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					</table>The U.S. energy storage market added more than 2 GW across all segments in the first quarter (Q1) of 2025, marking the highest Q1 on record, according to the latest U.S. Energy Storage Monitor report from the <a href="https://cleanpower.org/" target="_blank" rel="noopener">American Clean Power Association</a> and <a href="https://www.woodmac.com/" target="_blank" rel="noopener">Wood Mackenzie</a>.
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The utility-scale energy storage market added 1,558 MW of capacity in Q1 2025, a 57% year-over-year (YoY) increase. Deployments rose 33% to 4,078 MWh from 3,056 MWh in the same period of the previous 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.
Residential energy storage posted the highest relative growth across all segments. Installed power capacity <a href="https://www.mercomindia.com/us-energy-storage-market-deployed-in-q1-2024-up-89-yoy" target="_blank" rel="noopener">rose</a> 82% to 458 MW in Q1 2025 from 252 MW in Q1 2024. Energy capacity grew to 893 MWh from 516 MWh, a 73% YoY increase. The residential segment continued to grow with expansion in the California and Puerto Rico markets. These two markets contributed 74% to the overall growth.
Illinois emerged as a new market with net billing, although attachment rates have not yet reached the anticipated levels. Like with other segments, there are continued efforts across the country to take advantage of existing tax credits this year while they remain available.
The commercial, community, and industrial (CCI) segment also recorded gains. Power capacity additions increased to 26 MW in Q1 2025, up from 19 MW in Q1 2024, representing a 33% jump. Energy capacity additions increased by 6%, rising to 63 MWh from 59 MWh over the same period.
The California CCI sector is struggling as the state faces challenges from the slow adoption of NEM 3.0 projects. Additionally, the limited number of new community storage projects this quarter hindered growth in the segment.
A key growth driver in this quarter was the decline in system costs. The average price of utility-scale battery systems fell to $874/kW in Q1 2025, down from $1,165/kW in Q1 2024. This represents a 25% reduction, which has helped improve the economics of storage projects and broadened deployment across market segments.
The pipeline for future utility-scale projects also expanded. By the end of Q1 2025, the total utility-scale segment pipeline stood at 603 GW. This pipeline includes 127 GW of projects in Wood Mackenzie&#8217;s database and 476 GW in interconnection queues. The total represents a 12% increase from Q1 2024, which had a pipeline of 538 GW.
Outlook
Across all segments, 15.2 GW/48.7 GWh of capacity will be added in 2025. In the near term, all segments of the energy storage market are expected to face policy-related challenges. Despite this issue, cumulative installations are projected to reach 79.8 GW and 289.4 GWh.
This year is on track to set new records for utility-scale storage, with a 22% YoY anticipated growth rate. However, political uncertainty is likely to dampen progress in 2026, with the utility-scale segment expected to decline by 29% compared to 2025.
Throughout Q1 and Q2, fluctuating tariff rates have restricted battery procurement from China. Unless there are changes to the Investment Tax Credit (ITC) or Section 45X, the market is forecast to rebound in 2028 and 2029.
Over the next five years, cumulative installations are expected to match earlier projections despite short-term volatility. Long-term demand is driven by strong interest in renewables from hyperscalers, capacity constraints in independent system operators, and state-level targets.
The residential storage market is set to expand by 45% in 2025. This growth will be supported by stabilized tariffs, continued price declines, and program expansions. The net billing transition in select regions will also contribute to higher adoption rates.
Growth in the CCI segment remains limited. Lower-than-expected uptake in California, along with ongoing uncertainty surrounding tariffs and policy measures, has slowed momentum. The segment continues to face difficulties due to the complexity of applications and weak project economics. Any further reduction in tax credit availability could place additional pressure on its growth trajectory.
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House Reconciliation Bill Impact
Provisions in the House reconciliation bill are expected to <a href="https://www.mercomindia.com/us-senate-budget-bill-proposes-to-slash-solar-wind-incentives-from-2026" target="_blank" rel="noopener">impact</a> the energy storage sector. The projected range of possible outcomes over the next five years spans a 29.5 GW difference between the high and low scenarios.
In the high case, an additional 8 GW of storage capacity would be deployed over the next five years. This outlook assumes that federal clean energy tax credits remain in place, no new tariffs are introduced under the Trump administration, and that renewables paired with storage are actively used to meet growing electricity demand. The high case also assumes improvements in financing conditions and fewer interconnection delays.
The low-case forecast predicts a 27% decline in total installations from 2025 through 2029. This scenario assumes that the reconciliation bill passes in its final form in the House of Representatives. Under these conditions, projects would be required to begin construction within sixty days of the bill&#8217;s passage and be operational by the end of 2028.
The sudden end of the ITC would lead to widespread cancellations as developers struggle to qualify and financial institutions grow increasingly risk-averse. The low case also expects continued trade friction between the U.S. and China, with tariffs remaining volatile through 2026. These conditions would likely drive up system prices and create further procurement delays. For the residential sector, the assumption is that the tax credit under Section 25D would expire after 2025, including for leased systems.

