The U.S. energy storage market continued steady growth in Q3 2025, with 5.3 GW installed nationwide, pushing 2025 year-to-date totals ahead of combined 2024’s installations according to the latest “U.S. Energy Storage Monitor” report released today by the American Clean Power Association (ACP) and Wood Mackenzie. This forward momentum continued despite evolving supply chains and ongoing policy uncertainty.
Overall Q3 installations increased 31% year-over-year, though the market declined 6% compared to Q2 2025’s record highs. The utility-scale storage segment drove growth with 4.6 GW installed in Q3, a 27% increase year-over-year, with 82% of installed capacity concentrated in Texas and California.
The residential storage market continued its expansion for the sixth consecutive quarter, installing 647 MW in Q3, a 70% year-over-year increase. California, Arizona and Illinois led deployments as attachment rates reached new highs. Wood Mackenzie projects Q4 2025 will set a record for the residential sector as customers accelerate installations ahead of the Sec. 25D ITC expiration.
The community, commercial and industrial (CCI) segment installed 33 MW in Q3, down 8% year-over-year. California captured 54% of installations with 17.8 MW, while Illinois emerged as a key growth market alongside Massachusetts, driven by state rebate programs and community storage projects.
“Strong growth in the U.S. energy storage market reflects a simple reality: Meeting rising demand and keeping the grid reliable increasingly requires storage,” said John Hensley, ACP Senior Vice President of Markets and Policy Analysis. “These installations deliver the flexible, reliable grid support America needs today, boosting reliability and keeping power bills in check.”
Although domestic battery manufacturing continues to ramp up to meet new tariffs and non-foreign entities of concern (FEOC) requirements for the ITC, Wood Mackenzie projects near-term supply chain adjustments and constraints will drive an 11% contraction in the U.S. utility-scale storage market in 2026 and an 8% decline in 2027. However, the market is positioned for strong recovery, with double-digit year-over-year growth projected for 2028 and 2029 as domestic manufacturing capacity comes online.
Overall, Wood Mackenzie forecasts nearly 93 GW of storage will be installed across the United States over the next five years. Notably, the utility-scale five-year forecast has increased 15% compared to pre-One Big Beautiful Bill Act (OBBBA) projections, while the CCI segment is projected to grow 23% from 2025 to 2029.
“Despite new federal policies and tariffs, the market fundamentals remain exceptionally strong,” said Allison Feeney, research analyst at Wood Mackenzie. “Continued access to the ITC, cost-competitive domestic cell manufacturing, merchant revenue potential, state policy and load growth are driving our increased five-year outlook.”
California’s Net Billing Tariff (NBT), Massachusetts’ Solar Massachusetts Renewable Target (SMART) 3.0 and Illinois’ rebate programs are sustaining steady CCI deployment through 2029. Meanwhile, the residential segment’s shift toward third-party ownership models — which accounted for 57% of the market in Q3 2025 — is helping to mitigate the impact of the Sec. 25D expiration.
Allison Weis, Global Head of Storage at Wood Mackenzie, said “We’re seeing states step up with innovative programs, grids increasingly reliant on storage for reliability and costs at record lows. The industry’s ability to navigate these challenges and maintain a 15% increase in our five-year utility forecast since the passage of the OBBA demonstrates that storage has evolved from an emerging technology to an essential grid resource.”
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