Energy Storage’s Vital Role Endures Amid IRA Uncertainty

Whatever happens with the IRA, energy storage is here to stay
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The electric grid requires flexibility, speed, and stability, and energy storage delivers all three.

Published July 1, 2025
By Arun Muthukrishnan

In August 2022, the Inflation Reduction Act (IRA) was enacted, sparking a wave of optimism in the renewable energy sector. With over a decade of experience in utility-scale development and having worked on more than a gigawatt of solar and hundreds of megawatts of battery energy storage projects, I witnessed firsthand how the IRA transformed discussions in boardrooms, procurement strategies, and financial modeling. For the first time, standalone storage gained a stable federal foothold, which created unprecedented momentum.

However, as uncertainty around the IRA’s future grows due to political shifts, a pressing question arises within our industry: Can energy storage maintain its crucial role in decarbonizing the grid without federal support? Based on my observations during permitting meetings and negotiations for proposals, I firmly believe the answer is a resounding yes.

### Storage was never just about subsidies

The notion that the IRA is the sole driver behind the rise of energy storage is a convenient but misleading narrative. Storage has been a solution in search of a market for the past decade; what has changed is the surrounding context—renewable energy penetration, aging grids, demand volatility, and increasing grid interdependencies. These factors make storage essential rather than optional.

Prior to the IRA, I worked on projects in Texas and California that were economically viable based solely on merchant revenue and avoided curtailment. For instance, one of my earliest storage projects in Texas did not qualify for investment tax credit support, yet the business case remained strong due to energy arbitrage and ancillary services. The market demand was, and continues to be, compelling.

### Grid realities surpass federal politics

The need for flexible capacity is dictated by physics, not policy. As we integrate more solar and wind into the grid, the demand for responsive, dispatchable capacity to balance supply and demand increases. This need persists regardless of whether a tax credit is in place.

Take the California Independent System Operator (CAISO) as an example. In the summer of 2020, rolling blackouts highlighted that variable renewables alone cannot ensure reliability. Since then, energy storage has become a cornerstone of California’s long-term resource planning. I was directly involved in a 200 MW/800 MWh project in Southern California that succeeded due to the alignment of local authorities, fire marshals, and utilities—not because of IRA incentives, but because the grid required it.

In ERCOT, despite lacking a capacity market, storage thrives on market volatility. We have witnessed pricing events where storage entities earn their entire yearly revenue in just a few hours.

### State-level momentum is unwavering

Federal uncertainty does not equate to the end of support for storage. Many states are reinforcing their commitments. California has mandated the addition of 5,000 MW of new storage, while New York aims for 6,000 MW by 2030. Even Midwestern states are incorporating storage into their integrated resource plans.

From a developer’s standpoint, this is where the action is. My teams engage closely with municipalities, utilities, and permitting bodies. When we meet stakeholders in places like Carson, California—where I led permitting for a significant project—no one inquires about the IRA’s future. Instead, they ask, “How can we ensure this project is safe, timely, and resilient?”

### Buyers are driving demand

Utilities are not the only purchasers of energy storage anymore. Corporate power purchase agreements, especially from data center operators and large industrial firms, are driving unprecedented demand for renewable-backed firm power. Companies like Google, Amazon, and Meta are not influenced by policy changes; they operate under decarbonization mandates that are integral to their business models and investor commitments.

I recently participated in negotiations with a major corporate buyer evaluating battery storage, not just for energy optimization but also for backup during regional outages. That discussion focused entirely on business continuity rather than tax credits.

### Technology has surpassed policy

Another reason for my optimism is that the pace of advancements in storage technology exceeds the policy cycle. In 2017, lithium ferrophosphate (LFP) batteries were just emerging; today, they dominate procurement due to their safety, affordability, and supply chain reliability. Additionally, emerging technologies such as iron-air, zinc-based, and flow batteries are entering utility-scale pilot phases. These advancements represent the future of long-duration storage, regardless of the IRA’s status.

In a recent cost analysis, we found that even with the investment tax credit removed, LFP-based systems with a 4-hour duration remain competitive with gas peakers in certain markets. This trend is not coincidental; it is the outcome of scale, innovation, and intense global competition driving down costs.

### National resilience necessitates storage

Beyond economic and policy considerations, storage is increasingly recognized as a national security asset. Our grid faces numerous risks, including wildfires, hurricanes, and cyberattacks. Energy storage is being integrated into resilience hubs, emergency response infrastructures, and even Department of Defense installations. When we design projects today, we often consider not just the return on investment but also the “value of resilience.”

I recall a stakeholder meeting with a coastal California municipality where we discussed microgrid designs capable of isolating a fire station and a school. Their funding stemmed from the Federal Emergency Management Agency, not the IRA. Their primary motivation? Ensuring community safety.

### What developers and policymakers must do now

If IRA support diminishes or vanishes, the energy storage industry must take proactive steps to sustain momentum:

– Advocate for stable state-level frameworks that ensure clarity on interconnection, permitting, and compensation for services such as frequency regulation and spinning reserve.
– Standardize permitting and fire code compliance (e.g., NFPA 855) to minimize project delays. I have witnessed projects delayed by more than six months due to ambiguous setback or horn-strobe requirements.
– Educate local stakeholders—beyond policymakers, including communities—about the safety and benefits of storage. Opposition often stems not from ideology but from fear of the unknown.
– Diversify technology portfolios to adapt to shifts in supply chains and duration requirements. Hybrid systems (solar + storage) are no longer one-size-fits-all.

To be clear, the IRA was a game-changer. It accelerated deal-making, mitigated financing risks, and opened new avenues. However, the value proposition of energy storage extends well beyond subsidies.

Having negotiated land leases, engineering contracts, and fire code variances, witnessed battery price reductions, and discussed safety with city officials, I can confidently assert that energy storage is here to stay. Whether or not the IRA continues, the future grid demands flexibility, speed, and stability—qualities that energy storage provides. It is not merely a policy trend; it is a fundamental component of America’s energy transition.