The first quarter of 2017 (Q1’17) was the biggest quarter in history for the U.S. energy storage market in terms of megawatt-hours deployed, but it also saw a typical decline in terms of megawatts, according to GTM Research and the Energy Storage Association’s (ESA) latest U.S. Energy Storage Monitor.
The report says the U.S. deployed 234 MWh of energy storage in the first quarter, which represents more than fiftyfold growth year-over-year and bests the previous megawatt-hour record set in Q4’16 by 2%.
When measured in megawatts, it was the third-largest quarter in history, only behind the fourth quarters of 2015 and 2016. Specifically, the report says the U.S. deployed 71 MW of energy storage in Q1’17, a 50% decrease from the 140.8 MW deployed in Q4’16 but up 276% year-over-year from the 18.9 MW deployed in Q1’16. According to the report, this follows the trend of the first quarter of each year generally seeing a smaller megawatt deployment level after an active fourth quarter.
“Much of this growth can be attributed to a shift from short-duration projects to medium- and long-duration projects in the utility-scale market, along with a surge of deployments geared to offset the Aliso Canyon natural gas leak,” says Ravi Manghani, GTM Research’s director of energy storage. “Although, the industry shouldn’t get too comfortable, as with fulfilment of Aliso Canyon deployments, there aren’t that many 10+ megawatt-hour projects in the 2017 pipeline, indicating that the first quarter may be the largest quarter this year.”
In all, the report says front-of-the-meter energy storage represented 91% of all deployments for the quarter. Front-of-the-meter deployments grew 591% year-over-year in megawatt terms, boosted by a few large projects in Arizona, California and Hawaii.
The report says the behind-the-meter market segment, which is made up of residential and commercial energy storage deployments, declined 27% year-over-year in megawatt-hour terms and 32% year-over-year in megawatt terms. The report attributes much of the slowdown to a pause in California’s Self-Generation Incentive Program.
According to the report, California will remain the undisputed king of the U.S. storage market over the next five years. Arizona, Hawaii, Massachusetts, New York and Texas will all battle for second place, with each market forming a significant chunk of deployments through 2022, at which point GTM Research forecasts the U.S. annual market to reach 2.6 GW, almost 12 times the size of the 2016 market, and 7.2 GWh.
By 2022, GTM Research expects the U.S. energy storage market to be worth $3.2 billion, a tenfold increase from 2016 and a fivefold increase from this year. Cumulative 2017-2022 storage market revenues will be $11 billion, according to the report.