All-time high in US storage investment in Q3, finds GTM report

Corporate investment in energy storage in the U.S. in the third quarter (Q3) of 2016 reached an all-time high of $660 million, finds GTM Research’s latest U.S. Energy Storage Monitor, compiled in conjunction with the Energy Storage Association (ESA).

However, despite this record level of investment, deployment of both utility-scale and behind-the-meter storage was weak, reaching just 16.4 MW for the quarter. Around 1 MW of that capacity was at utility-scale, with 14.1 MW of behind-the-meter storage deployment representing flat year-on-year growth, the report finds.

Having finished 2015 with 226 MW of storage deployed nationwide, 2016 will push that figure to 260 MW as several large-scale projects come online in December.

While one strong financing quarter does not represent a trend, what was noteworthy, said GTM Research’s director of energy storage Ravi Manghani, was the scale and type of investment coming into the sector. "Project financing made up a significant portion of the total,” he said. "Growth in this segment, especially at residential, is a harbinger for further strengthening of deployment business models."

The report charts all financing deals made during Q3 and finds that the $300 million in project financing from Electric Gas & Industries Association for Tabuchi Electric was the largest, followed by a $200 million deal between Macquarie and Advanced Microgrid Solutions.

Other noteworthy movements in the space included the acquisition of storage firm Saft by France’s Total, and the contraction of 84.5 MW of storage capacity by SCE and SDG&E as part of the Aliso Canyon procurement.

The report also found that lithium-ion batteries continued their dominance of deployed applications, accounting for 96.2% of the market in Q3, while so far this year the sector has attracted $812 million in finance.

"In 2016 we are seeing a critical trend in energy storage deployment – a wider range of competitive applications is becoming available to storage systems, and as a result demand for longer duration systems is increasing," said ESA executive director Matt Roberts. "Measured in megawatt-hours, the industry is projected to grow by more than 284% by the end of the year, reflecting a broader set of applications, an increase in distributed storage systems, and a larger role in grid reliability like the Aliso Canyon procurements."

The U.S. Energy Storage Monitor projects sustained growth in storage deployment, rising to more than 2 GW of cumulative storage capacity by 2021.