Residential Storage Surges 70%! Latest US Energy Storage Market Report

According to the latest "US Energy Storage Monitor" report jointly released by the American Clean Power Association and Wood Mackenzie, the US energy storage market maintained steady growth in the third quarter of 2025, with 5.3 GW of new installations nationwide. This brings the cumulative installations for 2025 to date exceeding the total for the entire year of 2024. Despite ongoing supply chain evolution and policy uncertainties, this growth momentum continues.

Overall installations in the third quarter of 2025 grew 31% year-over-year but declined 6% compared to the record high set in the second quarter of 2025. The utility-scale storage segment was the primary driver of growth, adding 4.6 GW in the third quarter—a 27% year-over-year increase—with 82% of the capacity concentrated in Texas and California.

The residential storage market has expanded for the sixth consecutive quarter, with 647 MW installed in the third quarter, representing a 70% year-over-year growth. California, Arizona, and Illinois led in deployments, with system attachment rates reaching new highs.

Wood Mackenzie anticipates that the residential storage market will set a new quarterly record in the fourth quarter of 2025, as customers rush to install ahead of the expiration of the Section 25D Investment Tax Credit.

The community, commercial, and industrial (C&I) storage segment installed 33 MW in the third quarter, down 8% year-over-year. California accounted for 54% of the market share with 17.8 MW, while Illinois emerged as a key growth market, driven by Massachusetts' influence through state-level rebate programs and community/ residential storage project support.

John Hensley, Senior Vice President of Market and Policy Analysis at the American Clean Power Association, stated: "The robust growth in the US  residential storage market reflects a simple reality: Meeting growing demand and maintaining grid reliability increasingly requires energy storage support. These installations provide the flexible, reliable grid support needed in the US today, enhancing reliability and controlling electricity costs."

US domestic battery manufacturing is accelerating to meet new tariff policies and "Foreign Entity of Concern" requirements for investment tax credits. Nevertheless, Wood Mackenzie predicts that recent supply chain adjustments and restrictions will lead to an 11% contraction in the US utility-scale storage market in 2026, followed by an 8% further decline in 2027. However, as domestic capacity comes online, the market is expected to rebound strongly in 2028 and 2029, returning to double-digit year-over-year growth.

Overall, Wood Mackenzie forecasts nearly 93 GW of energy storage systems to be installed across the US over the next five years. Notably, compared to pre-Inflation Reduction Act projections, the five-year forecast for utility-scale storage has been revised upward by 15%, while the C&I segment is expected to grow 23% from 2025 to 2029.

Allison Feeney, Research Analyst at Wood Mackenzie, commented: "Despite new federal policies and tariffs, market fundamentals remain exceptionally strong. Continued investment tax credit opportunities, cost-competitive domestic battery manufacturing, market-based revenue potential, state-level policies, and load growth have collectively driven the upward revision in our five-year forecast."

California's net billing tariff policy, Massachusetts' Solar Massachusetts Renewable Target (SMART) 3.0 program, and Illinois' rebate policies will support stable deployments in the residential storage segment through 2029.

Meanwhile, the residential storage segment is shifting toward third-party ownership models—which accounted for 57% of the market in the third quarter of 2025—helping to buffer the impact of the Section 25D policy expiration.

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