This is an extract from a recent report “The US Energy Storage Monitor” by Wood Mackenzie Power & Renewables and the American Clean Power Association. 

US energy storage market added more than 2 GW across all segments in Q1 2025

Despite a q-o-q decrease in storage installations, Q1 2025 new additions are the highest for any Q1 on record. Utility-scale segment additions surpass last year’s Q1 installed capacity. Q1 2025 capacity additions of 1,558 MW in the utility-scale segment represent a 57% increase over the same period last year. California led with 457 MW of installed capacity, followed by Indiana with 256 MW. Arizona and Texas added 255 MW each, and Nevada 200 MW. Texas led this quarter in terms of project count with eight projects installed, followed by California, where the biggest project with 240 MW of capacity was brought online.

National residential storage market installed a record-breaking 458 MW 

The residential segment maintained its year-on-year growth in Q1 with continued expansion of the main markets of California and Puerto Rico. These two key markets contributed to 74% of the overall growth. Illinois emerged as a new market with net billing though attachment rates have not yet reached anticipated levels. Like in other segments, there are continued efforts across the country to take advantage of existing tax credits this year while they remain available.

After a record-breaking Q4, CCI deployment returned to usual Q1 levels 

The California CCI sector is struggling as the state faces challenges from slow adoption of NEM 3.0 projects. Additionally, the few new community storage projects this quarter hindered growth in the segment. 

US energy storage five-year market outlook

All segments face policy challenges in the short term, but are expected to recover to reach 79.8 GW/289.4 GWh cumulative installations. 2025 is set to be another record-breaking year for utility-scale storage, with 22% y-o-y growth. Political uncertainty will constrain the utility-scale segment by 29% in 2026 y-o-y .Fluctuating tariff rates have limited battery procurement from China throughout Q1 and well into Q2.  Barring changes to ITC or 45X, storage is expected to rebound in 2028 and 2029, achieving similar cumulative installs over the five-year horizon compared to last quarters forecast. Strong interest in renewables from hyperscalers, capacity constrained ISOs, and state level goals drive the long-term demand.

Residential storage will grow 45% in 2025. Stabilized tariffs and ITC support will enable higher attachment rates, bolstered by continued system price declines, program expansions, and the Net Billing Transition in some markets. CCI storage growth is reduced with lower uptake than expected in California and ongoing tariff and policy uncertainty. While further cost increases from potential changes in tax credit availability will further hurt the segment, the growth is already challenged by the complexity of use case and challenging economics. 

The House reconciliation bill’s strict provisions will reduce installs by 21.5 GW

The high and low scenarios show a 29.5 GW potential swing in cumulative installations over the next five years. The high case projects an extra 8 GW installed over the next five years. The high case assumes that federal clean energy tax credits remain unchanged, no additional tariffs under President Trump materialize, renewables firmed with storage are deployed to meet load growth, and barriers to financing and interconnection ease. The low case reduces installs by 27% in total from 2025 to 2029. The low case assumes the US reconciliation bill is passed as written in the final House version. Projects must start construction 60 days after the bill is passed and must be placed in service by the end of 2028. The abrupt termination of the ITC will result in significant project cancellations due to qualification challenges and financier risk aversion. The low case also anticipates continued US-China trade tensions, with tariff rates remaining uncertain throughout 2026, leading to increased system pricing and procurement delays. For the residential market, it was assumed the residential ITC under Section 0 25D ends after 2025, including for leased systems.

Access the report here