Credit: AES
The U.S. energy storage market set a record for quarterly growth in Q2 2025, with 5.6 GW of installations, according to the latest U.S. Energy Storage Monitor report released today by the American Clean Power Association (ACP) and Wood Mackenzie.
The utility-scale market led the way, setting a record with 4.9 GW installed in Q2, enough capacity to power 3.7 million American homes during average peak demand. While early adopters continue leading in deployment, activity across the country shows clear demand for utility-scale energy storage as a solution to rising electricity prices and soaring energy demand.
- Texas, California and Arizona added more than 1 GW each.
- Markets such as the Southwest Power Pool (SPP) saw renewed activity, with three projects coming online in Oklahoma — the first in the region in three years.
- Florida and Georgia saw major forecast upgrades due to aggressive procurements by vertically integrated utilities.
“Energy storage is being quickly deployed to strengthen our grid as demand for power surges and is helping to drive down energy prices for American families and businesses,” said Noah Roberts, ACP VP of energy storage. “Despite regulatory uncertainty, the drivers for energy storage are strong and the industry is on track to produce enough grid batteries in American factories to supply 100% of domestic demand. Energy storage will be essential to the expansion of the U.S. power grid and American energy production.”
Residential and CCI continue to expand
The residential storage market expanded 608 MW in Q2. This represents a 132% increase year-over-year and an 8% jump quarter-over-quarter.
- Most of the growth was driven by California, Arizona and Illinois, as attachment rates hit new highs and higher-capacity systems gained market share.
Community-scale, commercial and industrial (CCI) storage expanded more modestly at 38 MW. This represents an 11% year-over-year increase.
- California and New York led Q2 CCI storage installations, accounting for over 70% of total capacity, while Illinois gained traction.
- Community storage deployment remained limited due to high costs and policy constraints.
Market shows resiliency despite policy uncertainty
According to the report, U.S. storage will reach 87.8 GW by 2029, driven by residential and utility-scale segments amidst a constantly evolving policy environment. However, U.S. utility-scale storage installations could drop 10% year-over-year in 2027 largely due to uncertainty over pending Foreign Entity of Concern (FEOC) regulations on battery cell sourcing.
“Pricing and FEOC uncertainty and slow community storage development are expected to limit CCI segment growth below 1 GW by 2029, though Massachusetts’ SMART 3.0 may help boost future deployment,” said Allison Feeney, research analyst at Wood Mackenzie. “Residential storage is expected to outpace solar due to stronger policy resilience, high attachment rates in key markets like California and Puerto Rico and continued ITC access through third-party ownership.”
Allison Weis, global head of storage at Wood Mackenzie, said that while the One Big Beautiful Bill Act (OBBBA) preserved the ITC for energy storage, headwinds remain and the five-year buildout could be reduced by 16.5 GW.
“After 2025, utility-scale storage projects must comply with new, stringent battery sourcing requirements to receive the ITC,” said Weis. “While domestic cell supply is ramping up, supply chain shortages are possible, although developers are continuing to consider supply from China to fill in any gaps. A rush to start construction under the more certain near-term regulatory framework uplifts the near-term forecast. Projects that have not met certain milestones by the end of 2025 are at risk of exposure to changing regulations. There is additional downside risk if further permitting delays threaten solar and storage projects.”
News item from Wood Mackenzie
