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Analysis & Projections

Battery Storage in the United States: An Update on Market Trends

Release date: July 15, 2020

Large-scale battery storage systems are increasingly being used across the power grid in the United States. In 2010, 7 battery storage systems accounted for only 59 megawatts (MW) of power capacity, the maximum amount of power output a battery can provide in any instant, in the United States. By 2015, 49 systems accounted for 351 MW of power capacity. This growth continued at an increased rate for the next three years, and the total number of operational battery storage systems has more than doubled to 125 for a total of 869 MW of installed power capacity as of the end of 2018.

This report explores trends in battery storage capacity additions in the United States and describes the state of the market as of 2018, including information on applications, cost, ongoing trends, and market and policy drivers. These observations consider both power capacity and energy capacity, the total amount of energy that can be stored by a battery system. Some key observations are as follows:

At the end of 2018, 869 megawatts (MW) of power capacity,[1] representing 1,236 megawatthours (MWh) of energy capacity,[2] of large-scale[3] battery storage was in operation in the United States.

  • Over 90% of large-scale battery storage power capacity in the United States was provided by batteries based on lithium-ion chemistries.
  • About 73% of large-scale battery storage power capacity in the Unites States, representing 70% of energy capacity, was installed in states covered by independent system operators (ISOs) or regional transmission organizations (RTOs).
  • Alaska and Hawaii, with comparatively smaller electrical systems that account for 1% of total grid capacity in the United States, accounted for 12% of the power capacity in 2018, or 14% of large-scale battery energy capacity.
  • Historically, the majority of annual battery installations have occurred within the PJM Interconnection (PJM), which manages energy and capacity markets and the transmission grid in 13 eastern and Midwestern states and the District of Columbia, and California Independent System Operator (CAISO) territories. However, in 2018, over 58% (130 MW) of power capacity additions, representing 69% (337 MWh) of energy capacity additions, were installed in states outside of those areas.

Figure ES1. Large-scale battery storage capacity by region (2010–2018)

Approximately one third (32%) of large-scale battery storage power capacity (and 14% of energy capacity) in the United States in 2018 was installed in PJM.

  • In 2012, PJM created a new frequency regulation market product for fast-responding resources, the conditions of which were favorable for battery storage. However, changes implemented in 2017 in PJM’s market rules have reduced the number of battery installations in the region.
  • Most existing large-scale battery storage power capacity in PJM is owned by independent power producers (IPPs) providing power-oriented frequency regulation services.

Installations in CAISO accounted for 21% of existing large-scale battery storage power capacity in the United States in 2018, but they accounted for 41% of existing energy capacity.

  • In 2013, the California Public Utility Commission (CPUC) implemented Assembly Bill 2514 by mandating that the state’s investor-owned utilities procure 1,325 MW of energy storage by 2020.
  • Large-scale installations in California tend to provide energy-oriented services and tend to serve a wider array of applications than systems in PJM.
  • Four California utilities held nearly 90% of small-scale storage power capacity in the United States in 2018.

Battery storage costs have been driven by technical characteristics such as the power and energy capacity of a system.

  • On a per-unit of power capacity basis, total installed system costs for batteries of shorter duration have been less expensive than long-duration systems (Figure ES2).
  • In terms of costs per-unit of energy capacity, the reverse has been true—longer duration batteries have typically had lower normalized costs compared with shorter-duration batteries (Figure ES2).
  • Over time, average costs per-unit of energy capacity have decreased by 61% between 2015 and 2017, from $2,153/kWh to $834/kWh (Figure ES3).

Figure ES2. Total installed cost of large-scale battery storage systems by duration

Figure ES3. Total installed cost of large-scale battery storage systems by year

See complete report

Contact:
Alex Mey, (202) 287-5868, Alexander.Mey@eia.gov
Patricia Hutchins, (202) 586-1029, Patricia.Hutchins@eia.gov
Vikram Linga, (202) 586-9224, Vikram.Linga@eia.gov



Footnotes
[1] As the maximum instantaneous amount of power output, power capacity is measured in units such as megawatts (MW).

[2] As the total amount of energy that can be stored or discharged by a battery storage system, energy capacity is measured in megawatt-hours (MWh).

[3] Large-scale refers to systems that are grid connected and have a nameplate power capacity greater than 1 MW.

[4] Small-scale refers to systems connected to the distribution network and have a nameplate power capacity less than 1 MW.