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Q2 Sees Market Rebound Despite Supply Chain Challenges
In the second quarter of 2023, the U.S. energy storage market saw a remarkable achievement, setting a new quarterly record by adding 5,597 MWh across all industry sectors. Notably, the grid-scale segment was the standout performer, contributing an impressive 5,109 MWh in Q2, surpassing the previous record set in Q4 2021 by 5%. These findings were detailed in a recently published report.
The latest U.S. Energy Storage Monitor report by Wood Mackenzie and the American Clean Power Association (ACP) revealed that the grid-scale segment played a pivotal role in driving market growth, achieving a remarkable 172% quarter-over-quarter expansion. California emerged as a dominant force in this sector, accounting for 738 MW of installed capacity and holding a 49% share.
John Hensley, the Vice President of Research and Analytics at ACP, expressed that the energy storage market is headed for an exceptional year. He noted that utilities and major power consumers are increasingly embracing storage solutions to bolster the grid’s performance and enhance reliability. Despite facing supply chain obstacles and interconnection delays, the market is set to nearly double its annual installations and is poised for rapid growth in the coming years.
According to Wood Mackenzie’s five-year forecast spanning from 2023 to 2027, the grid-scale segment is anticipated to be the primary catalyst behind market expansion, constituting a substantial 83% of total installations, equivalent to 55 GW.
Vanessa Witte, a senior analyst with Wood Mackenzie’s energy storage team, noted a significant resurgence in the second quarter following consecutive quarterly market declines. She explained that numerous projects, previously postponed due to supply chain challenges, were successfully executed during the last quarter. Nevertheless, despite this record performance, the expected project pipeline didn’t fully materialize, with more than 2 GW of projects being delayed.
In the Community, Commercial, and Industrial (CCI) sector, installations reached 107 MWh, surpassing any quarter in 2022. However, they couldn’t match the substantial surge in Q1 installations, resulting in a 53% quarterly decline. Nonetheless, the CCI segment still demonstrated impressive growth, up by 25% compared to the previous year.
Residential energy storage experienced its second consecutive quarter of reduction, amounting to 381.2 MWh, falling slightly behind the 388.2 MWh recorded in Q1. Notably, California witnessed the most significant decrease, with a 17% decline compared to the previous quarter and a substantial 37% drop year-over-year.
Vanessa Witte, an expert in the field, remains optimistic about the residential segment’s long-term potential, forecasting robust growth in the five-year outlook, ultimately reaching a total of 8.0 GW by 2027. However, the Community, Commercial, and Industrial (CCI) sector has consistently fallen short of growth expectations, leading to a revision of its five-year growth projection, which has been downgraded by 28% to 3 GW.
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