Adoption of energy storage is on the rise with more compensation and incentive programs

　　The energy storage industry in the United States has reached numerous milestones in recent years, but 2023 should be a banner year for battery adoption across all markets. Systems of any size can now take advantage of a 30% installation credit thanks to the new storage investment tax credit (ITC).

　　According to Wood Mackenzie, 59.2 GW of energy storage capacity will be added through 2026. up from 13.5 GW cumulative capacity in 2022.

　　"The American Clean Power Association's energy storage industry is maturing," said Jason Burwen, VP of energy storage, in a press release. "Over 1 GW of energy storage is now installed on a quarterly basis. When combined with the benefits of newly available tax credits from the Inflation Reduction Act, the question for investors and grid operators is no longer whether to deploy storage, but how much and how quickly."

　　Whereas previously on-site solar panels were required to charge energy storage in order to access solar's ITC, batteries can now be installed on their own or without strict paired solar requirements in order to receive financial support. When an independent battery is not limited to receiving all of its power from solar panels, it can operate more efficiently alongside large-scale solar sites, increasing the overall value of the project. Residential storage systems can also better navigate time-of-use rates and immediately enroll in more grid participation programs, reducing system payback periods.

　　Simultaneously, grid programs and virtual power plants (VPP) are expanding into new markets across the country. Aggregators group multiple residential batteries together through a VPP, and a utility or grid operator calls on that stored power when needed, compensating storage customers for that access. These additional benefits make purchasing a residential energy storage system even more appealing.

　　VPPs and energy storage adoption are already making a difference in California's grid, which is prone to outages. The California grid was stressed by a late summer 2022 heat wave, but 76% of the state's 80.000 customer-sited batteries provided 684 MW of power when the grid needed it most, saving residents from potential blackouts. Only 30.000 batteries were available in the state two years ago. The current capacity of customer-sited batteries in California is equivalent to the state's Diablo Canyon 1 nuclear power plant.

　　In terms of batteries, California's new NEM 3.0 program, which establishes the rate at which owners are credited for their solar production, is expected to boost storage adoption in the country's largest solar market. According to Roth Capital Partners analysts, the new net-billing rates in California increase the payback period for solar, reducing the economic value of solar-only systems by 85%. Adding storage to a California residential solar system would increase its ROI.

　　According to EnergySage, an online installation marketplace, solar with storage is on the rise, with 17.1% of its quoted solar systems including batteries in 2022. up from 9.5% in 2020. Battery adoption in the United States is reaching new heights, thanks to new grid programs and a stand-alone storage ITC.