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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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The Record-Breaking U.S. Battery Boom Is Set To Slow

  • U.S. battery storage additions broke a record in Q2 2022.
  • Despite impressive growth, the U.S. grid-scale energy storage pipeline continues to face rolling delays into 2023 and beyond.
  • Battery storage has been recognized as a critical factor for the long-term success of wind and solar power.

Battery storage additions in the United States broke a record in the second quarter of the year, topping 2.6 GW in the latest sign the energy transition in the world’s biggest energy consumer is moving ahead inexorably. The data, however, also showed that some 1.1 GW in new battery storage projects were canceled or delayed during the period for a variety of reasons. This suggests challenges still remain for the renewable energy and storage industries despite the generous injection of support Washington granted them recently with the Inflation Reduction Act.

“Despite impressive growth, the U.S. grid-scale energy storage pipeline continues to face rolling delays into 2023 and beyond. More than 1.1 gigawatts (GW) of projects originally scheduled to come online in Q2 were delayed or cancelled, although 61% of this capacity, 709 megawatts (MW), is still scheduled to come online in Q3 and Q4 of 2022,” said Vanessa Witte, a senior analyst at Wood Mackenzie, who co-authored the report with the American Clean Power Association.

The reasons for the delays, according to Witte, included the continuing supply chain snags plaguing more than one industry in the U.S., transportation delays, and “interconnection queue challenges. 

Battery storage has been recognized as a critical factor for the long-term success of wind and solar power due to the intermittency of power generation from these sources. The Inflation Reduction Act will provide a major stimulus for battery builders, including standalone facilities and solar-plus-storage systems in the coming years. Wood Mackenzie estimates that some 59.2 GW of new capacity could be added by 2026.

Last year, total battery storage capacity in the United States rose threefold to reach 4.63 GW, which reflected the recognition that storage is a necessary part of wind and solar deployment. According to the Energy Information Administration, which released the data, the increase in wind and solar installations and the need for load management were two reasons for the increased battery deployment. A third reason was arbitrage, the EIA said.

California recently made headlines with its use of grid-scale batteries during the latest heatwaves in the state. Energy Storage News reported earlier this month that batteries were kicking in and helping California avert blackouts during demand peaks when solar power production declined naturally. Imports of electricity also helped, but batteries were praised for playing the starring role in securing California’s power.

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Meanwhile, however, Bloomberg reported last week that batteries in California were not without their problems. According to the report, sometimes batteries began discharging long before it was necessary, effectively betraying the purpose for which they were built. When this happened on September 7, California barely averted massive blackouts by calling on consumers to conserve energy, Bloomberg wrote.

The reason was not a technical glitch. The batteries in California begin discharging the power they have stored automatically when the price of electricity on the state’s wholesale market hits $1,000 per megawatt-hour. This price was reached in the mid-afternoon on September 7, Bloomberg explains, which kicked the batteries into premature action.

“The way batteries are operated on the grid, we are still on a steep learning curve,” UC Berkeley energy professor Severin Borenstein, who also sits on the board of governors of CAISO told Bloomberg. “We are still learning about the right way to integrate them.”

Meanwhile, demand is rising for both utility-scale installations and residential battery storage. Rising costs and supply shortages have interfered with actual deployments, the Wood Mac/ACP report noted. Still, the outlook remains upbeat, not least thanks to IRA tax incentive provisions that will offset some of the cost increases.

The incentives come at just the right time, too: battery costs are being driven higher by the cost of the raw materials used to make them, which could have affected storage additions quite negatively in the absence of government aid.

By Irina Slav for Oilprice.com

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