A new report from GTM Research and the Energy Storage Association (ESA) says that US homeowners added 36 megawatt-hours (MWh) worth of batteries to their residences in the first quarter of 2018. That's more than the previous three quarters combined.

The gains were driven by local and state policies that actually reduced the value of standalone solar installations, the report said. Where once a California or Hawaii homeowner might have received significant compensation from the local utility for producing rooftop electricity, now those programs are being limited, so homeowners are turning to batteries to capture excess energy made during the day. In California, utilities are adopting so-called Time of Use pricing, so investing in a battery can help homes continue to run when prices are highest. Consequently, "California and Hawaii together constitute 74 percent of residential deployments on the quarter," according to the ESA.

Outside of the residential sector, past policies have created the appearance of volatility in the energy storage industry. The market as a whole, including utility-grade storage and commercial storage (like batteries serving warehouses, for example), grew 26 percent quarter-over-quarter but declined 46 percent year-over-year in terms of megawatt-hour added in Q1 2018. This is largely due to the fact that California mandated that utilities build out significant amounts of energy storage in 2017, after the Aliso Canyon natural gas leak depleted the fuel that the state had stored.

Currently, GTM and ESA only track the most significant markets in the storage industry, namely: Arizona, California, Colorado, Hawaii, Massachusetts, Nevada, New Jersey, New York, PJM (the regional grid operator for a number of mid-Atlantic and midwest states), and Texas. Colorado and Nevada are new additions to the list, as they finally have storage markets worth counting, ESA says.

Battery capacity is usually most accurately measured in watt-hours, rather than watts. A battery's usefulness is tied to how long it can supply energy, not necessarily how much energy it can deliver at any one instant. But one of the best use-cases for utility-grade batteries right now is supplying the grid with instantaneous power to keep grid frequency constant, and for that use case, a measure of watts is more applicable than a measure of watt-hours.

GTM and ESA predict that the US market will hit 1 GW of storage in 2019, an inflection point that could mark explosive growth for the market. "[I]n 2020 a large number of systems included as part of utility procurements will come online, and this also marks the year California is requiring solar for all new homes, which has upside implications for residential storage," the report states. (Additionally in California, homebuilders may be able to receive "compliance credits" for adding storage to new houses after 2020.) Currently, the report estimates that the US will have 557 MW of rooftop and utility-grade storage by the end of 2018.