An EVLO energy storage project in Vermont.
The energy storage industry’s trajectory in recent years has been nothing short of remarkable, driven by increased customer recognition of these assets’ critical roles in grid services, electricity reliability needs, and renewable energy integration. This rapid evolution of the BESS sector also correlated with an emphasis on safety, reliability and seamless grid integration that will define the next chapter of energy storage.
And this momentum shows no sign of slowing. Global energy storage installations are projected to grow by 76% in 2025 according to BloombergNEF, reaching 69 GW/169 GWh as grid resilience needs and demand balloon.
Market dynamics and growth
Global energy storage projections are staggering, with a potential acceleration to 1,500 GW by 2030 following the COP29 Global Energy Storage and Grids Pledge. California alone has reached more than 13 GW of capacity, and batteries became the biggest single contributor to the California Independent System Operator (CAISO) grid one pivotal evening in April of 2024. This growth is propelled by surging electricity demand, with U.S. utility annual generation expected to grow another 26% by 2028.
Several key drivers stand out: electric vehicle (EV) adoption and data center expansion, with the latter accounting for 44% of U.S. electricity load growth through 2028. Additionally, annual extreme weather events in the U.S. have increased more than seven-fold since the 1980s, underscoring the need for flexible, resilient systems to provide backup power. Finally, solar capacity is projected to triple to over 5,700 GWDC by 2033, and BESS assets will be critical for managing renewable intermittency and maintaining grid reliability.
The growing energy demand is compelling utilities and developers to act quickly and explore new power source options.
Technology evolution and cost trends
Lithium iron phosphate (LFP) chemistry is projected to continue gaining market share in 2025, driven by its superior safety profile and significant cost reductions. With LFP prices dropping 20% in 2024 following a 30% decrease in 2023, the economics of BESS projects continue to improve. This trend of battery oversupply and lower prices is expected to persist through 2028, benefiting both developers and customers.
Beyond price reductions, innovations in LFP manufacturing processes and battery material sourcing are opening pathways for enhanced battery performance and sustainability. Advanced coatings can increase conductivity and extend battery lifecycles, while innovations in hydrometallurgical and other recycling practices have potential to reduce reliance on mined materials to lower carbon emissions.
Advancements in battery design are also reshaping the industry. EVLO’s 6th-generation BESS, EVLO SYNERGY, is an example of how high-density, integrated solutions can lower total ownership costs while meeting the growing needs of utilities and IPPs.
Evolving utility requirements
As the energy storage market matures, utilities and IPPs are becoming more sophisticated in their expectations; these organizations now have a deeper understanding of how storage can address grid modernization and resiliency, and its ability to optimize peak load management in the face of additional power demands. They seek robust, reliable storage systems that integrate seamlessly into their operational frameworks, regardless of the energy source, while maintaining system reliability, adhering to safety standards and optimizing costs.
To set themselves apart, integrators must focus on delivering robust systems designed for increasingly complex grid dynamics. Rigorous testing, seamless operational integration and effective stakeholder training are critical to helping utilities and IPPs maximize storage investments and ensure reliable performance.
Safety innovation and standards
Safety remains at the heart of energy storage innovation. The adoption of updated fire codes, such as New York’s 2024 guidelines requiring emergency response plans and advanced fire suppression systems, emphasizes the industry’s evolving approach to risk mitigation.
A notable trend in battery energy storage systems (BESS) is the integration of early thermal runaway detection and containment mechanisms, which are crucial for preventing and mitigating safety incidents associated with lithium-ion batteries. These advancements are setting new benchmarks in the industry, aligning with heightened safety expectations from utilities, regulators and communities.
Facilities conducting live grid testing play a pivotal role in validating the safety features of energy storage systems. Simulating real-world conditions before systems commissioning ensures they meet or exceed certification standards and can streamline site safety certification.
Policy landscape and market opportunities
While 2025 promises further industry developments, the road ahead will require a combination of strategic planning and deft response to a dynamic policy and regulatory environment. Across North America, tariff negotiations and geopolitical challenges will continue to shape procurement strategies for BESS integrators. With the upcoming 2026 review of the Canada-United States-Mexico Agreement, trade relationships and supply chain considerations will be increasingly important for the North American energy storage market. As domestic manufacturing ramps up, driven by incentives under the Inflation Reduction Act and section 45X, as well as tariffs on Chinese-made components, the North American market will have to strategically balance local production with global supply chains to prevent bottlenecks.
In the U.S., the Inflation Reduction Act’s standalone storage incentives can further improve project economics, while FERC Order 2023 stands to streamline interconnection processes. At the state level, California leads in battery deployment with programs rewarding grid resiliency, while Texas leverages its growing demand for grid stability.
The push toward clean energy targets in 24 states also creates compelling opportunities for energy storage. While established markets like California, Texas and Arizona set the pace, the growing project pipeline in regions like the Midwest demonstrates the technology’s broadening appeal.
Looking ahead: Keys to success
Several factors will define the energy storage market in 2025: the continued dominance of LFP chemistry and its downward impact on pricing, increased utility demand for integrated solutions to meet growing energy demand and evolving safety standards. While challenges remain in supply chain development and regulatory alignment, the foundation for sustainable industry growth has never been stronger.
Continued collaboration among technology providers, utilities and IPPs, regulators and policymakers will be essential as we work toward a cleaner, more resilient energy future.
