The second quarter of 2024 marked a milestone for the U.S. energy storage market, with total installations reaching 3,011 MW/10,492 MWh, a 74% increase from the same period in 2023.

The energy capacity installed was the second highest for a quarter on record. The previous record high was the 4,236 MW/13,437 MWh deployed in Q4 2023.

According to data published in the latest U.S. Energy Storage Monitor report by the American Clean Power Association (ACP) and Wood Mackenzie, the grid-scale segment led this growth, deploying 2,773 MW/9,982 MWh.

The community (CCI) segment increased by 61% to 87 MWh, while the residential sector grew by 12% to 423 MWh.

California, Arizona, and Texas emerged as the primary drivers of this growth, accounting for 85% of all installations.

In Q1, the U.S. energy storage market installed 1,265 MW/3,512 MWh across all segments. This was the highest storage capacity installed in the U.S. in the first quarter, representing an 89% increase from Q1 2023.

John Hensley, SVP of Markets and Policy Analysis for ACP, said, “Energy storage is becoming a mainstay of the power grid, delivering a more resilient and affordable grid.” The expansion of storage capacity across U.S. markets is providing cost-effective and reliable solutions to pressing challenges, including rising energy demand, the need for increased overall capacity, and volatile and extreme weather events.”

Interconnection Challenges

Despite the impressive growth, the industry faces several challenges that need to be addressed to maintain this momentum. Hensley emphasized the importance of finding solutions for development challenges such as lengthy interconnection queues and permitting and siting issues.

Additionally, early-stage development challenges, the complexity of developing Carbon Capture and Innovation (CCI) projects, and the limited availability of financial value streams for certain segments continue to pose obstacles for the industry.

Wood Mackenzie’s five-year U.S. energy storage market forecast presents a positive outlook with some nuances.

In the short term, the market is expected to see a 42% growth in total U.S. storage deployments between 2023 and 2024, with an anticipated deployment of 12.7 GW/36.7 GWh across all segments in 2024.

Looking at the long-term forecast, the market is projected to maintain an average annual growth rate of 7.6% between 2025 and 2028. The grid-scale segment is expected to increase by 32% year-over-year, with 11 GW/32.7 GWh deployed by the end of 2024 and a cumulative deployment of 62 GW from 2024-2028.

In the distributed storage sector, 12 GW is expected to be deployed over the next five years. The residential segment will play a significant role, constituting 80% of distributed power capacity installations, with 10 GW of storage capacity additions between 2024-2028. The CCI segment will likely install 2.5 GW of storage during the same period.

Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team, noted that while growth is expected to flatten in 2025 and 2026, this is primarily due to project capacity being pushed into later years.

“The CCI segment, in particular, continues to face high barriers to growth, including complex project development and limited financial value streams.

The U.S. energy storage market is experiencing unprecedented growth, driven by the need for a more resilient and flexible power grid. While challenges remain, particularly in project development and market incentives, the overall trajectory suggests that energy storage will play an increasingly vital role in the U.S. energy landscape in the coming years.

A Solar Energy Industries Association and Wood Mackenzie report highlighted that 9.4 GW of new solar power capacity was added in the U.S. during Q2 2024, marking a record-breaking second quarter.