U.S. Energy Storage Market Achieves Record Growth in Q1 2025

According to the latest U.S. Energy Storage Monitor, developed by Wood Mackenzie and the American Clean Power Association (ACP), the American energy storage market has seen unprecedented growth in the first quarter of 2025, despite ongoing policy uncertainties. The U.S. energy storage sector added over 2 GW of capacity across all segments during this period, setting a record for Q1 performance. The utility-scale segment led this surge, contributing more than 1.5 GW of new capacity, which marks a remarkable 57% increase compared to Q1 2024.

“Surging energy demand is putting the electric grid under strain. The energy storage market is responding to help keep the lights on and support this unprecedented growth in an affordable and reliable way,” stated John Hensley, ACP’s Senior Vice President of Markets and Policy Analysis. “Policy uncertainty is now one of the most significant risks that remains on the horizon as we tackle a balanced approach to allowing our economy to expand while maintaining the energy reliability that Americans deserve.”

### New Horizons in the Market

The report indicates a growing appetite for grid-scale energy storage across the nation, as utilities, regulators, and communities increasingly integrate this technology into their resource planning. In Q1 2025, states like Indiana showcased the geographical expansion of the market beyond early adopters such as Texas and California. Indiana, for instance, added 256 MW of new storage, effectively quadrupling its operational storage capacity. The state now boasts over 10 GW of new storage in the interconnection queue, making it the fifth largest storage queue in the country.

“We’re now seeing significant deployment of energy storage resources in emerging markets like Indiana, while states across the Southwest like Nevada and Arizona continue to expand their energy storage portfolio,” noted ACP Vice President of Energy Storage, Noah Roberts. “Energy storage was the second most deployed resource in Q1 2025, demonstrating its unique ability to be quickly built to address critical reliability needs.”

The residential storage sector also experienced impressive year-over-year (YoY) growth, installing a record-breaking 458 MW in Q1. California and Puerto Rico accounted for 74% of this growth, while new markets like Illinois are beginning to emerge.

### A Moment of Policy Uncertainty

While the five-year utility-scale capacity forecast remains robust, the segment faces a potential 29% contraction in 2026 due to ongoing policy uncertainties. The community-scale, commercial, and industrial (CCI) segment has seen a 42% reduction in its five-year outlook, grappling with tariff uncertainties and a slower-than-anticipated transition to NEM 3.0 projects in California.

The report warns that potential modifications to current tax credits could have a significant impact on the overall growth of the industry. If access to the Investment Tax Credit (ITC) is substantially diminished, as proposed in the reconciliation bill passed by the House, it could result in a 27% reduction in buildout over the forecast period. The distributed storage segment could be the most affected, with a possible 46% drop from the base case in the next five years. Utility-scale installations could decrease by 16 GW over the same period if tax provisions are altered.

For the near term, the report anticipates that 15 GW/49 GWh of energy storage capacity will be installed across all segments in 2025, with the utility-scale segment projected to grow by 22% YoY.

As the market evolves, ongoing innovation, supportive policies, and strategic planning will be essential to navigate the changing landscape and leverage the tremendous potential of energy storage in the U.S. energy transformation.

“The Q1 2025 results demonstrate the demand for energy storage in the U.S. to serve a grid with both growing renewables and increasing load. However, the industry stands at a crossroads, with potential policy changes threatening to disrupt this momentum,” asserted Allison Weis, Global Head of Energy Storage at Wood Mackenzie. “It’s crucial that policymakers understand the importance of stable, supportive policies for the continued expansion of energy storage.”