How does the United States develop energy storage with an annual growth rate of over 200%?

History of Energy Storage Development in the United States

The research on energy storage technology began in the late 20th century, and initially mainly included non battery energy storage technologies such as pumped storage, compressed air storage, flywheel energy storage, and supercapacitors. Lithium ion battery technology gradually matured during this period and began to be applied to consumer electronics products.
With the development of renewable energy, especially wind and solar energy, energy storage, as a key means to solve the problems of energy intermittency and volatility, has begun to emerge in some small-scale demonstration projects, such as battery energy storage systems for grid stability and backup power sources.
In the mid-2000s, the United States began to encourage the development and application of energy storage technologies through research and development funding, tax incentives, and demonstration project subsidies. For example, the US Department of Energy (DOE) has established multiple energy storage technology research and development programs. At the same time, some regions have begun to allow energy storage resources to participate in the electricity wholesale market, such as California Independent System Operator (CAISO), which has taken the lead in incorporating energy storage into the ancillary services market.
Since 2003, the large-scale energy storage capacity in the United States has increased, and with the decrease in lithium-ion battery costs and technological progress, the economy of battery energy storage systems has gradually improved, leading to commercial energy storage projects being put into operation.
After 2010, states such as California, New York, and Massachusetts set energy storage deployment targets through legislation or administrative orders, greatly stimulating market development. For example, California set a deployment target of 1.3GW of energy storage in 2013.
In 2016, after the installation of a 197MW large-scale battery energy storage project in the United States, the country's annual added power capacity reached a historic high. In 2017, the first large-scale battery energy storage device in the United States was put into operation, and by the end of 2017, 708MW of power generation had been put into operation.
In addition to large-scale energy storage, in small-scale battery energy storage, such as in 2013, California in the United States established an energy storage task that required all utility companies owned by its investors to install 1325MW energy storage devices at the transmission, distribution, and customer levels by 2024.
By 2016, reports from utility companies in the United States showed that there were already over 66MW of small energy storage capacity, with over 60% of the electricity loaded into the commercial sector and 31% loaded into the industrial sector. It is worth mentioning that nearly 90% of small-scale energy storage capacity in the United States is located in California, especially owned by four utility companies: Southern California Edison (SCE), Pacific Gas and Power Company (PGE), San Diego Gas and Power Company (SDGE), and Sacramento Municipal Public Utility Area.
According to EIA data, as of the end of 2022, the operating scale of independent energy storage and photovoltaic distribution storage in the United States was 4.28GW and 3.24GW, respectively, accounting for 50% and 38% of the total. The planned independent energy storage and photovoltaic distribution storage scale for 2023-2024 is 11.37GW and 10.77GW, accounting for 50% and 47% respectively.

The energy storage industry chain in the United States

According to the comparison of multiple energy types by the US EIA, such as wind energy, solar energy, and energy storage, with the development of the energy storage market and applications, the US will further deepen its development with battery energy storage as a representative. At present, the batteries used in energy storage are mainly chemical batteries, with lithium-ion batteries accounting for more than 80% of the installed capacity of large capacity electricity.
Nickel based batteries were the earliest batteries used in some large battery energy storage systems in the United States. However, although nickel based batteries have high energy density and reliability, their cycle life is relatively low. In contrast, sodium based batteries are more popular, accounting for 3% of the installed large electricity capacity in the United States as of the end of 2016.
In addition, lead-acid batteries, as one of the representatives of batteries, have gradually been phased out. But as of the end of 2016, lead-acid batteries still accounted for 2% -3% of the large battery energy storage capacity installed in the United States.
According to Wood Mackenzie's statistics, in 2021, the newly installed capacity of electrochemical energy storage in the United States reached 3.58GW/10.5GWh, accounting for about 38% of the world's newly installed capacity, with a growth rate exceeding 200% for two consecutive years.
In terms of market structure, the US energy storage market is divided into a pre meter market (large-scale energy storage, such as utility energy storage) and a post meter market (household and commercial energy storage). The pre balance sheet market mainly serves the demand of the power system, such as new energy distribution and storage, grid peak shaving and valley filling, and enhancing the flexibility of the power system; The post market focuses on user side energy management, backup power supply, demand response, etc.
Taking the household energy storage market as an example, data shows that in 2020, Tesla ranked first in the US energy storage market with a market share of 73%, LG ranks second with a 12% market share, followed by SolarEdge Enphase, Sonnen and other American and European brands. On large-scale energy storage, Fluence and other local integrators purchase Ningde LG and other battery cells are relatively strong in construction and operation. In addition, system integrators also include W ä rtsil ä AES Energy Storage, Powin Energy, etc. are responsible for the overall design, equipment integration, installation and commissioning of energy storage projects.
By 2021, Tesla, BYD, and Enphase are ranked in the top three. Tesla still ranks first with a high market share of 55%. However, due to multiple fire safety accidents, LG has greatly undermined consumer confidence in the brand, and large-scale product recalls have seriously affected LG's market share in the United States.
It is worth mentioning that Solarledge from Israel is a leading supplier of household inverters in the United States, and its household storage products have been shipped in large quantities in the European market. Shenzhen Keshida is one of the important suppliers of Solarledge battery packs. In addition, some of GE's household energy storage products sold in the United States are produced under the domestic Gudewei brand.
However, American consumers recognize brand power more, and apart from BYD and Solax from Zhejiang, there are almost no other domestic brands in household storage products. The market for optical storage system installers in the United States is highly concentrated. Data shows that in 2020, the top ten installers accounted for over 60% of the market share in the United States, with Tesla and SunRun each accounting for about 20%, far higher than other manufacturers.
From the trend, the energy storage market in the United States is still showing explosive growth, but there are high barriers to entry in the US market, and local brands are also relatively strong. Currently, most Chinese companies participate in the upstream supply chain.

Summary

As one of the world's largest energy storage markets, the US energy storage market has also grown rapidly due to its rapid increase in installed capacity in photovoltaics and wind power, as well as the promotion of national policies and energy storage technologies. At the same time, the United States has made significant progress in electrochemical energy storage, especially in lithium-ion battery technology, and actively promotes the integration and utilization of renewable energy. It is foreseeable that the US energy storage market will continue to maintain a rapid development trend and have a positive impact on the global energy transition.