Another record-breaking quarter for energy storage in the United States: Wood Mackenzie and the American Clean Power Association (ACP) have determined that 3.3 GW/8.4 GWh of battery energy storage systems were installed in Q1 2026, surpassing the previous Q1 record by 54%. Each market segment hit a new high, according to the latest “U.S. Energy Storage Monitor” report.
Utility-scale activity dominated, with more than 2.3 GW/6.8 GWh installed in the first quarter. Q1 growth was largely driven by 2025 project delays as developers focused on meeting tax incentive eligibility deadlines for pipeline projects in the second half of 2025. Texas, California and Arizona continued to top the charts, but new markets with vertically integrated utilities also gained traction, particularly in Michigan and Georgia.
The community, commercial and industrial (CCI) sector installed 97.7 MW in Q1 2026 (up 27% quarter-over-quarter), driven by California’s 75 MW. Continued growth is expected in the Illinois, Maryland, Massachusetts and New York community storage markets, with over 215 MW in the collective project pipeline.
The residential segment installed a record 1.3 GWh in Q1 2026, up 86% year-over-year and 5% quarter-over-quarter, with volumes buoyed by an overflow of installations initiated at the end of 2025 to capture the expiring Section 25D tax credit. California, Texas, Hawaii and Arizona had the largest QOQ increases in storage capacity deployed in the first quarter.
“The industry is delivering on what the market needs — fast, flexible power that supports load growth, resource adequacy, and a modern grid,” said John Hensley, SVP of Market and Policy Analysis at ACP. “These record-breaking battery storage installations underscore the critical role storage plays in maintaining grid reliability and the strong value that utilities, corporate purchasers, and grid operators see in the technology.”
Battery energy storage system installations are projected to reach 200 GW/655 GWh of cumulative installed energy storage capacity by 2031, driven mainly by the utility sector, which will make up 85% of installations between 2026 and 2031.
“Co-location and contracting with large loads will be a key market driver for the foreseeable future,” said Allison Feeney, research analyst at Wood Mackenzie. “Utility-scale is poised for the most explosive expansion, but the CCI market will grow a steady 26% by 2031 as well. Despite a strong start to the year, we do see residential contraction 5% in 2026, due to constraints in tax equity availability, and updated permitting rules.”
Credit: Primoris Renewable Energy
With foreign entity of concern (FEOC) restrictions now in force, the challenge of securing FEOC-compliant equipment and safe harbored capacity will be a critical developmental bottleneck over the next two-to-four years.
Allison Weis, Global Head of Storage at Wood Mackenzie, said: “Developers with mature pipelines and available capital rushed to safe harbor their pipelines in late 2025 and will now work to secure long-term supply agreements with domestic manufacturers for the rest of their pipeline. Lower tier developers either face acquisition or turn to low-cost Chinese OEMs. Battery energy storage cell manufacturers will work to secure limited FEOC-compliant cell components to qualify for the 45X tax credit, a key factor in maintaining cost competitiveness with China.”
Sensible trade policies that support rather than undermine supply chains can enable domestic supply chain development. ACP’s annual “State of Clean Energy Manufacturing” report found that most of the critical battery storage supply chain could be domestically supplied by the end of the decade, based on facilities currently under construction and announced investments.
News item from WoodMac
