The United States is on pace to lead the global market for grid-connected battery storage in 2019, overtaking 2018 leader South Korea, driven by accelerating solar-plus-storage projects and peaking capacity requirements, according to a May 21 research note from IHS Markit.
U.S. energy storage deployments will nearly double to 712 MW this year, surpassing South Korea, which is expected to drop below 600 MW "or even significantly lower," according to Camron Barati, a senior analyst at IHS Markit.
After installing an estimated 920 MW in 2018, the South Korean energy storage sector tumbled in the first half of 2019 following a series of fires at storage installations that prompted an ongoing government investigation. The country's Ministry of Trade, Industry and Energy, which launched an investigation in January after more than 20 fires, plans to complete the probe in June, according to a recent article in The Korea Times.
In January, the agency asked public institutions, large multipurpose facilities and private owners to shut down their energy storage systems, while suppliers were forced to discontinue shipments, battering the financial results of large battery-makers LG Chem Ltd. and Samsung SDI Co. Ltd.
LG Chem, for instance, lost 148 billion South Korean won, or roughly $124.1 million, in its energy storage business in the first quarter of 2019, following seven straight quarters of profits.
Both companies expect market activity to revive in the second half of 2019. In the meantime, IHS analysts see the U.S. market racing ahead, propelled by "significant regulatory and policy developments as well as the diversification in major applications and geographic activity," Barati wrote in the research note. Those developments include a Federal Energy Regulatory Commission order to open up wholesale electricity markets, the ability of developers to use the federal investment tax credit for storage projects charging on solar power, new state-level storage mandates and incentives, and growth in behind-the-meter installations.
Between 2019 and 2023, more than 2,000 MW of energy storage paired with 10,000 MW of utility-scale solar photovoltaic arrays will be deployed in the United States, IHS forecasts. The firm estimates that combining 25 MW of four-hour batteries with a 100 MW single-axis tracking photovoltaic plant could reach a levelized cost of energy below $40/MWh if the developer qualifies for the federal investment tax credit.
About 4,300 MW of grid-tied energy storage will be added globally in 2019, according to IHS, with annual installations growing to more than 10,600 MW by 2025. Stronger outlooks in the United States, China, Japan and Australia led the analysts to boost their prior forecast through 2025 by roughly 3,530 MW.
As of May 21, $1 was equal to 1,192.41 South Korean won.