A battery energy storage system used for testing purposes at the National Renewable Energy Laboratory (NREL) in Golden, Colorado. Courtesy: Paul Gerke
The U.S. energy storage market is stronger than ever, and the cost of the most commonly used battery chemistry is trending downward each year. Can we keep going like this, or are we in a bubble bound to burst?
According to the latest Energy Storage Monitor report released today, in the third quarter of 2024, the United States deployed a total of 3,806 megawatts (MW) and 9,931 megawatt-hours (MWh) of energy storage, a new Q3 record and an 80% and 58% increase over the same span in 2023.
Most of that fresh capacity came courtesy of utility-connected batteries. The new American Clean Power Association (ACP) and Wood Mackenzie offering found that the grid-scale storage segment added 3,431 MW and 9,188 MWh in Q3, also a record for the quarter.
The cost of doing business
The rapid proliferation of energy storage onto the U.S. grid can be credited (at least partially) to the declining price of lithium-ion (Li-ion) batteries. Globally, battery prices just sustained their deepest year-over-year plunge since 2017 according to an analysis by research firm BloombergNEF (BNEF). Lithium-ion pack prices dropped 20% from 2023 to a record low of $115 per kilowatt-hour.
BNEF credits factors including cell manufacturing overcapacity, economies of scale, low metal and component prices, adoption of lower-cost lithium-iron-phosphate (LFP) batteries, and a slowdown in electric vehicle sales growth. Granted, Li-ion packs in the U.S. and Europe were 31% and 48% higher than those in China, which the analysis suggests is a reflection of the relative immaturity of the American and European markets, plus their higher production costs and lower comparative volumes.
Still, energy storage is getting connected to the grid at an ever-increasing clip, and competition in the global battery market is tightening (tariffs will help ensure that). And you can expect both trends to continue through 2025.
Record growth and more in Q4
ACP and Wood Mackenzie’s latest Energy Storage Monitor highlights rapid growth in Texas and California, where grid operators ERCOT and CAISO have been particularly eager to embrace storage as a solution to constraints and resiliency concerns.
Jupiter Power’s 200 MW/400 MWh Calisto I BESS in Harris County, Texas. Courtesy: Jupiter Power
In Q3 2024, Texas tripled installations compared to the previous quarter, adding nearly 1.7 gigawatts (GW). Only California brought gigawatt hours online, 6 GWh, thanks to the state’s focus on longer-duration storage.
Arizona, Colorado, Florida, and Vermont also added storage last quarter, hinting at a much larger appetite for grid-scale battery deployment nationwide.
The residential market set an all-time high in Q3, with 346 MW of residential storage installed, a 63% increase over Q2 2024. California, Arizona, and North Carolina had the most quarter-over-quarter growth, installing 56%, 73%, and 100% more residential storage in Q3 than in Q2 respectively.