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Analysis & Projections

U.S. Battery Storage Market Trends

Release date: May 21, 2018

This report explores trends in U.S. battery storage capacity additions and describes the current state of the market, including information on applications, cost, and market and policy drivers. There are a number of key takeaways:

  • At the end of 2017, 708 megawatts (MW) of power capacity,[1] representing 867 megawatthours (MWh) of energy capacity,[2] of large-scale[3] battery storage capacity was in operation.
  • Over 80% of U.S. large-scale battery storage power capacity is currently provided by batteries based on lithium-ion chemistries.
  • About 90% of large-scale battery storage in the United States is installed in regions covered by five of the seven organized independent system operators (ISOs) or regional transmission organizations (RTOs) and in Alaska and Hawaii (AK/HI).

Figure ES1. U.S. Large-Scale Battery Storage Capacity by Region (2003–2017)

Notes: 2017 energy capacity data for large-scale battery storage are based on preliminary estimates; energy capacity annual additions do not include 26 MW of since-retired batteries because energy capacity is not reported for retired generators Sources: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report.

  • Nearly 40% of existing large-scale battery storage power capacity (and 31% of energy capacity) lies in the Pennsylvania-New Jersey-Maryland Interconnection (PJM), which runs energy and capacity markets and the transmission grid in 13 eastern states and the District of Columbia.
    • In 2012, PJM created a new frequency regulation market product for fast-responding resources, the conditions of which were favorable for battery storage. However, recent changes in PJM’s market rules have slowed battery installations in the region.
    • Most existing large-scale battery storage power capacity in PJM is owned by independent power producers providing power-oriented frequency regulation services.
  • Installations in California Independent System Operator (CAISO) territory accounted for 18% of existing U.S. large-scale battery storage power capacity in 2017, but they accounted for 44% of existing energy capacity.
    • In 2013, the California Public Utility Commission (CPUC) implemented Assembly Bill 2514 by setting a mandate for the state’s investor-owned utilities to procure 1,325 MW of energy storage by 2020.
    • Large-scale installations in California tend to be energy-oriented to provide energy-oriented services and tend to serve a wider array of applications than systems in PJM.
    • In addition, nearly 90% of reported small-scale[4] storage power capacity in the United States was reported by four California utilities.
  • Costs for battery storage technologies depend on technical characteristics such as the power and energy capacity of a system.
    • In general, total installed system costs for batteries of shorter duration are less expensive than long-duration systems on a per-unit of power capacity basis.
    • In terms of costs per-unit of energy capacity, the reverse is true—the longer duration batteries will typically have lower normalized costs compared with shorter-duration batteries.

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

  • Battery storage can serve many applications. However, the functional ability of storage to serve these applications has traditionally been not well defined under existing market rules and policies. As the technology has matured and as the industry stakeholders in some regions have gained experience financing, procuring, and operating storage installations, the situation has changed and more clarity has begun to be provided. Most of the activity has been led by specific ISOs/RTOs and state-level regulators.

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Contact:
Cara Marcy
(202) 586-9224



Footnotes
[1] Power capacity is the maximum instantaneous amount of power output, and is measured in units such as megawatts (MW)

[2] Energy capacity of the storage system is the total amount of energy that can be stored or discharged by the battery storage system and is measured in megawatt-hours (MWh)

[3] Large-scale refers to systems that are grid connected and have a nameplate power capacity greater than 1 MW.

[4] Small-scale refers to systems connected to the distribution network and have a nameplate power capacity less than 1 MW.