California Storage Market Report

A well-established global leader in renewable energy, California is now making great strides in energy storage development. At the end of 2020, the state had a whopping 4.2 gigawatts installed at 220 operational energy storage projects, which was the highest installed capacity in the U.S. Much of the installed behind-the-meter capacity is residential, in part due to widespread installed residential solar, favorable utility time-of-use rate schedules, and the growing need for protection against power outages.

California’s Self-Generation Incentive Program (SGIP), one of the oldest and most developed behind-the-meter energy storage incentive programs in the country, is also accredited with rapid capacity growth in the state. SGIP’s higher rebates for low-income and wildfire vulnerable applicants have also proven critical, as increasingly devastating droughts and wildfires have left millions without power.

Tesla is the reigning behind-the-meter manufacturer for Californian battery energy storage systems, with 92.6% and 85.8% non-residential and residential market share, respectively. Semper Solaris is the leading residential installer and Black & Veatch is the leading non-residential installer.

While California regulators and legislators have taken great care to develop energy storage targets and policies over the last few years, there is still work to be done to clearly define energy storage as a market asset. For example, behind-the-meter energy storage projects face market restrictions that do not yet allow them to provide maximum value to the grid and system owners.

As of now, California has no energy storage target beyond 2020. Now that the industry is moving beyond its nascent years, it appears that the legislature and the California Public Utilities Commission are focusing more on how energy storage can support the state RPS and on developing language in policies that include and support fair energy storage market participation.

Both residential and commercial capacities are predicted to increase exponentially over the next decade, driven primarily by the state’s aggressive RPS and the increased need for wildfire resiliency. In particular, stakeholders are actively seeking long-duration solutions to support renewable intermittency and energy resiliency challenges.