Battery installations in the US skyrocketed in 2022, transforming power grids

The United States is in a battery boom, adding almost as much capacity to the grid in 2022 as in all previous years combined.

The surge is transforming America’s regional power grids. In California, for example, analysts credit a surge in new battery installations with saving the state from power outages in late summer when a searing heat wave sent demand for electricity skyrocketing.

“That means we can shift the energy generated by wind and solar to where it’s needed, such as transferring solar energy generated during the day to the evening when everyone comes home and turns on their air conditioning,” said Ric O’Connell , the managing director of GridLab. “This means we can rely more and more on wind and sun.”

The United States will have installed 4 gigawatts of battery capacity in 2022, nearly equivalent to the 4.7 GW installed in all previous years combined, according to figures from the US Energy Information Administration. California and Texas accounted for 90 percent of US battery installations, bringing 2.4 GW and 1.3 GW online respectively in 2022.

The battery explosion in America’s two most populous states is largely due to the growing power of solar power. California and Texas are by far the first and second largest solar markets in the United States, respectively.

The high penetration of solar power in each state contributes to large fluctuations in electricity prices, falling during the day when solar power is producing and rising in the evening when demand increases and solar production falls.

Batteries are well positioned to benefit from the price surge in the evening hours. Lithium-ion batteries, which make up the vast majority of utility-scale energy storage systems, can be quickly charged with excess solar energy during the day and distribute power over a four-hour interval in the evening.

“They’re really chasing arbitrage,” said Dan Finn-Foley, an analyst who follows the storage industry at PA Consulting. “Storage can gain a lot of value there.”

The sheer scale of America’s energy storage boom is mind-blowing, he said. In 2018, the United States installed a total of 189 megawatts of storage capacity. According to the American Clean Power Association, a trade group, the largest single project installed last year was 350 MW.

The growth isn’t surprising, Finn-Foley said. The lithium-ion batteries used for grid purposes are the same batteries used in electric vehicles. With the growth of the EV market, supply chains have been enlarged and battery costs reduced for grid-scale storage. Batteries used in the energy sector make up a small part of the overall lithium-ion battery market.

“It’s safe to say that the stationary grid storage industry would not exist today without the EV industry,” said Finn-Foley.

The spate of battery installations in the energy sector in 2022 is particularly notable given the supply chain constraints the industry faced in the first part of the year. Developers have largely resolved these issues after experiencing similar supply chain bottlenecks in 2018 and 2020, Finn-Foley said.

The impact of the new installations was particularly evident during a Labor Day heatwave in California last year. The state was able to call on about 3 GW of battery capacity in the evening hours when demand was near its peak and solar production was down, O’Connell said.

“Without that 3GW of online storage, we would have been in serious trouble,” he said. Despite this battery capacity, increasing demand prompted the state grid operator to urge residents to reduce their electricity consumption to avoid blackouts.

Analysts say the battery boom is likely to continue.

The far-reaching climate law inflation reduction law passed last year makes it easier for battery developers to claim a tax credit for investments. Previously, a battery installer had to be associated with a solar project to qualify. The Inflation Mitigation Act eliminated this requirement and paved the way for any battery connected to the grid to qualify.

According to EIA figures, the developers want to install 22 GW of battery capacity by 2026. Of this, 16 GW are earmarked for Texas and California.

E&E News reprinted with permission from POLITICO, LLC. Copyright 2023. E&E News provides important news for energy and environmental professionals.

Leave a Reply

Your email address will not be published. Required fields are marked *