Batteries Are About to Double. The US Grid Question Is Whether They Arrive Where Solar Does
At the start of 2024, the federal statistics agency published three short notes that, read together, describe the most important change in the American power system this decade. The first said that utility-scale battery capacity could rise by 89% by the end of the year if developers bring their planned systems on line on schedule. The second said solar will supply almost all of the growth in US electricity generation through 2025. The third set out the numbers behind that claim: solar output rising 75% in two years while coal generation falls by almost a fifth.
None of these is a surprise to anyone who has watched interconnection queues fill up. What is new is that the forecasts now describe a near-term operating reality, not a long-run scenario. The Energy Information Administration's preliminary generator inventory shows planned and operating utility-scale battery capacity of around 16 gigawatts at the end of 2023. Developers plan to add another 15 GW in 2024 and around 9 GW in 2025. California has 7.3 GW of installed battery storage, the most of any state, and Texas follows with 3.2 GW.
On the generation side, the January Short-Term Energy Outlook puts solar at 4.0% of total US generation in 2023, rising to 5.6% in 2024 and 7.0% in 2025. In absolute terms, solar output grows from 163 billion kilowatthours in 2023 to 286 billion kWh in 2025, a 75% increase. The US electric power sector produced 4,017 billion kWh in 2023, and renewables of all kinds accounted for 22% of that. One detail in the EIA's explanation deserves more attention than it gets.
Wind and solar developers often bring projects on line at the end of the calendar year, so new capacity tends to show up in generation growth the following year. A storage project that slips by six months does not shift a year's worth of energy, because a battery does not produce energy at all. California and Texas are building storage for overlapping reasons but in very different market settings, and the difference is useful for everyone else.
In California, much of the battery fleet has been procured through resource adequacy obligations placed on load-serving entities. The 18% fall in coal generation forecast for 2023 to 2025 is the clearest sign that the combination of cheap gas and new renewables is changing dispatch. First, monthly battery additions in the EIA's generator inventory, compared with the dates developers gave a year earlier. Second, evening price behavior in markets with heavy solar but light storage. The January numbers describe a grid moving quickly in the right direction.