As a solar analyst, it’s increasingly difficult to talk about distributed solar these days without mentioning energy storage. Direct storage incentives, the phase-out of net metering, grid service opportunities, and grid reliability concerns have driven growth in add-on rates. In the third quarter of 2023, 11% of U.S. residential solar and 5% of non-residential solar installations will be combined with energy storage.
With these exciting changes underway, Wood Mackenzie is pleased to launch a list of U.S. distributed solar + storage leaders to track the competitive landscape. The list, provided quarterly by U.S. Distributed Solar Services and Energy Storage Services, provides rankings and market share for solar+storage installers and battery suppliers. Read on for an overview of our first edition.
Competition among U.S. residential solar+storage battery manufacturers intensifies Tesla’s Powerwall and LG’s RESU series have been the most popular residential products over the past five years, accounting for 77% of sales from 2018 to Q3 2023 % cumulative market share. However, their dominance has recently come under pressure from new entrants. In 2018, Tesla and LG products were installed on 96% of U.S. residential solar+storage projects, but by the third quarter of 2023, their share of installations had dropped to 65%.
Chart showing U.S. national solar-plus-storage battery manufacturers’ market share by number of installations. Established energy equipment companies such as Enphase, SunPower, Generac and SolarEdge have entered the market and established themselves among the top seven manufacturers. Notable new entrants also include FranklinWH, which entered the manufacturer rankings at No. 8 in the country less than two years after launching its first energy storage project.
With more choices on the market than ever before, battery suppliers must differentiate through features such as price, warranty, rate optimization software, ease of installation, inverter power levels, and more. Strategic relationships with installers will also play an important role in helping secure market share in the coming years.
Tesla, Sunrun, and SunPower have installed 55.3% of U.S. residential solar+storage projects to date The residential solar+storage installer market is much more concentrated than the residential solar installer market . The top five accounted for 59% of the market share in the former, while the top five in the former accounted for only 24%. Tesla ranks first in the residential solar + energy storage rankings with a 30.2% market share, followed by Sunrun (20.5%) and SunPower (4.6%).
These leaders have something in common. They are big players in the residential solar industry and have been investing in energy storage for years, either through their own products or through relationships with suppliers. They also have ambitious energy storage sales strategies. For example, Tesla requires at least one Powerwall for every 7.6 kW AC solar backup circuit. This default approach to energy storage puts Tesla at the top of the solar+storage rankings, despite trailing Sunrun by 9 percentage points in the latest residential solar rankings.
While the big players capture a large portion of the market, we are also seeing some smaller installers gaining experience in installing and selling energy storage. For example, California's Cinnamon Energy and Arizona's Sun Valley Solar Solutions, while smaller regionally, appear on our list of the top 75 installers nationwide because of their focus on selling energy storage. As favorable solar+storage policies increase, there is significant potential for regional installers to develop energy storage expertise and gain market share.
We also keep a close eye on the impact of California's net billing rates on market share. As this rate is implemented, we expect storage add-on rates to grow, which will give installers with more experience selling and installing energy storage an advantage.
This trend has already begun to take shape as early as the second quarter to the third quarter of 2023. Sunrun's California market share rose from 20% to 27% as the state's add-on rate grew from 7% to 13% during the period, marking the company's move to sell its non-standby "Shift" product to optimize net billing savings Initial success has been achieved. As solar + storage continues to grow, it will be interesting to see how the big players perform.
Commercial solar + storage remains constrained by a few key markets with direct storage incentives. Since 2018, New York, Massachusetts and California have accounted for 60% of the nation’s non-residential storage solar capacity.
Due to the “irregular” nature of non-residential solar installations (with large projects spread over several quarters), the first edition of the Distributed Solar + Storage Leadership List ranks non-residential installers by cumulative installations since 2018. Not surprisingly, leading installers have a strong foothold in the key markets mentioned above.
Borrego leads the way with 20% market share, driven by strong projects in California and Massachusetts. Nexamp follows with a 7% market share, driven by its projects in Massachusetts and New York. Renewable energy construction in the United States ranks third with a market share of 6.8%, and its projects are mainly located in Massachusetts.
As Borrego has spun off its distributed solar business (to form startup developer New Leaf) and new market opportunities emerge with favorable energy storage policies, we expect significant quarterly changes and opportunities in the commercial installer rankings .