The U.S. energy storage market achieved historic growth in the first quarter of 2025, exceeding 2 gigawatts (GW) of installations despite ongoing uncertainties surrounding federal fiscal policies and tax credits. This information is based on a collaborative report from energy consulting firm Wood Mackenzie and the American Clean Power Association (ACP).
### Utility-Scale Sector Leads
The utility-scale storage segment saw a remarkable increase, adding over 1.5 GW of capacity, which represents a 57% rise compared to the same quarter in 2024. This makes the first quarter of 2025 the most successful on record for both organizations since they began tracking these figures. John Hensley, Senior Vice President of Markets and Policy Analysis at ACP, noted that while this growth addresses current energy supply challenges, it still faces significant political risks.
Indiana notably quadrupled its operational storage capacity, adding 256 megawatts (MW) in this quarter alone. With an interconnection queue reaching 10 GW, the state now ranks fifth in planned capacity nationwide. The report attributes this growth to land availability and clear local permitting guidelines.
### Growth in the Residential Sector
The residential sector also set a record for the first quarter, installing 458 MW mainly due to contributions from California and Puerto Rico, which together account for 74% of this increase. Additionally, emerging markets like Illinois are beginning to show promise. Noah Roberts, Vice President for Energy Storage at ACP, highlighted a significant geographic diversification with increased projects in Midwestern and Southwestern states, particularly Indiana, Nevada, and Arizona.
### Medium-Term Uncertainties
Despite these encouraging figures, the report warns of growing regulatory uncertainties that could impact medium-term forecasts. The future of the Investment Tax Credit (ITC) is particularly uncertain following the recent U.S. budget bill, which could impose restrictions on energy project developers. A drastic shift in federal fiscal policies might lead to a 29% decrease in the utility-scale installations market by 2026. For the community-scale, commercial, and industrial (CCI) segment, five-year forecasts have been reduced by 42% due to tariff uncertainties and delays in the implementation of California’s Net Energy Metering (NEM 3.0) program.
The report further indicates that distributed storage installations could face the most significant declines due to potential legislative changes, with a projected drop of 46% over the next five years. In this scenario, the utility-scale sector would see a cumulative reduction of 16 GW.
Nevertheless, Wood Mackenzie forecasts a total of 15 GW (49 gigawatt-hours – GWh) of new capacity installations across all segments in 2025, which represents an annual increase of 22% for utility-scale installations. Allison Weis, Global Head of Energy Storage at Wood Mackenzie, emphasized that maintaining stable policy is crucial for sustaining the current growth rate in the sector and adequately addressing the increasing demands on the U.S. electricity grid.
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