The U.S. Household Savings Market Is Mainly Concentrated in California, Puerto Rico, Texas And Hawaii

Research shows that the number and installed capacity of solar + energy storage projects deployed globally is growing rapidly, but until 2022, only 12% of distributed solar power generation facilities will be equipped with battery energy storage systems.

 

In the next decade, solar + energy storage projects will become an important tool for the energy transition. Solar-plus-storage projects can help balance the intermittency of renewable energy generation, enhance grid stability, provide grid resilience during extreme weather events, help manage peak electricity demand, and provide other services important to helping decarbonize the grid.

 

One way research firm Wood Mackenzie assesses the solar-plus-storage market is by looking at the growth in battery-storage installation rates, or the share of solar power projects that are paired with batteries. The firm used its comprehensive project data to conduct a thorough assessment of the deployment rates for battery storage systems in the distributed solar industry.

 

In the first quarter of 2023, 11.1% of residential solar systems and 5.3% of non-residential solar systems in the United States will be equipped with energy storage systems, Wood Mackenzie said in its research report. U.S. residential solar installations have more than doubled since 2019 but have declined for three consecutive quarters due to battery supply chain constraints, high interest rates, and the California net-bill tariff decision. The adoption rate of non-residential solar systems has grown more slowly, increasing only two percentage points since 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(U.S. Residential Solar+Storage Matching Rates)

U.S. distributed solar-plus-storage projects concentrated in key markets

Most solar-plus-storage projects deployed in the U.S. are limited to a handful of markets. Residential solar-plus-storage projects deployed in the United States are mainly concentrated in four major markets: California, Puerto Rico, Texas, and Hawaii. These four markets will deploy 67,200 solar-plus-storage projects in 2022, accounting for 79% of the total U.S. residential solar-plus-storage market.

 

Additionally, only five residential solar-plus-storage markets in the U.S. (California, Hawaii, Vermont, Puerto Rico, and Utah) have a ratio of more than 10%.

 

For non-residential solar systems (commercial and community solar), the project size ranges from a 20kW rooftop solar system for a small business to a 5MW community solar farm. Data from Wood Mackenzie shows that large-scale solar power projects are more likely to be accompanied by energy storage systems. As a result, non-residential solar-plus-storage deployment rates are hardly a useful metric to describe the solar-plus-storage industry. For example, Massachusetts and New York have large-scale solar power projects deployed in conjunction with battery energy storage systems, which have a strong impact on this indicator.

 

Four key drivers of solar-plus-storage projects

Four key factors drive the adoption of energy storage: immediate incentives to deploy energy storage, transition from net metering rules, grid service opportunities, and grid reliability concerns.

 

Connecticut and New Jersey are rolling out new energy storage incentives; rate reforms are underway in North Carolina, Indiana, Idaho, and California; and grid reliability events continue to drive the adoption of energy storage systems.

 

However, California is the largest solar + energy storage market in the United States, with the above four driving factors. Recently, the state has also adopted a net billing tariff strategy, which will promote the deployment of battery energy storage systems in more solar power generation facilities.

 

California's net billing strategy will provide key insights into how battery storage developers and battery manufacturers can adapt and take advantage of rate reform. In 2022, matching rates for the top 20 solar-plus-storage installers in California range from 5% to 73%. It will be interesting to see how the matching rate changes under the new incentives. Developers who currently have higher integration ratios may have an advantage because they already have a business strategy focused on battery energy storage systems.

 

In California, product offerings will also continue to evolve. A key trend is the emergence of non-standby markets, focused on offering rate arbitrage to help customers maximize the value of their solar generation facilities. This strategy is showing early signs of success and could be applied to other markets, including time-of-use rates, net billing, or cost-avoidance compensation.

 

Finally, the development of the solar-plus-storage market in California shows that retrofitting solar-plus-storage projects (deploying batteries to existing solar generation projects) is becoming more common. In 2022, utility Pacific Gas & Electric (PG&E) had 6,380 retrofit solar-plus-storage projects in its service area, an increase of 38% compared to 2021. To attract new customers, utility sales teams must develop strategies to entice customers who already have solar to deploy battery storage.