What is the story about?
What's Happening?
Utility-scale battery energy storage deployments in the U.S. reached 4.9 GW/15 GWh during the second quarter of 2025, marking a 63% increase year-over-year. This growth sets a new record for any quarter, according to a report by Wood Mackenzie and the American Clean Power Association. Despite this achievement, the report predicts a decline in deployments in 2026 due to unfavorable federal policy changes, particularly concerning foreign battery material sourcing. The U.S. energy storage market remains concentrated in key states like California, Texas, and Arizona, which accounted for 75% of the utility-scale capacity installed during the quarter.
Why It's Important?
The record growth in utility-scale storage deployments underscores the increasing demand for energy storage solutions in the U.S. as the power grid faces rising load forecasts. However, the anticipated decline in 2026 highlights the impact of policy changes on the industry, particularly restrictions on foreign equipment sourcing. These challenges could slow the progress of energy storage expansion, affecting the country's ability to meet future energy demands and transition to renewable sources. States with favorable storage policies and high load growth projections are likely to remain strong markets for utility-scale storage.
What's Next?
The U.S. energy storage market may face a downturn in 2026, but demand for storage is expected to continue as the power grid evolves. Emerging ownership and financing models could support the growth of residential solar and storage, potentially offsetting the decline in utility-scale deployments. The One Big Beautiful Bill Act's favorable treatment for third-party owned solar and storage systems may boost the residential market through 2027, with forecasts predicting significant increases in residential storage capacity and installations.
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