Analysis of the Week: 8 GW of Battery Projects, Representing $11bn of Investment, Secured Financial Close in the United States Since the Start of 2023

California Continues to Accelerate Energy Storage Development, Sanctioning 2.5 GW of Projects, While Arizona Overtook Texas with by Approving 2 GW of New Capacity

California: Storage Development Surges, Driven by Legislation to Process Environmental Approval Within 270 Days of Permit Application

The bill was signed into law in 2022, providing a major boost to the development of battery systems in the state. According to the California Energy Commission, the state's installed storage capacity reached 6.6 GW in 2023, and Enerdatics data suggests that this figure could more than double by 2026. Additionally, CAISO's recent plans to invest $6.1bn in grid improvements by 2035 will benefit projects close to major load centers in the LA Basin, Greater Bay Area and San Diego.

Arizona: Emerges as Storage Hotspot, Primarily Due to Aggressive Initiatives by Utilities and Recent Plans to Invest in Component Manufacturing

Arizona Public Service (APS) is one of the pioneers of storage development in the state, with a 2020 plan to add 850 MW of storage by 2025, followed by an additional 1.7 GW by 2030. Fellow utilities Tucson Power and Salt River are also following suit. Additionally, companies including LG Energy Solution, Ecobat, American Battery Factory and Kore Power have announced billions of dollars of investments in manufacturing facilities, further boosting storage development

Texas: Sanctioned 1.6 GW of Batteries Driven by the State's Arbitrage Market, Under Which Operational Projects are Generating up to 20% IRRs

Black Mountain Energy Storage CEO Rhett Bennett highlighted the potential of the energy storage market in Texas, where power prices can rise from ~$90/MWh to nearly $3,000/MWh during days of solar solar or wind resource availability. According to Enerdatics' data, Texas will see ~3 GW of batteries commissioned during H2 2024, bringing the year's total to more than 6 GW, driven by the rapid buildout of renewables, low land costs and improved interconnection processes

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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