Orrick Energy Storage Update 2021 – 2022

By any measure, 2020 served as a banner year for the global energy storage market, despite significant challenges posed by the COVID-19 pandemic. Investment in storage projects worldwide in 2020 increased almost 40% year-over-year to $5.5b, which included more than $1.5b in the United States. Moreover, 3.5 GWh of new storage capacity were installed in the United States in 2020, more than the 3.1 GWh of storage capacity installed between 2013 and 2019 combined.

The future for storage promises even greater growth. Global energy storage capacity is expected to increase at a compound annual growth rate of 31% through 2030, reaching 741 GWh of total capacity by 2030.  Over 10 GW of storage capacity is expected to be added worldwide in 2021, and the United States will account for half of those additions. By 2026, the United States is expected to add 33 GWh annually, representing an 8.5 billion domestic annual energy storage market.

Driven by this growth, battery storage projects have increased in number and size in recent years, transactions and deal structures for the development and financing of storage have proliferated, and the geographic diversity of storage projects has expanded both inside and outside the United States. In the face of the devastating impacts of climate change, governments and investors outside the United States have increased their political and financial commitments to both renewables and battery storage. Within the United States, the energy transition is well underway and storage development is at its present-day peak due to a combination of long-term decreases in battery costs, increasing renewables penetration and political momentum at the federal and state levels. These dynamics have prompted increased public and private investments into storage as well as substantial mandates for utility and other LSE procurements for products and services from stand-alone storage and hybrid/co-located storage facilities.

With the booming energy storage sector as a backdrop, we focus our attention in this fourth Orrick Energy Storage Update on the key topics and trends most relevant in today’s global and domestic storage markets, including:

• Solar + Storage: Recent developments in offtake, EPC/procurement, financing, M&A, tax and regulatory issues in solar + storage projects
• Trade and Compliance: Discussion of the most important trade and compliance issues impacting storage projects, including tariffs, CFIUS and bulkpower systems
• ESG: Highlights of Environmental, Social and Governance issues relating to storage projects, including forced labor, conflict minerals and child labor issues
• U.S. Regional Updates: Updates on the most active domestic regions, including California/CAISO, Texas/ERCOT, PJM and New York/NYISO
• International Storage Trends: Focus on recent storage trends in the United Kingdom, Japan, Italy and Spain
• Hydrogen: Summary of key transaction structures and issues in the burgeoning green hydrogen market

We hope this update proves useful to our clients and friends in the renewables and energy storage industries and look forward to a continued dialogue.