scale solar power generation facilities during the period.
Depending on the size and characteristics of the energy storage system, the DC-coupled system has significant cost advantages over the AC-coupled system. Its main advantages are reduced power conversion equipment required and other means of obtaining DC power. While AC-coupled systems are more flexible to participate in a wider range of ancillary services, both types of systems can take advantage of investment tax credit (ITC) policies and benefit from shared installation and operational costs.
IHS Markit estimates that the deployment of a 25MW/100MWh energy storage system to a 100MW AC single-axis tracking solar system in 2019 may increase costs if there is no investment tax credit (ITC). Assuming that the battery energy storage system is replaced after 15 years, it can reduce energy consumption by 35% to 40%. After considering the installation and operation synergies of DC-coupled systems and applying investment tax credits (ITC) to the deployment of solar power and energy storage systems, a levelled energy cost (LCOE) of less than $40/MWh can be achieved. .
IHS Markit predicts that by 2023, the US solar + energy storage project will become a power generation resource that can compete fiercely with natural gas power plants.