The U.S. added a record 6.7 GW/20.2 GWh of battery energy storage system (BESS) capacity in the second quarter (Q2) of 2026, according to the U.S. Energy Storage Market Outlook by the Solar Energy Industries Association (SEIA) and Benchmark Mineral Intelligence.

Deployments increased 11% year-over-year (YoY) during the quarter, driven primarily by utility-scale projects.

In the first half (1H) of 2026, just under 31 GWh/10.3 GW of BESS capacity became operational across the utility-scale and behind-the-meter (BTM) markets, representing a 23% YoY increase in energy capacity.

Utility-scale installations accounted for 26 GWh/8.1 GW during the period, with 10 states adding more than 500 MWh each.

The report forecasts that U.S. annual BESS installations will reach about 71 GWh in 2026, up 20% from 59 GWh in 2025. Annual installations increased 30% in 2025 and 69% in 2024.

In the previous quarter, the U.S. had added 9.7 GWh of energy storage capacity, up 32% YoY.

Utility-Scale Energy Storage

Utility-scale projects continued to drive the U.S. energy storage market, accounting for 18 GWh of capacity additions in Q2 2026.

Arizona, California, Utah, and Texas each deployed more than 2.5 GWh during the quarter.

Four gigawatt-scale projects were commissioned in Arizona during Q2, along with two in California and one in Utah.

Standalone energy storage projects accounted for 56% of utility-scale capacity additions during the quarter, while solar-paired storage projects constituted the remaining 44%, according to the report’s Q2 market snapshot.

Residential Segment

Residential energy storage deployments declined 27% YoY to 657 MWh in Q2 2026.

The report attributed the decline partly to fewer installations after the removal of the 25D tax credit and to the surge in installations the previous year, as projects were brought forward ahead of the incentive change.

Residential BESS installations are forecast at 2.69 GWh in 2026, down 16% from 3.22 GWh in 2025. Installations had increased 56% in 2025 and 44% in 2024.

Despite the near term decline, the report said higher electricity costs, changes to net metering, concerns over outages, and increased state support through virtual power plants and demand response programs could support residential storage demand over the long term.

Growing opposition to data center expansion could also support residential BESS adoption as consumers seek to reduce their exposure to potential electricity cost increases associated with large load growth.

Data Centers Drive C&I Demand

Commercial and industrial (C&I) energy storage installations reached 1.8 GWh in Q2 2026.

The report said U.S. C&I battery storage demand is increasingly being driven by the rapid expansion of data centers and difficulties in securing sufficient grid capacity.

This has led to the emergence of a “bring your own generation” model, under which developers combine BESS with onsite or co-located solar and wind projects to increase energy independence, manage intermittency, and reduce exposure to grid constraints.

Battery systems can shift renewable energy generation, manage rapid fluctuations in data center electricity demand, and provide short-duration backup. High-power uninterruptible power supply systems continue to address power quality requirements within data center facilities.

Natural gas generation is also being paired with storage in some hybrid configurations to provide dispatchable capacity and rapid ramping or to serve facilities while permanent grid connections are being developed.

Manufacturing

The report highlighted that the planned North American BESS manufacturing capacity now exceeds 250 GWh.

LG Energy Solution (LGES) is expected to become the largest manufacturer, with 44 GWh of planned nameplate capacity by the end of 2026. The company aims to increase its capacity to more than 100 GWh by the end of the decade.

Tesla shipped its first Megapack units, manufactured with domestically produced lithium iron phosphate (LFP) cells, during the quarter. The company also brought its third Megafactory online in Texas, with an annual nameplate capacity of 50 GWh for Megapacks.

In July, L-H Battery Company, a joint venture between LGES and Honda Motor, produced its first battery cells at its manufacturing facility in Jeffersonville, Ohio. The facility, initially intended for the electric vehicle market, is now manufacturing cells for LGES’ stationary energy storage products.

Samsung SDI plans to begin producing prismatic LFP battery cells in the U.S. in October 2026 and is currently conducting quality validation.

Lithium-ion batteries are expected to continue dominating U.S. BESS deployments. The report forecasts approximately 69 GWh of lithium-ion BESS installations in 2026, with LFP accounting for the majority.

Policy and Tariffs

The report said growing electricity demand from industries such as artificial intelligence is expected to encourage more U.S. states to introduce storage targets and incentives.

Illinois enacted legislation targeting 3 GW of energy storage deployment by 2030, while Virginia introduced procurement requirements exceeding 20 GW for utilities, including mandates for long-duration and distributed storage.

The Federal Energy Regulatory Commission also directed all six major Regional Transmission Organizations and Independent System Operators to justify or reform their large load interconnection tariffs, with implications for data centers and co-located or hybrid energy storage projects.

Starting January 1, the Section 301 tariff on non-electric vehicle lithium-ion batteries imported from China increased from 7.5% to 25%, in addition to the existing 23.4% base tariff.

The report also noted subsequent changes to U.S. trade measures, including the expiry of Section 122 tariffs and new Section 301 investigations.

U.S. installed a record 18.9 GW/51 GWh of energy storage in 2025, increasing 52% YoY.