US Utility-Scale Battery Storage Capacity To Grow Rapidly

The U.S. electric utility industry is undergoing a transition as companies are fast shifting focus to produce electricity from renewable sources. Per the U.S. Energy Information Administration (EIA), wind, solar and other non-hydroelectric renewables will be the fastest growing source of electricity generation for the next two years. EIA forecasts 10% of utility-scale electricity generation in 2019 and 12% in 2020 from wind, solar, and other non-hydropower renewables sources in the United States.

As electricity generation from wind and solar energy sources is on the rise, the need to store the excess electricity has become essential. Here comes the need for battery storage, which helps store the surplus electricity for use during periods of shortage.

Utilities operating in the United States are trying to cut down emission by implementing innovative technology. The following utilities have invested in battery storage projects.

Xcel Energy (NASDAQ:XEL) , under its Colorado Clean Energy Plan, will replace the Comanche coal units with a $2.5-billion investment in renewables and battery storage, which includes 1,131 megawatts (MW) of wind, 707 MW of solar PV, and 275 MW of battery storage in the state.

In October 2019, Duke Energy Carolinas announced plans to partner with Anderson County, S.C., to build an energy storage project at the Anderson Civic Center, Carolinas. This project is part of the company's plans, announced last October, to invest $500 million in battery storage projects in Carolinas over the next 15 years for electricity generation capacity of 300 MW. In June last year, Duke Energy's (NYSE:DUK) subsidiary Duke Energy Florida (DEF) announced plans to construct three battery storage projects with 22 MW capacities.

In March 2019, NextEra Energy’s (NYSE:NEE) Florida Power & Light subsidiary announced that it plans to build a 409-MW energy storage project in Florida, which will be powered by utility-scale solar.

We believe these companies are good investment options as these have returned 31.1%, 17.6% and 33.7%, respectively, outperforming the industry’s 13.3% in the past year.

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Rising Adoption of Battery Storage

Increasing usage of battery storage promotes renewable energy as well as reduces the dependency on grid. Per a report from STRATEGIC FINANCE, utility-scale storage of renewable energy is among the top 10 emerging technologies in 2019. Lithium-ion batteries currently provide more than 80% of America’s utility-scale battery-storage power capacity.

With the rapid drop in production cost, lithium-ion batteries are expected to be one of the most viable storage options unless new storage devices are developed in the next decade. With an expanding battery storage market, investors can also pick from battery storage manufacturing companies. General Electric Company (NYSE:GE) manufactures and supplies grid-scale battery energy storage solutions with renewable applications.

Utilities are focusing on adding energy storage projects to their portfolio and providing clean energy to customers. EIA projects expanding utility scale battery storage capacity over the long term. As of March 2019, 899 MW of battery storage projects were being operated in the United States. By 2023, EIA expects battery storage power capacity to exceed 2,500 MW, provided the currently planned additions are completed and no current operating capacity is retired.

Conclusion

One of the largest drawbacks of electricity generation from renewable energy sources is that it fails to provide electricity 24x7 like power plants run on conventional energy sources. The large battery storage devices in a way pave the way for development of more power plants based on renewable sources of energy.

With the increasing usage of storage facility, production of electricity from renewables will also rise, which in a way will fulfill goals of making the environment cleaner. The primary source of renewables for electricity generation is available for free. Evidently it is a win-win situation for utilities, which are producing electricity from renewable sources and using battery storages as well. Canadian Solar (NASDAQ:CSIQ) is a prominent name in the solar industry which deals in battery storage solutions. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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