US will install 500GWh of new energy storage by 2031

US will install 500GWh of new energy storage by 2031, Wood Mackenzie predicts. Meanwhile the biggest quarter on record saw 5.8GW of installations by power and 14.8GWh in energy storage capacity, with 4.9GW in the utility-scale segment of the market, according to Wood Mackenzie.

In Q4 2024, the firm had reported 3.3GW of installs, with the final quarter of last year marking a considerable year-over-year jump.  

As indicated by the above, the rapidly growing US market has seen records broken frequently. Last year's installations had already surpassed 2024's by the time the Q4 2025 edition of the US Energy Storage Monitor was released in December, finding a total of 12.6GW of new storage deployed during the year by the end of Q3 2025.

Speaking last month at an energy industry event in the UK, the global head of energy storage research at a consulting firm said that despite regulatory and policy changes in the US creating some uncertainty, the market has remained strong. This resilience is largely because energy storage continues to benefit from the investment tax credit (ITC), while this incentive has been removed from solar PV and wind.

Other drivers of the record 2025 numbers included low system costs and growing interest in offtake by US utility companies, while the market saw continuing regional diversification: including the two long-established leading markets by state of California and Texas, Wood Mackenzie tracked new projects in 13 US states, two more than in the previous edition of the report.

Tax incentives also drove record performance in the residential segment, albeit in a less positive manner. Last year, 2.7GW of residential installs were completed, a 92% increase from 2024, and this was due in no small part to the phasing out of the ITC for purchased residential systems.

The community, commercial and industrial segment, often abbreviated to commercial and industrial (C&I), remains the laggard despite 16% year-on-year growth from 2024, registering just 95.6MW in 2025. The vast majority of that, 77MW, was installed in Q4.

In a February interview published in two parts as a comparative analysis of US and European market dynamics, and featuring contributions from an EMEA-based energy storage analyst at a consulting firm, Allison Weiss noted that the record-breaking streak is likely to come to an end this year.

"We expect less storage capacity to come online in 2026 than in 2025," Weiss said. "Much of this is because projects were not signed while tariffs were fluctuating. Then, after a major piece of legislation was passed, developers had to move quickly to secure safe harbor status before new restrictions on foreign entities of concern came into effect."

FEOC restrictions, introduced with the OBBA legislation and in effect since 1 January 2026, disqualify energy storage projects from the ITC incentives if their developers and owners receive significant aid from companies based in FEOC nations, including China, the world's main exporter of battery products, materials and components.  

However, the market research firm has since withdrawn its expectation of a near-term market contraction, because a record number of projects began construction in late 2025 to lock in the ITC, making up for a shortfall as activity slowed down mid-year.   

Therefore, even accounting for those challenges and new findings that utility-scale battery system prices went up 23% year-on-year from 2024 to 2025, Wood Mackenzie expects the US market to retain momentum. That momentum to date has led to more than 50GW and 144GWh of installs between 2019 and 2025. Wood Mackenzie has forecasted that between 2026 and 2031, around 500GWh of battery storage will be deployed, which would be 22.5x what was installed in the years 2025-2030.

The firm has established Low, Base and High scenarios for its market expectations.  It predicts that annual installations could surpass 36GW in 2031 under the High scenario in which policy changes are minimal and developers navigate their way through US Treasury guidance on FEOC rules smoothly, while state level policies remain supportive.

However, if the market more closely resembles the Base scenario in which FEOC guidance limits short-term procurement but is more workable long-term, US-China import tariffs remain at similar rates and there is a "slight thaw" in the Federal freeze on permitting projects on public land, it could be closer to 28GW.

In the meantime, in a Low scenario market, restricted by FEOC guidance that constrains battery cell availability and increasingly protectionist import-export policies, among other drivers, the swing downwards could be much greater, according to Wood Mackenzie.