US Energy Storage Hits New Q1 Record with Over 2 GW Installed

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					</table>The U.S. energy storage market set a first-quarter record for capacity installed in Q1 2024, with 1,265 MW/3,512 MWh deployed across all segments. This marks the highest storage capacity installed in the U.S. in the first quarter, representing an 89% increase from Q1 2023.
In Q1, 993 MW/2,952 MWh of energy storage capacity was deployed in the grid-scale segment, up 101% year-over-year, with Nevada, Texas, and California accounting for 90% of the MW and MWh capacity, according to the latest report by <a href="https://www.woodmac.com/" target="_blank" rel="noopener">Wood Mackenzie</a>.
This represents the largest capacity installed in any Q1 to date. Additionally, more than 250 MW of residential storage was deployed in Q1, up 8% from Q4 2023.
California was the primary driver of this growth, adding 32 MW. California also led the commercial and industrial (C&amp;I) segment, while New York and Massachusetts experienced one of their slowest C&amp;I quarters in recent years.
<img loading="lazy" decoding="async" class="aligncenter wp-image-67360 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2.png" alt="" width="815" height="640" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2.png 815w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2-300x236.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2-768x603.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2-650x510.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2-624x490.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture1-2-600x471.png 600w" sizes="(max-width: 815px) 100vw, 815px" />
The report mentioned that U.S. original equipment manufacturers (OEMs) are benefiting from new domestic content guidance and Section 301 tariffs. Storage prices from the cell to block level continue to decline due to lithium price drops and other factors in China, such as oversupply and intense competition.
OEMs and integrators were boosted by the recently released domestic content guidance, which altered the reporting structure to qualify for the 10% adder. This change allows developers to be eligible without including manufacturing costs from the OEM directly.
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Nevada and Texas installed 38% and 35% of total Q1 capacity, respectively. However, in terms of MWh, Texas installed only 553 MWh, while Nevada saw 1,416 MWh installed. Texas led Q1 with 12 different storage projects, followed by California with 9.
The residential segment is growing quickly as the California market continues to expand. California tripled its number of installs between Q1 2023 and Q1 2024. With Q1 attachment rates at 41%, there is still much room for growth. High interest rates continue to affect the residential segment, increasing the share of third-party ownership installations.
C&amp;I Segment Deployment Drops 
The C&amp;I segment had its worst quarterly deployment numbers in years. California&#8217;s commercial and industrial (C&amp;I) storage deployments have remained stagnant, with most systems being interconnected under NEM 2.0.
New York and Massachusetts each had down quarters, which is not concerning given the C&amp;I segment&#8217;s low quarterly number of installations. More projects are expected to come online in 2024 and 2025.
New capacity additions in 2024 are expected to surpass the 10 GW mark for the first time, with 75 GW forecasted across all segments through 2028.
<img loading="lazy" decoding="async" class="aligncenter wp-image-67362 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture3.png" alt="" width="648" height="512" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture3.png 648w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture3-300x237.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture3-624x493.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/Picture3-600x474.png 600w" sizes="(max-width: 648px) 100vw, 648px" />
2024 Forecast
In 2024, a capacity of 12.9 GW/35.8 GWh is expected to be deployed across all segments. The five-year grid-scale forecast increased by 5% quarter-over-quarter (QOQ) in MW terms due to an increased pipeline of announced projects.
This brings the cumulative new additions through 2028 to 62.2 GW. Over the next five years, over 10 GW of residential storage deployments are anticipated. The five-year residential forecast rose by 8% QoQ, largely due to declining system costs and emerging value streams in residential storage.
The five-year C&amp;I forecast was reduced by 34% following the California Public Utilities Commission&#8217;s (<a href="https://www.cpuc.ca.gov/" target="_blank" rel="noopener">CPUC</a>) decision on community solar in May.
The report said the grid-scale segment is projected to see a 45% year-over-year increase with 11.1 GW/31.6 GWh installed, bringing the total cumulative volume to 62.6 GW/219 GWh in the next five years.
Growth is expected to flatten in 2025 and 2026 as project capacity is pushed into the later years of the forecast, largely due to early-stage development challenges such as permitting and siting, and interconnection queue timelines.
Over the next five years, 13 GW of distributed storage will be deployed, with the residential segment constituting 79% of distributed power capacity installations. The residential segment will install 10 GW of storage between 2024 and 2028 as storage becomes cheaper, the value of mid-day solar exports decreases, and new value-add opportunities emerge for distributed storage.
The report has forecasted that the C&amp;I segment will install 2.6 GW of storage between 2024 and 2028, a 34% reduction from Wood Mackenzie&#8217;s previous forecast. The C&amp;I segment continues to face the highest barriers to growth in the near term, but its strong value proposition and emerging value streams will make it an exciting growth segment in the later years of our ten-year forecast.
Wood Mackenzie and the American Clean Power Association <a href="https://www.mercomindia.com/us-energy-storage-with-8-7-gw-nearly-doubling-2023" target="_blank" rel="noopener">reported</a> breakneck growth for the U.S. energy market in 2023, shattering previous installation records across multiple segments, adding 8.7 GW of energy storage capacity.
A recent report by the International Energy Agency said energy storage infrastructure must <a href="https://www.mercomindia.com/energy-storage-must-expand-six-fold-enable-renewables" target="_blank" rel="noopener">expand</a> by at least six times the current capacity if the world wants to triple renewables capacity by 2030 while maintaining electricity security.

US Energy Storage Market Sees Record 3,512 MWh Deployed in Q1 2024, Up 89% YoY

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