The US energy storage market continued steady growth in the third quarter of 2025, with 5.3 GW installed nationwide, pushing 2025 totals higher than 2024 combined installations, according to the latest figures. report ‘US Energy Storage Monitor’ released today by the American Clean Power Association (ACP) and Wood Mackenzie. This forward momentum has continued despite changing supply chains and continued policy uncertainty.
Overall, installations rose 31% year-over-year in the third quarter, although the market fell 6% from record highs in the second quarter of 2025. The utility-scale storage segment drove the growth with 4.6 GW installed in the third quarter, up 27% year-over-year, with 82% of installed capacity concentrated in Texas and California.
The residential storage market continued its expansion for the sixth consecutive quarter, installing 647 MW in the third quarter, up 70% year-on-year. California, Arizona and Illinois led deployments as the number of attachments reached new highs. Wood Mackenzie Projects The fourth quarter of 2025 will set a record for the residential sector as customers accelerate installations ahead of the Sec. 25D ITC Expiry Date.
The community, commercial and industrial (CCI) segment installed 33 MW in the third quarter, down 8% year-over-year. California captured 54% of installations with 17.8 MW, while Illinois emerged alongside Massachusetts as a key growth market, driven by state rebate programs and community storage projects.
“The strong growth in the U.S. energy storage market reflects a simple reality: meeting rising demand and keeping the grid reliable requires more and more storage,” said John Hensley, ACP Senior Vice President of Markets and Policy Analysis. “These installations deliver the flexible, reliable grid support America needs today, increasing reliability and keeping energy bills under control.”
While domestic battery production continues to ramp up to meet new rates and non-foreign entity of concern (FEOC) requirements for the ITC, Wood Mackenzie expects that near-term supply chain adjustments and constraints will lead to an 11% contraction in the U.S. utility storage market in 2026 and an 8% decline in 2027. However, the market is positioned for a strong recovery, with double-digit year-over-year growth through 2028 and 2029 when domestic production capacity comes online.
In total, Wood Mackenzie predicts that nearly 93 GW of storage capacity will be installed in the United States over the next five years. Notably, the utility-scale five-year forecast is up 15% compared to pre-One Big Beautiful Bill Act (OBBBA) projections, while the CCI segment is expected to grow 23% from 2025 to 2029.
“Despite new federal policies and tariffs, market fundamentals remain exceptionally strong,” said Allison Feeney, research analyst at Wood Mackenzie. “Continued access to the ITC, cost-competitive domestic cell manufacturing, vendor revenue potential, state policy and tax growth are driving our higher five-year outlook.”
California’s Net Billing Tariff (NBT), Massachusetts’ Solar Massachusetts Renewable Target (SMART) 3.0, and Illinois’ rebate programs ensure steady deployment of CCI through 2029. Meanwhile, the residential segment’s shift to third-party ownership models – which accounted for 57% of the market in the third quarter of 2025 – is helping to mitigate the impact of the Sec. 25D expiration date.
Allison Weis, Global Head of Storage at Wood Mackenzie, said: “We are seeing states ramp up with innovative programs, networks increasingly reliant on storage for reliability and costs at record low levels. The industry’s ability to meet these challenges and maintain a 15% increase in our five-year utility forecast since the introduction of the OBBA shows that storage has evolved from an emerging technology to an essential network resource.”
News item from Wood Mackenzie
