The U.S. energy storage sector achieved a historic milestone in 2025, with battery energy storage system (BESS) installations reaching 18.9 gigawatts (GW), marking a 52% increase compared to 2024. This data comes from the latest U.S. Energy Storage Monitor report released by the American Clean Power Association (ACP) and Wood Mackenzie.
Record-Breaking Quarterly Performance
The fourth quarter of 2025 had the most installations ever, with 5.8 GW. Utility-scale projects made up most of the quarter, adding 4.9 GW, which is a 31% increase from the same time last year. Deployment spread out geographically, with new installations reported in 13 states, showing that the trend is moving beyond traditional strongholds like California and Texas.
Residential and CCI Segments Show Strong Growth
The residential energy storage segment also reached new highs. In the fourth quarter alone, installations reached 1 gigawatt-hour (GWh), thanks to the end of tax breaks. Residential installations were more than 800 megawatts (MW) for the whole year, which is a 75% increase from the year before. California was the biggest reason for this growth, adding 700 MW more than in 2024. High electricity prices and net billing policies that encourage people to use batteries during peak hours helped. Puerto Rico, Texas, Arizona, and Illinois were also important markets.
Meanwhile, the Community, Commercial, and Industrial (CCI) segment saw record growth, with 77 MW installed in Q4 thanks to good state-level policies.
“The record-breaking energy storage growth seen in 2025 highlights how technology innovation is transforming America’s grid,” said John Hensley, Senior Vice President of Markets and Policy Analysis at ACP. “This momentum, driven by supportive policy and expanding market opportunities, demonstrates that large-scale storage is now a cornerstone of delivering affordable, reliable, and American-made energy in communities nationwide. Continued collaboration across industry and government will be essential to building on this progress and meeting soaring energy demand.”
Outlook: Strong Growth Through 2031
According to Wood Mackenzie’s five-year outlook, the U.S. is expected to install nearly 0.5 terawatt-hours (TWh) of storage between 2026 and 2031 a 250% increase over the previous five-year period. Annual utility-scale additions are projected to double between 2025 and 2030. While residential demand surged in 2025 due to expiring Section 25D tax credits, a slight 2% contraction is anticipated in 2026. The CCI segment is forecast to grow by 39% between 2025 and 2030.
“2025 was a banner year for the energy storage market,” said Allison Feeney, research analyst at Wood Mackenzie. “Declining system costs, supportive policies and growing revenue opportunities have all contributed to the impressive growth over the last six years. We expect this momentum to continue as the technology becomes even more proven and widely adopted.”
Regulatory Uncertainty Poses Risks
Even though things are going well right now, future deployment is still affected by policy and market conditions. Wood Mackenzie thinks that regulatory uncertainty and different demand scenarios could affect 52 GW of potential capacity. If policies and supply chain conditions are good, annual installations could reach 36 GW by 2031 in a high-growth scenario. But a low-growth scenario, caused by trade barriers and lower demand, could cut capacity by 17% compared to the base case.
Allison Weis, Global Head of Storage at Wood Mackenzie, stated, “The market trajectory is strongly upward, but large load buildout and federal policy will determine whether we reach the high case of 26 GW by 2031 or something more conservative.”
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