This is an extract from a recent report “U.S. Energy Storage Market Outlook” published by Solar Energy Industries Association.

BESS market update and outlook

In Q1 2026, just under 10 GWh/6.77 GW of battery energy stationary storage (BESS) entered operation across the utility scale and behind-the-meter (BTM) markets, a y-o-y increase of 32% (GWh). The utility-scale market continued to underpin growth with 7.8 GWh/1.5 GW installed, with six states bringing more than 500 MWh of new capacity online across all sectors. The tariffs applied to imported BESS cells and systems continued to evolve in the first quarter, following the Section 301 increase from 7.5% to 25% that came into force in January. The previously enforced IEEPA tariffs were ruled unlawful by the Supreme Court in early March. President Trump subsequently enacted Section 122 tariffs on all nations, which can be in place for a maximum of 150 days (~July 2026). In March, the US Trade Representative (USTR) announced two new Section 301 investigations targeting 60 different US trading partners. Imports from these trading partners comprised more than 99% of US imports in 2025. Additionally, the AD/CVD case on anode active materials was dismissed.

Quarterly market snapshot – Utility-scale & behind the meter

Q1 2026 saw BESS deployments of just under 10 GWh, up 32% compared to Q1 2025. The utility-scale market accounts for over 75% of deployments, as developers continue to see growing markets in capacity, energy arbitrage, and long-term contracts. As data centers and other BTM applications grow in the coming years, this segment’s share of the market is expected to grow to 20% by 2030. 

Residential BESS decreases 35% from Q4

Residential BESS deployments in Q1 2026 reached 515 MWh across the U.S., representing a 28% decrease compared to Q1 2025. This initial contraction will likely continue as the market adjusts to the end of the 25D tax credit. Some projects originally slated for Q1 2026 are likely to have been pulled forward into Q4 2025 to take advantage of the expiring tax credit. Given the ongoing energy shock across international markets, electricity prices are once again rising, which gives reason to improve the outlook for residential batteries due to improved economics. Tax credit and incentive scheme removals often exhibit sharp but temporary downward impacts on deployments. Looking ahead, continued recovery is expected out to 2030 in the residential storage market. 

C&I to be driven by data centers

Data center growth in the U.S. is leading to a variety of energy storage approaches from facility developers. In addition to the previously-seen LFP BESS deployments for peak shaving use, Google and Meta are deploying ultra-long-duration energy storage (LDES) to secure 24/7 carbon-free power for their data centers. Google announced plans to install a 30 GWh iron-air system in partnership with Form Energy in Minnesota, while Meta has reserved up to 100 GWh of capacity using Noon Energy’s reversible solid oxide fuel cell technology. These systems provide 100+ hours of discharge, enabling these facilities to maintain critical uptime during multiday renewable energy lulls. Other data centers will continue to opt for a multi-stage battery approach, with lithiumion systems in use for peak shaving outside the facility, and high-power UPS systems within the data center manage load swings.

BESS manufacturing & technology trends

This quarter’s manufacturing spotlight focuses on Ford’s announcement to pivot to energy storage through its new subsidiary: Ford Energy. The new company, which will make use of Ford’s existing manufacturing facilities, aims to deploy 20 GWh annually, with initial deliveries starting in 2027. In April, Chinese cell major Envision AESC announced the sale of a controlling stake in its nameplate 10 GWh LFP factory to Fixx Energy, an American company. Production at the facility had been on hold whilst Envision AESC sought a resolution to difficulties arising from the PFE rules restricting tax credits. Envision will continue to serve as technology partner at the site. Ultium Cells announced a $70 million investment to retool its Spring Hill, Tennessee facility to produce lithium-iron phosphate battery cells for energy storage systems. The company operates as a joint venture between General Motors and LG Energy Solution. Production is scheduled to begin in the second quarter of 2026, and the completed cells will be supplied to LG Energy Solution-Vertech for use in grid-scale and artificial intelligence data center applications.

Key policy updates

The U.S. policy landscape for BESS over the last 12 months has been a balancing act between domestic manufacturing ambitions, immediate grid needs and energy security. Though final guidance regarding the precise methodology for Material Assistance Cost Ratio (MACR) calculations has been a gradual process, a plethora of announcements were seen from states to codify the importance of energy storage by announcing targets and incentive structures. Given the expected load growth across U.S. grids being driven by industries such as AI, more of these announcements are expected in future. 

Access the report here