The US energy storage market reached a record 18.9 GW of battery energy storage system (BESS) installations in 2025, up 52% from 2024, according to the latest report.US energy storage monitor‘ report released today by the American Clean Power Association (ACP) and sector analyst Wooden Mackenzie.
A solar and storage project in Arizona, currently in the process of adding BESS. Credit: McCarthy Building Companies
In the fourth quarter of 2025 alone, 5.8 GW was installed. Utility-scale installations accounted for 4.9 GW of that total, up 31% from the previous year. New operations were spread across 13 different states, showing market growth outside the leading states of California and Texas.
The US residential storage market also reached a quarterly milestone in the fourth quarter with 1 GWh installed, as tax incentive expirations accelerated demand. The residential market installed a total of more than 800 MW in 2025, an increase of 75% year on year. California led the growth, installing 700 MW more in 2025 than in 2024, thanks to high retail electricity rates and a net billing rate that encourages battery discharge during peak energy consumption times. Puerto Rico, Texas, Arizona and Illinois rounded out the top five markets for storage growth in 2025.
The community, commercial and industrial (C&I) market also saw record growth with 77 MW installed in the fourth quarter of 2025, as government policies drove deployment.
“The record-breaking growth of energy storage by 2025 demonstrates how technological innovation is transforming the U.S. power grid,” said John Hensley, senior VP of Markets and Policy Analysis at ACP. “This momentum, driven by supportive policies and growing market opportunities, demonstrates that large-scale storage is now a cornerstone of delivering affordable, reliable and American energy in communities across the country. Continued collaboration between industry and government will be essential to build on this progress and meet rising energy demands.”
US installations will exceed 28 GW in all segments by 2031
Wood Mackenzie expects this momentum to continue in the BESS market. The report predicts that the US will install half a terawatt hour of storage between 2026 and 2031, a 250% increase over the previous five-year period. Utilities deployment is expected to lead this effort, which is expected to double in installed gigawatt hours between 2025 and 2030.
A record number of projects began construction in 2025 to meet previous federal investment tax credit (ITC) requirements. Residential storage demand rose in 2025 as consumers took advantage of the expiring Section 25D ITC, but the residential market is expected to shrink 2% in 2026 when the tax credit expires, the report said. Annual C&I storage installations are also expected to grow by 39% between 2025 and 2030 as system costs decline and potential policy support increases profitable business cases.
“2025 was a banner year for the energy storage market,” said Allison Feeney, research analyst at Wood Mackenzie. “Decreasing system costs, supportive policies and growing revenue opportunities have all contributed to the impressive growth over the past six years. We expect this momentum to continue as the technology becomes more proven and deployed.”
Regulatory uncertainty and variable demand growth scenarios
Wood Mackenzie assessed high-case and low-case five-year outlooks for BESS in the report. The high scenario would result in approximately 36 GW of new BESS deployed in 2031, if higher demand growth, federal permitting and storage technologies maintain access to tax credits, and increase domestic system and mobile supply in light of Foreign Entity of Concern requirements.
However, the low case results in 17% less capacity than the base case.
“The market trajectory is strongly upward, but major tax expansion and federal policy will determine whether we reach the high level of 26 GW in 2031 or something more conservative,” said Allison Weis, global head of storage at Wood Mackenzie.
News item from Wood Mackenzie & ACP
