Battery Storage in 2022: The Year Grid-Scale Storage Went Mainstream

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If 2022 was a turbulent year for solar module supply, it was a genuine inflection point for battery storage. A new federal tax credit, record raw-material prices, and utility pilot programs all converged to push storage from a niche add-on into a mainstream category for residential, commercial, and grid-scale buyers alike. Here's how the year unfolded.

The IRA Created the First Standalone Storage Tax Credit

The single biggest policy shift for storage in 2022 was the Inflation Reduction Act, signed into law August 16, 2022. For the first time, the Section 48 Investment Tax Credit was extended to standalone battery storage systems of at least 3 kWh, independent of whether they were paired with an on-site solar array (SEIA IRA Summary; McGuireWoods).

Previously, storage could only access the ITC when installed alongside, and charged primarily by, a qualifying solar system. Removing that requirement opened the credit to a much broader set of projects: backup power systems, grid-support batteries, and storage retrofits added to existing solar arrays after the fact. The standalone credit applies at the same 30% base rate as solar, with the same domestic content and energy community bonus adders available on top (Financier Worldwide). Note that the standalone provision took effect for expenditures made after December 31, 2022, so its full impact on new project economics carried into 2023 (SEIA).

Lithium Prices Hit Record Highs

Even as policy tailwinds strengthened, battery economics faced serious headwinds from raw material costs. Battery-grade lithium carbonate prices rose 91% during 2022, from an average of $35,000 per metric ton in January to $67,000 per metric ton in December, according to the U.S. Geological Survey (USGS 2022 Minerals Yearbook). Lithium hydroxide prices rose even faster — up 126% for the year, from $35,250 to $79,500 per metric ton (USGS). Chinese spot prices for battery-grade lithium carbonate briefly touched all-time highs above $74,000-$80,000 per tonne in the back half of the year (Global X ETFs).

The downstream effect was unavoidable: BloombergNEF reported that volume-weighted average lithium-ion battery pack prices rose to $151/kWh in 2022, a 7% increase in real terms — the first annual price increase BNEF had recorded since it began tracking the market in 2010 (BloombergNEF). LFP battery pack prices, generally the lower-cost chemistry, still rose 27% year-over-year due to their lithium carbonate exposure (BloombergNEF).

Data via USGS 2022 Minerals Yearbook and BloombergNEF.

Tesla Powerwall Shortages Persisted All Year

Residential battery demand in 2022 far outstripped supply, and no product illustrated that better than the Tesla Powerwall. Tesla had entered 2022 already sitting on a massive backlog — reportedly around 80,000 unfulfilled Powerwall orders dating back to mid-2021 due to the global chip shortage (Wikipedia/Tesla disclosures). Wait times remained long throughout 2022; in September, Elon Musk acknowledged on social media that Powerwall supply was still too constrained to resume stand-alone (non-solar-paired) orders, estimating that capability might not return until the end of the year (Teslarati).

Grid-scale storage faced its own capacity crunch. On Tesla's Q2 2022 earnings call, the company confirmed its Megapack utility-scale battery product remained effectively sold out into 2023, citing "significant unmet demand in stationary storage" (Teslarati).

Grid-Scale Storage Deployments and Virtual Power Plant Pilots

Despite supply constraints, grid-scale storage kept expanding through 2022. The U.S. installed roughly 5.9 GWh (2.3 GWac) of energy storage onto the electric grid in the first half of 2022 alone, according to Department of Energy tracking (NREL Fall 2022 Solar Industry Update). SEIA/Wood Mackenzie also reported that 783 MW of new residential, commercial, and community solar capacity deployed in 2022 was paired with energy storage — a new annual record, with 33% of new residential solar expected to pair with storage by 2027 (Wood Mackenzie).

Utilities also expanded virtual power plant (VPP) pilots that aggregated residential batteries into grid resources. In July 2022, Pacific Gas & Electric (PG&E) and Tesla launched a VPP pilot inviting roughly 25,000 California customers with Powerwalls to enroll; by the pilot's initial phase, more than 1,500 customers had joined, together capable of providing 8-10 MW of dispatchable capacity during grid emergencies, paid at $2 per incremental kWh discharged (JEPIC-USA). Texas grid operator ERCOT also launched its Aggregated Distributed Energy Resource (ADER) pilot in 2022, targeting 80 MW of flexible battery and demand-response capacity (Utility Dive).

Notable 2022 Storage Developments

• IRA created the first standalone storage ITC at 30%, effective for spending after December 31, 2022 (SEIA).
• Lithium carbonate prices rose as much as 91-130% during the year, pushing battery pack prices up for the first time since BNEF began tracking in 2010 (USGS; BloombergNEF).
• Tesla Powerwall and Megapack both remained supply-constrained throughout the year despite strong demand (Teslarati; Teslarati).
• PG&E/Tesla and ERCOT both launched notable VPP pilot programs aggregating residential batteries as grid resources (JEPIC-USA).
• A record 783 MW of new distributed solar in 2022 was paired with storage (Wood Mackenzie).

What This Meant for Installers and Facility Managers

The combination of rising raw material costs and constrained finished-product supply meant 2022 was a difficult year to source batteries on tight timelines — but also the year the federal incentive structure caught up with rising customer demand for resilience and backup power. Facility managers and installers who diversified beyond single-brand battery relationships were better positioned to keep projects moving as any one manufacturer's allocation tightened.

PES Supply's catalog spans 50,000+ SKUs across 169 authorized brands, including multiple energy storage manufacturers, giving installers options when any single battery line faced allocation constraints. Browse our battery storage systems and inverters collections to compare currently available brands and capacities. Standard delivery runs 7-10 business days.

Setting the Stage for 2023

By year-end 2022, the pieces were in place for a genuine storage boom: a new standalone tax credit taking effect January 1, 2023, moderating (though still elevated) lithium prices, and utilities increasingly comfortable treating aggregated residential batteries as legitimate grid assets through VPP programs. The supply constraints and price spikes of 2022 were real, but they set up the rapid growth in grid-scale and residential storage that followed in subsequent years.

Sources: SEIA, Wood Mackenzie, BloombergNEF, USGS 2022 Minerals Yearbook, Teslarati.