Boom in battery storage is helping underwrite 40% YoY growth in solar capacity
February 12, 2024
Key Observations:
Combined growth in U.S. power generation capacity from solar photovoltaic (+36 GW), battery storage (+14 GW), and wind (+8 GW) is on track to reach +58 GW this year. That YoY growth is the equivalent of 12 percent of installed gas-fired generation capacity in the United States at the end of 2023.
In 2024, solar photovoltaic (PV) becomes bigger than nuclear for power generation capacity in the Untied States. By yearend, solar PV is most likely more than one quarter the size of U.S. gas-fired capacity.
By the end of 2024, combined installed generation capacity from solar PV, wind, and battery storage will likely be the equivalent of nearly two-thirds of U.S. gas-fired capacity.
Coal will still be larger than either solar PV or wind at year's end: 177 GW versus 126 GW and 156 GW, respectively.
But a near-doubling in battery storage capacity (from ~15 GW to 30 GW) helps (a) reduce the reliability problem in solar and wind, and (b) retire 2 GW of coal capacity.
Source: EIA, Blacklight Research. Note in 2023, power generation from wind, solar, biomass, and geothermal reached 31 percent of mix in Texas and 33 percent in California. The comparable figure for both New York and Florida is 6 percent. The financial strains from higher interest rates and the competitive pressures the surge in U.S. solar capacity spurred by incentives in the Inflation Reduction Act (IRA), helped drive last year's roughly fifty-percent collapse in solar sector valuations. However, the Invesco Solar ETF (TAN, $1.4Bn marketcap) is now showing signs of bottoming in the early stages of sectoral recovery. One catalyst is the Feb. 7 earnings call from Enphase Energy. Daily volume in those shares was 16.9 million on Feb. 7 (12-month trailing average: 4.4 million) in reply to the company's cost-cutting moves and improving demand outlook after a brutal quarter.
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