In keeping with 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 very best Q1 on document. The utility-scale phase led the best way with greater than 1.5 GW of latest capability, representing a major 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 assist this unprecedented development in an reasonably priced and dependable means,” stated John Hensley, ACP SVP of Markets and Coverage Evaluation. “Coverage uncertainty is now one of the important dangers that is still on the horizon as we sort out a balanced method to permitting our economic system to increase 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 akin to Indiana highlighted the geographic diversification that continues to happen because the market expands past early adopters akin to Texas and California.
Credit score: AES
The rising market in Indiana is made potential resulting from elements akin to 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 important deployment of power storage sources in rising markets like Indiana, whereas states throughout the Southwest like Nevada and Arizona proceed to increase their power storage portfolio,” stated ACP VP of Vitality Storage Noah Roberts. “Vitality storage was the second most deployed useful resource in Q1 2025, demonstrating its distinctive potential to be shortly constructed to handle vital reliability wants.”
The residential storage market additionally noticed important 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 phase is in danger for a possible 29% contraction in 2026 resulting from coverage uncertainty.
The community-scale, industrial, and industrial (CCI) phase has seen a 42% discount in its five-year outlook, combating tariff uncertainty and slower-than-anticipated transition to NEM 3.0 tasks in California.
The report cautions that potential modifications to present tax credit might considerably affect the business’s total development. If entry to the funding tax credit score (ITC) is severely decreased as proposed within the reconciliation invoice handed by the Home, it might 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 phase, 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 tasks that 15 GW/49 GWh of power storage capability will probably be put in throughout all segments in 2025. The utility-scale phase is predicted to develop 22% YoY in 2025. Because the market evolves, continued innovation, supportive insurance policies, and strategic planning will probably 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 reveal 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 modifications threatening to disrupt this momentum,” stated Allison Weis, World Head of Vitality Storage at Wooden Mackenzie. “It’s essential that policymakers perceive the significance of secure, supportive insurance policies for the continued growth of power storage.”
Information merchandise from ACP
