The U.S. grid-scale battery industry so far has cleared a milestone it wasn’t expected to hit until next year. One industry target set early in 2017 had foreseen getting to 35 gigawatts installed by the end of 2025; the market raced past that goal this fall. Installers added 4.7 gigawatts in the third quarter, enough to lift cumulative deployments above 40 gigawatts, Canary Media reported, citing federal market data.
Storage has been elevated from a wind or solar sidekick to a front-line source of capacity, Things ESG, a Connecticut research group on clean investing, said in a report released on Friday: “Batteries formed over half of new renewable additions from July through September, and renewables led all new U.S. capacity in 2025,” according to filings with the Federal Energy Regulatory Commission. The boom has been focused in Arizona, California, and Texas, where overtaxed grids led to a rapid embrace and the writing of a playbook that other regions can follow.
What Factors Catapulted the Early Energy Storage Win
Three currents came together: policy, price, and market rules. The Inflation Reduction Act released a separate investment tax credit for storage, and utility and merchant projects took off. Battery pack prices fell further as a result of lithium iron phosphate and large-scale production. And FERC Orders 841 and 2222 unlocked wholesale markets for batteries and aggregations, allowing flexibility and quick response to become bankable revenue streams.
Operations on the ground confirm the economics. California’s grid operator repeatedly calls upon multiple gigawatts of batteries during the evening ramp, neutralizing the notorious “duck curve” and cutting back curtailment of midday solar, according to CAISO data. In Texas, batteries get an increasing share of revenue from grid ancillary services and peak shaving during ERCOT’s fast-response heat waves. Recent procurements in Arizona are enabling multi-hour capacity to be added prior to summer peaks.
Startups and New Business Models Accelerating Storage
Businesses are racing to chase the surge with new supply and new business models. Redwood Materials, co-founded by former Tesla CTO JB Straubel, is repurposing used EV batteries for second-life grid storage—and finding that many packs heading to recyclers still have a great deal of useful capacity left in them just as demand for utility-scale storage starts to accelerate. The company has said it will deploy 20 gigawatt-hours by 2028 and recently scored $350 million to scale the effort.
Base Power, based in Austin, is putting leased home batteries into a virtual power plant, the type of system that can grow more rapidly than utility procurements—all while reducing customer bills. The startup got $1 billion to grow production and has already installed over 100 megawatt-hours in Texas. Outside the realm of lithium-ion, companies like Sizable Energy, Fourth Power, XL Batteries, and Cache Energy are pressing longer-duration options from sea-based reservoirs to thermal and flow systems in pursuit of cheaper storage across many hours or even seasons.
Grid Reliability and the Data Center Surge
What’s important is early overperformance, because batteries are pulling double duty: storing cheap renewables and shoring up reliability. Analyses from national labs and state regulators have found storage cuts into wind and solar curtailment, stands in for peaker plants during short spikes, and offers a millisecond-frequency response that fossil fleets cannot match without idle costs.
The next battlefield is the Midwest and East, where data centers are mushrooming in part on subsidy-promising trends from PJM and MISO that are bathing their services with expenses. Batteries can postpone substation upgrades, firm local renewable power for campuses, and alleviate congestion while transmission catches up. There can easily be life after California’s resource availability program and ERCOT ancillaries; lessons learned there are already informing utility RFPs east of the Rockies.
Bottlenecks That May Slow Energy Storage Momentum
The interconnection queue is still the largest roadblock. Developers are waiting years for upgrades and studies, and the issue is being exacerbated by a lack of transformers and permitting delays. (This is good for safety but can stretch out timelines without uniformly adopted standards and trained local inspectors.)
Supply chains are proving resilient but not invincible. LFP manufacturing is increasing, but anode materials, electrolyte salts, and power electronics are all experiencing intermittent limitations. Domestic manufacturing credits will provide an assist, and alternative chemistries—sodium-ion, zinc-based, iron flow—are advancing to help spread risk. Meanwhile, states are starting to buy 8–24-hour “long-duration” storage to protect them against multi-day weather events that go beyond the maximum of four hours’ capacity typical battery designs offer.
The Road Ahead for U.S. Grid-Scale Energy Storage
With the pipeline stacking up and financing costs coming down, analysts at companies like Wood Mackenzie and BloombergNEF anticipate double-digit gigawatts of storage connecting to the system every year through this decade. The industry’s next metric won’t be megawatts installed; it will be services delivered—ramping, inertia, and black-start—against the rate of peaker retirements and avoided emissions. Now that it has met 2025 goals ahead of schedule, the industry must prove that it can maintain grid stability as electrification and AI-era loads quicken.
