US Energy Storage Hits 18.9 GW—A 52% Surge

The numbers are hard to ignore. The United States installed 18.9 GW and 51 GWh of energy storage capacity in 2025—a 52% jump over 2024 levels. To put that in perspective: it took the country from 2019 to 2022 to build its first meaningful storage base, and it just added more in a single year than most analysts thought possible three years ago.

This isn't momentum. It's acceleration.

Wood Mackenzie's quarterly Energy Storage Monitor captures the full picture, and what it reveals is a market that has crossed from "emerging" to "essential"—fast. The fourth quarter alone set an all-time quarterly record with 5.8 GW and 14.8 GWh deployed across all segments. Since 2019, cumulative US storage installations now exceed 50 GW and 144 GWh. Average annual installations have grown 107% on a MWh basis over those six years.

That last figure matters more than the headline number. Doubling every year, on average, isn't a trend. It's a structural shift in how the grid gets built.

What's Driving the Surge

Three forces are converging to push storage deployment at this velocity: federal policy, falling system costs, and a deepening pool of revenue opportunities for project developers.

Federal investment tax credits have been the clearest accelerant. The Section 48 ITC for standalone storage gave utility-scale developers a durable incentive structure that banks and tax equity investors could underwrite. Meanwhile, the Section 25D residential ITC—which expired at the end of 2025—created a pull-forward effect that inflated residential numbers heading into year-end. More on that in a moment.

Declining system costs have done the quiet work that policy alone never could—making storage economically viable in markets where subsidies aren't enough on their own. Offtake agreements between project developers and utilities have also matured significantly, giving lenders the revenue certainty they need to close project finance. The combination of these three elements explains why growth spread to 22 states for utility-scale storage in 2025—not just the California-Texas duopoly that dominated earlier years.

The domestic manufacturing transition is another variable worth watching. The shift toward US-made battery cells, accelerated by FEOC (Foreign Entities of Concern) guidance under the IRA, is expected to reshape supply chains over the next five years. For developers sourcing product today, that transition creates near-term procurement complexity—but longer term, it reduces geopolitical risk in a sector where Chinese supply chain dominance has always been a vulnerability.

Utility-Scale vs. Residential: Two Very Different Stories

Utility-scale storage was, as expected, the engine of 2025 growth—16 GW for the full year, with 4.9 GW deployed in Q4 alone. The pipeline behind that installed base is enormous: 152 GW of projects in development databases and 530 GW sitting in interconnection queues as of Q4 2025.

That 530 GW figure deserves a moment of attention. Interconnection queues are notoriously leaky—a large percentage of queued projects never get built. But even if only 20% of that pipeline reaches commercial operation, it represents a decade of transformative infrastructure buildout. The bottleneck isn't demand or capital—it's grid interconnection, permitting, and the physical capacity to execute at this scale.

Utility-scale growth is projected to continue at 16% annually through 2031, supported by load growth from data centers, EV adoption, and industrial electrification. Peak power demand—the hours when grid stress is highest and storage earns its keep—is the fundamental economic engine here.

The residential story is more complicated. The segment installed 2.7 GW in 2025, a 92% increase over 2024. California led, adding 700 MW more than the prior year. Puerto Rico, Texas, Arizona, and Illinois rounded out the top growth markets.

But that 92% growth came with an asterisk: much of it was a deadline-driven sprint to capture the expiring Section 25D ITC before December 31, 2025. The result is a hangover. Wood Mackenzie forecasts residential storage will contract by 2% in 2026. Notably, that's an improvement from their earlier projection of a 6% contraction—interconnection backlogs and the rise of third-party ownership models (think: leased systems rather than purchased) are cushioning the fall. Still, any developer or installer who built their 2026 business plan around 2025 residential run rates is going to have a difficult year.

The community-scale, commercial, and industrial segment (CCI) was the quietest performer—95.6 MW for the year, up 16% from 2024. California dominated, with New Mexico beginning to emerge. The CCI segment faces a temporary dip in 2026 due to project timing shifts in Illinois, but a 39% growth projection from 2025 to 2030 reflects real underlying demand once state-level policy frameworks mature.

What the Next Five Years Look Like

Wood Mackenzie projects the US will add 500 GWh of storage capacity between 2026 and 2031—250% more than the country built in the entire 2020–2025 period. That's not a forecast that assumes everything goes right. It's a base case built on existing policy frameworks, signed offtake agreements, and observable load growth trends.

The range of outcomes, however, is wide. High- and low-deployment scenarios differ by 52 GW—a gap driven primarily by three uncertainties: how fast load actually grows, how trade policy evolves (particularly around Chinese battery components), and what final FEOC guidance looks like in practice.

For infrastructure investors and developers, that 52 GW range isn't a reason to wait—it's a reason to build flexibility into project structures now.

What This Means for Infrastructure Developers and EPC Contractors

A market adding 16+ GW of utility-scale storage annually doesn't just need batteries. It needs land, transmission access, labor, and the project management infrastructure to turn sites into operating assets.

Land selection for battery storage projects has become meaningfully more complex as the market has matured. Proximity to substations, transmission headroom, and avoiding sites that trigger expensive environmental reviews are now first-order considerations—not afterthoughts. As growth spreads to new geographies beyond California and Texas, developers are navigating land markets they've never worked in before.

For EPC contractors, the volume opportunity is significant, but execution risk is rising in parallel. Supply chain disruptions, labor constraints in emerging markets, and the ongoing transition toward domestic cell manufacturing all create project delivery variables that weren't present three years ago.

The residential installation channel faces a different challenge: surviving a 2026 contraction year while positioning for the long-term growth that third-party ownership models and grid services revenues will eventually unlock.

Five hundred gigawatt-hours over six years requires thousands of projects, hundreds of thousands of acres, and an execution capability the US infrastructure sector is still building in real time. The capital is there. The policy framework, for now, is intact. The question is whether the development and construction ecosystem can scale fast enough to meet a market that isn't waiting for anyone to catch up.

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[INTERNAL LINK: federal investment tax credits]

[INTERNAL LINK: utility-scale storage growth]