The U.S. energy storage is experiencing rapid growth, with installed capacity expected to exceed 14GW.
2024 is a year worthy of attention for the U.S. energy storage sector. According to SMM forecasts, the installed capacity of energy storage in the U.S. is expected to exceed 14GW this year, showing an above-expected performance. Part of the new installed capacity comes from delayed projects from last year, with an estimated 4-5GW of delayed projects expected to be completed and connected to the grid this year. Additionally, with the optimization of grid connection processes and the political impact of the presidential election, a rush to install energy storage by the end of the year is anticipated. Currently, it typically takes more than a year for U.S. energy storage projects to go from bidding to final installation and grid connection. Therefore, the gradually optimized and accelerated grid connection process approval in H2 2023 will have a positive impact on grid connections in 2025 and beyond.
Data from May 2024 shows that in May 2024, the newly connected capacity of large-scale energy storage projects in the U.S. reached 1,073MW, up 608% YoY and 105% MoM. The cumulative grid-connected capacity for the first five months of 2024 reached 2.83GW, up 269.7% YoY. The issue of grid connection delays is gradually being alleviated. From the perspective of application scenarios, among the newly connected projects in May, the capacity of standalone energy storage projects was 489MW, accounting for 45% of the total; the capacity of new energy storage projects was 605MW, accounting for 55% of the total.
Looking at specific projects, highlights in May included the Condor Energy Storage LLC project in California. This project has an installed capacity of 200MW and was originally scheduled to be connected to the grid in May, ultimately achieving its goal as planned. Additionally, the Sierra Estrella Energy Storage project in Arizona also performed well, with an installed capacity of 250MW. Although initially expected to be connected to the grid in June, the actual grid connection time was earlier, indicating that the issue of grid connection delays has been effectively overcome. Several anticipated large-scale projects not only achieved on-time grid connection but some were even completed ahead of schedule.
Reviewing the past two months, Q2 saw positive progress in the U.S. energy storage sector. The number of projects under construction increased, the backlog of projects awaiting approval significantly decreased, and the approval process noticeably accelerated.
Each project's approval process still went through multiple time nodes, including IR (Interconnection Request) and IA (Interconnection Agreement). Project developers are very familiar with the approval progress in each state. For example, in H2 last year, California suspended the approval of energy storage projects due to the high workload, causing many developers to delay their project bidding.
Additionally, obtaining grid access permits in the U.S. has high thresholds, mainly due to the weak power infrastructure, requiring simultaneous evaluation of both the load side and the supply side. If the grid's capacity is exceeded, transmission upgrades are needed, and these costs are usually shared by developers and project owners. As a result, the approval process for energy storage projects in the U.S. is very detailed and stringent.
Overall, the U.S. energy storage market has shown significant growth potential this year. With the optimization of policies, approval processes, and changes in market demand, the installed capacity of energy storage is expected to continue its high growth in the coming years.
