The global energy storage capacity additions are expected to grow by 35% in 2025 to 94 GW or 247 GWh, according to BloombergNEF’s (BNEF) latest outlook. BNEF forecasts a compound annual growth rate of 14.7% between 2025 and 2035, with yearly additions reaching 220 GW or 972 GWh by 2035.

The growth will be driven by traditional markets and large-scale utility projects launched or under construction in countries such as Saudi Arabia, South Africa, Australia, the Netherlands, Chile, Canada, and the UK.

China’s Changing Policies

Mainland China continues to account for the bulk of global energy storage demand. This growth is primarily supported by regulatory requirements that mandate storage with utility-scale solar and wind projects.

However, a new policy introduced in February 2025 requires 100% of solar and wind generation to be traded on the wholesale power market. This policy removes energy storage as a prerequisite for connecting renewable energy sources to the grid. Local governments have until the end of 2025 to define implementation specifics.

Despite the policy change, several Chinese provinces have continued to mandate battery pairing for new renewable projects. BNEF expects storage deployment in China to remain robust. However, the growth drivers will increasingly shift from mandates to economic viability, depending on local policy outcomes.

US Market Weakens

In the U.S., the energy storage outlook has weakened due to sharply increased tariffs on imports from China, Canada, and Mexico. President Donald Trump, who returned to the White House in 2025, raised import tariffs in April, with base tariffs on Chinese goods reaching up to 145%.

BNEF’s base-case scenario models a blanket 54% import tariff, which increased turnkey four-hour battery system costs in the U.S. this year by 30% to $266/kWh. Under the higher tariff scenario of 145%, annual buildout is expected to drop by 51% to 74% from 2025 to 2027 compared to the base case.

Rising costs have already led to project delays, cancellations, and renegotiation of supply contracts. This increase also affected the U.S. domestic battery industry, which still relies on imports of battery materials, such as graphite, from China.

Utility-Scale Dominance

Globally, the energy storage market is increasingly led by the utility-scale segment, particularly in China, Saudi Arabia, South Africa, Australia, and Chile. Government mandates and auctions are driving gigawatt-level development in these countries.

Utility-scale installations are accelerating in Europe, the Middle East, and Africa and are expected to surpass the residential segment by 2026. This growth is driven by increased utility procurement and policy support.

The residential market showed mixed results, slowing down in Europe but growing in California following policy shifts in 2024. BNEF expects commercial deployments to surpass residential storage by 2030 as solar battery attachment rates rise.

Technology Landscape

Lithium iron phosphate (LFP) remains the dominant lithium-ion battery chemistry in the stationary energy storage market. According to BNEF, Chinese battery manufacturers specializing in LFP production are capitalizing on domestic market growth and aggressive international expansion.

Major battery producers, including Contemporary Amperex Technology, BYD, EVE Energy, CALB, and Hithium, are developing products specifically for the energy storage market. This development is leading to a continued divergence from the electric vehicle (EV) chemistry mix, which predominantly features nickel-based lithium-ion battery chemistries, such as nickel-manganese-cobalt oxide (NMC) and nickel-cobalt-aluminum oxide (NCA).

NMC and NCA offer higher energy density, benefiting EVs with lighter and longer-range capabilities. However, LFP’s cost-effectiveness and safety profile are more suited for stationary storage.

In Japan and South Korea, where manufacturers historically focused on nickel-based chemistries, a portion of production is expected to meet domestic energy storage demand. This production is also projected to supply a diminishing overseas NMC demand through 2035.

The U.S. market may see NMC in utility-scale projects until at least 2027. Despite the clear shift towards LFP, 2024 still saw substantial shipments of NMC batteries for energy storage.

The high tariffs on Chinese imports, where the majority of LFP batteries are produced, are expected to reduce the overall U.S. energy storage demand. However, these tariffs may make NMC batteries from non-Chinese sources more competitive. Expectations for sodium-ion batteries have diminished as LFP prices continue to decline, leading to lower forecasts for sodium-ion technology adoption.

Corporate funding for energy storage companies, including venture capital, debt, and public market financing, totaled $2.2 billion across 31 deals in Q1 2025, according to Mercom Capital Group’s recently released Q1 2025 Funding and M&A Report for Energy Storage.