The landscape of energy storage in the United States is undergoing a rapid transformation, propelled by the surge in electric vehicle (EV) adoption and evolving dynamics in the lithium market. Record-breaking installations of lithium-ion battery arrays and significant reductions in lithium prices are reshaping the energy storage sector.
Energy storage developers are at the forefront of this transformation, connecting unprecedented volumes of lithium-ion battery arrays to the US power grid. In 2023, approximately 6.8 GW of new large-scale battery capacity was added, marking a 59% increase from the previous year, according to S&P Global Market Intelligence. These projects, primarily storing electricity for one to four hours, are often co-located with renewable or fossil-fueled power plants. California, Texas, and the greater Southwest lead this expansion, contributing to a total non-hydroelectric storage capacity of about 17 GW.
California stands out with 8,179 MW of operating batteries, followed by Texas with 4,252 MW, as of Feb. 8. The battery storage pipeline is expanding beyond the Southwest-centric focus, reaching states like Oregon, Indiana, and Wisconsin. In 2024, a remarkable 34 GW of big battery resources are expected to come online, with over 10 GW currently under construction.
Despite some delays throughout the year, S&P Global Commodity Insights projects 4.2 GW of firm projects in 2024, forecasting a total installed battery power storage capacity of 23 GW by the end of 2025. This robust growth underscores the pivotal role of energy storage in the US’s transition to a sustainable energy future.
In the last quarter of 2023, developers achieved a record-breaking quarter, installing 2,332 MW, double the previous year’s figure and surpassing the third quarter’s record. Notable completions include Terra-Gen LLC’s Edwards & Sanborn solar-plus-storage complex in Southern California and Plus Power’s Rodeo Ranch Battery Storage in Texas.
This surge in lithium-ion battery storage installations aligns with the optimistic growth in the plug-in electric vehicle (PEV) market. While January witnessed PEV sales surging in key markets like China and Europe, challenges such as reduced incentives and stricter sourcing requirements in the US have impacted certain models.
Reduced battery costs, driven by lower metal prices, have facilitated price reductions in the EV market. Lithium-iron phosphate cell production costs dropped by around 30% in 2023, with an additional 20% reduction expected in 2024. This has intensified competition, particularly in China, prompting PEV manufacturers to aggressively vie for market share.
As lithium prices decline, reports of curtailed lithium mine operations have surfaced, impacting projects led by junior miners. Despite challenges, companies like Li-FT Power are dedicated to consolidating and advancing hard rock lithium pegmatite projects within Canada, contributing to meeting North American lithium demands.
As the US power grid evolves toward sustainability, the surge in energy storage installations marks a transformative step. With record-breaking battery installations and declining lithium prices, the landscape is ripe for innovation and growth.