The market for utility-scale energy storage is doing very well again

We are so far from batteries being the best backup method that it is not even funny. To get to where we want to go, which is a highly decarbonized power system, you will need batteries that are many orders of magnitude more significant than what we have now.

Jim Robb, President and CEO of the North American Electric Reliability Corp (NERC), talked about this sad fact in 2021, after the famous Texas power grid failure, when he complained about the country's small power backup system. Robb's comment came when large-scale energy storage was getting going because the price of lithium-ion batteries had dropped by almost 90% in the last ten years. Unfortunately, the sector took a huge hit when Covid-19 caused considerable problems in the supply chain. As a result, hundreds of clean energy projects had to be scrapped or put on hold.

Thanks to a new report from Wood Mackenzie and the American Clean Power Association (ACP), the problem is over. In the second quarter of 2023, grid-scale energy storage in the U.S. hit a new record. In Q2 2023, the U.S. energy storage market grew by 5,597 megawatt hours (MWh), a quarterly record and a 172% increase from the previous year. California had 738 megawatts (MW) of systems, which was the most of any state.

"After the market fell for two quarters, we saw a big return in Q2. "Many projects that had been put off in previous quarters, mostly because of problems with the supply chain, were finally able to finish this past quarter," said the energy storage team at Wood Mackenzie.

John Hensley, VP of Research and Analytics at ACP, said, "The energy storage market is on track for a record year." This is because utilities and more significant power users are increasingly turning to storage to improve the grid and make it more reliable.

Because wind and solar power come and go, it is thought that grid-scale energy storage is a must for managing and controlling a clean energy supply grid. Wood Mackenzie says that the grid-scale segment will be the market's main driver from 2023 to 2027 when 83% of all installs will be made.

The Inflation Reduction Act (IRA) that President Biden signed into law last year has significantly boosted the utility-scale energy storage market. People say the IRA is the most critical climate law in U.S. history. It offers funding, programs, and incentives to speed up the change to a clean energy system, and most of its provisions are already in effect. It is the most critical climate legislation in U.S. history, and it offers funding, programs, and incentives to speed up the change. The Inflation Reduction Act of 2022 went into force for most of its parts on January 1, 2023.

Since it started up a year ago, the IRA has improved the prospects for both mobile and stationary storage markets. It has also brought at least $63 billion in private and public investments into the battery storage sector.

Energy storage companies and stocks are doing very well, and many are doing better than the S&P 500, a broad market measure. Tesla Inc. (NASDAQ: TSLA), a well-known electric vehicle company, gets the most out of IRA points for making batteries. Tesla works with Panasonic Holdings (OTCPK: PCRFY) to make batteries in Nevada, and it is also ramping up production at its plant in Texas. Tax breaks for companies producing batteries give Tesla a significant advantage in the market over its competitors, particularly those making fewer batteries. So far this year, TSLA has increased by 123.9%, while Panasonic has increased by 40.3%. The S&P 500 has made a 13.5% gain so far this year.

Eos Energy Enterprises Inc. (NASDAQ: EOSE) makes energy storage systems for the utility, commercial, and industrial markets that are based on zinc. Last month, the company announced Project AMAZE, which stands for American-Made Zinc Energy; this is a $500 million plan to build 8 GWh of clean energy storage capability. The Inflation Reduction Act (IRA) drives up demand for long-term energy storage, and AMAZE backs the company's plan to meet that demand. EOSE stock is up 76.1% so far this year.

Fluence Energy Inc. (NASDAQ: FLNC) sells energy storage goods and digital applications that can be used with renewable energy and energy storage. Last month, Barclays gave the stock an "Overweight" rating, saying that the company will likely do well because green energy is becoming more popular.

"Given that renewables are expected to be built up quickly and that wind and solar projects have problems with being on and off, energy storage will be a vital part of the energy shift. Even though the hardware is an essential part of the offering, Barclays said in a positive report that they expect the number of service/software solutions to grow. This will allow project owners to keep their assets better and make the most of their grid participation.

FLNC stock has made 37.9% so far this year.