The U.S. installed a record 18.9 GW/51 GWh of energy storage in 2025, increasing 52% year-over-year (YoY), according to a report by Wood Mackenzie.

In the fourth quarter (Q4) of 2025, the U.S. set a quarterly record for deployed storage capacity, at 5.8 GW/14.8 GWh.

The country has installed more than 50 GW/144 GWh of energy storage since 2019. Average annual storage installations grew 107% on a megawatt-hour basis during the last six years. This increase was driven by declining system costs, supportive federal policies, and growing revenue opportunities.

Utility-Scale

The utility-scale segment installed over 16 GW in 2025, supported by tax credits, low system costs, and utility offtake. Utility-scale storage was installed across 22 states during the year, with deployment in 13 states in just Q4.

During the quarter, the utility-scale segment continued to grow with 4.9 GW installed, an increase of 31% YoY. This growth was driven by an expansion into emerging markets.

Community, Commercial, and Industrial (CCI)

The CCI segment installed 95.6 MW in 2025, growing 16% YoY from 2024.

In Q4, the CCI segment reached 77 MW, supported by state-level policies that expanded community-storage opportunities.

California installed the highest capacity of the quarter, at 45 MW. The state is expected to sustain this growth through 2026, supported by the net billing tariff compensation structure, which incentivizes storage. New Mexico installed 5.9 MW in Q4. Both states witnessed record installations.

Residential Market

The residential storage market installed a record 2.7 GW in 2025, rising 92% from 2024.

California led in yearly growth, installing 700 MW more than the previous year. The state’s installation growth was driven by high retail rates and continued implementation of the net billing tariff. Puerto Rico, Texas, Arizona, and Illinois came in second, third, fourth, and fifth.

In Q4, storage installations exceeded 1 GWh per quarter as the expiring investment tax credit (ITC) accelerated year-end demand. The residential market installed over 800 MW in 2025, a 75% YoY growth during the quarter.

Outlook

The U.S. is expected to add approximately 500 GW of storage between 2026 and 2031, representing a 250% increase over the 2020 to 2025 period.

The utility-scale segment is projected to grow at an average annual rate of 16%, supported by federal incentives and rising peak demand. This increase will be driven by continued access to the ITC, expected domestic cell manufacturing capacity, and large load growth.

Wood Mackenzie does not expect a significant near-term market contraction in this segment, given the record-breaking construction that commenced during the year. These projects need not comply with the supply-chain restrictions introduced under the One Big Beautiful Bill Act (OBBBA).

CCI installations are forecast to rise 39% from 2025 to 2030. This growth will be driven by state programs, tax credits, and grid requirements.

Installations in the CCI segment are projected to decrease slightly in 2026 as community projects in Illinois shift their commercial operation dates. However, overall growth will continue, supported by ITC policies, falling system costs, and interest in stand-alone storage.

Emerging markets such as New Mexico and Connecticut are expected to help with diversification. States like California, Massachusetts, and New York will continue to anchor near-term CCI storage growth.

Residential storage saw significant performance in 2025 as customers took advantage of Section 25D of the ITC, which allowed homeowners to claim a 30% federal tax credit on the total cost of installing solar, geothermal, and battery storage systems.

This segment is expected to contract by 2% in 2026 due to the OBBBA. However, this projected decline is a slight improvement over the 6% contraction forecast last quarter.

High versus Low Case Scenarios

Energy storage potential under the high-case scenario could be approximately 20%, or 28 GW higher, than under the base case.

The high-case scenario assumes storage projects will retain access to tax credits, as written in the OBBBA, and that guidance on workable Foreign Entity of Concern (FEOC) provisions will help ease federal headwinds.

These developments can lower trade tensions and provide federal permitting relief, resulting in higher utility-scale deployments at the end of the forecast period.

The high-case scenario also assumes a stronger large-load buildout than in the base case. This is expected to drive further on-site utility-scale storage and higher retail rates, supporting greater deployment of distributed storage.

Further, the scenario includes a favorable state policy. This would lead to successful utility-scale procurements and the expansion of the community storage market.

Under the low-case scenario, Wood Mackenzie expects considerably lower energy storage installations by 2031, approximately 17%, or 24 GW less than under the base case.

The low case assumes that storage can claim full tax credits till 2033, as provided under the OBBBA. However, restrictive FEOC guidance can make access to these credits significantly more difficult.

Protectionist trade barriers can raise system costs, reducing deployments across all segments.

Under the low case, weaker power demand is projected to slow utility-scale storage deployment. Interconnection and permitting delays will also be more pronounced. This will result in fewer installations across all storage segments.

The high and low case scenarios for Q1 2026 differ by 52 GW in projected installations, depending on how policies and demand evolve.

The global energy storage market grew 43% YoY in 2025, adding 106 GW of new capacity worldwide, a significant increase from 73 GW in 2024, according to Wood Mackenzie.

According to BloombergNEF’s Levelized Cost of Electricity 2026 report, the cost of battery storage projects reached all-time new lows in 2025, even as the cost of other renewables saw an increase.