In response to the brand new “U.S. Energy Storage Monitor” developed by Wooden Mackenzie and the American Clear Energy Affiliation (ACP), the American power storage market skilled document development in Q1 2025, even amidst the present coverage uncertainty.
The U.S. power storage market added greater than 2 GW throughout all segments in Q1 2025, marking the best Q1 on document. The utility-scale section led the best way with greater than 1.5 GW of latest capability, representing a big 57% improve in comparison with Q1 2024.
“Surging power demand is placing the electrical grid below pressure. The power storage market is responding to assist maintain the lights on and help this unprecedented development in an inexpensive and dependable method,” mentioned John Hensley, ACP SVP of Markets and Coverage Evaluation. “Coverage uncertainty is now one of the vital dangers that is still on the horizon as we deal with a balanced method to permitting our financial system to broaden whereas sustaining the power reliability that Individuals deserve.”
The report exhibits there’s a rising urge for food throughout the nation for deployment of grid-scale power storage, as utilities, regulators, and communities additional combine the know-how into their useful resource planning. In Q1 of 2025, states reminiscent of Indiana highlighted the geographic diversification that continues to happen because the market expands past early adopters reminiscent of Texas and California.
Credit score: AES
The rising market in Indiana is made attainable resulting from elements reminiscent of land availability and clear state allowing tips. Indiana added 256 MW of latest storage to the grid in Q1 2025, successfully quadrupling its operational storage capability. Indiana has greater than 10 GW of latest storage lively within the interconnection queue — the fifth largest storage queue within the nation.
“We’re now seeing vital deployment of power storage assets in rising markets like Indiana, whereas states throughout the Southwest like Nevada and Arizona proceed to broaden their power storage portfolio,” mentioned ACP VP of Power Storage Noah Roberts. “Power storage was the second most deployed useful resource in Q1 2025, demonstrating its distinctive means to be rapidly constructed to deal with vital reliability wants.”
The residential storage market additionally noticed vital year-over-year development, putting in a record-breaking 458 MW in Q1. California and Puerto Rico accounted for 74% of this development, whereas new markets like Illinois are starting to emerge.
The overall 5-year utility-scale capability forecast stays sturdy. Nevertheless, the section is in danger for a possible 29% contraction in 2026 resulting from coverage uncertainty.
The community-scale, business, and industrial (CCI) section has seen a 42% discount in its five-year outlook, combating tariff uncertainty and slower-than-anticipated transition to NEM 3.0 initiatives in California.
The report cautions that potential adjustments to present tax credit may considerably affect the business’s general development. If entry to the funding tax credit score (ITC) is severely diminished as proposed within the reconciliation invoice handed by the Home, it may result in a 27% discount in buildout over the forecast interval. (Notice: this report was developed earlier than the U.S. Senate Finance Committee launched its model of the reconciliation invoice on June 16.)
Distributed storage could be essentially the most impacted section, with a possible 46% drop from the bottom case over the following 5 years. Utility-scale installations would lower by 16 GW over the following 5 years if the tax provisions are modified.
Within the close to time period, the report initiatives that 15 GW/49 GWh of power storage capability shall be put in throughout all segments in 2025. The utility-scale section is anticipated to develop 22% YoY in 2025. Because the market evolves, continued innovation, supportive insurance policies, and strategic planning shall be essential to navigate the altering panorama and capitalize on the immense potential of power storage within the U.S. power transformation.
“The Q1 2025 outcomes exhibit the demand for power storage within the US to serve a grid with each rising renewables and rising load. Nevertheless, the business stands at a crossroads, with potential coverage adjustments threatening to disrupt this momentum,” mentioned Allison Weis, World Head of Power Storage at Wooden Mackenzie. “It’s essential that policymakers perceive the significance of steady, supportive insurance policies for the continued growth of power storage.”
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