The US energy storage market just posted its strongest Q1 ever, adding more than 2 gigawatts (GW) of capacity across all segments, according to the latest US Energy Storage Monitor from Wood Mackenzie and the American Clean Power Association (ACP).
That makes Q1 2025 the biggest first quarter for energy storage in US history.
The surge was led by utility-scale projects, which accounted for over 1.5 GW of the new capacity, a 57% jump compared to Q1 2024.
Surging energy demand is putting the electric grid under strain,” said John Hensley, SVP of markets and policy analysis at ACP. “The energy storage market is responding to help keep the lights on and support this unprecedented growth in an affordable and reliable way.”
But that momentum is now bumping up against policy uncertainty that could derail growth in the near future.
Indiana shows what’s possible
Energy storage is no longer limited to early-adopter states like California and Texas. In Q1, Indiana added 256 megawatts (MW) of new energy storage, quadrupling its total installed capacity. It now has more than 10 GW of new storage in its interconnection queue, the fifth-largest in the country.
Indiana’s growth is being driven by available land and clear permitting processes, two major barriers in other states.
“We’re now seeing significant deployment in emerging markets like Indiana, while states across the Southwest like Nevada and Arizona continue to expand their energy storage portfolio,” said Noah Roberts, VP of Energy Storage at ACP.
Home battery boom
Residential storage also set a new record, with 458 MW installed in Q1, the most ever in a single quarter. California and Puerto Rico led the way, accounting for 74% of that growth, while Illinois and other emerging markets began to pick up pace.
Trouble on the horizon
Despite a strong near-term outlook, the long-term picture is cloudier. The five-year forecast for utility-scale storage remains solid, but looming changes to federal policy could slash future growth.
If proposed changes to the Investment Tax Credit (ITC) in the House’s reconciliation bill become law, the total storage buildout over five years could fall 27% below the current base case.
- Distributed storage would take the biggest hit, with a projected 46% drop.
- Utility-scale storage could shrink by 16 GW.
The CCI (community, commercial, and industrial) segment has already seen a 42% cut in its five-year outlook, weighed down by tariff risks and slow adoption of California’s NEM 3.0 rules.
The Q1 2025 results demonstrate the demand for energy storage in the US to serve a grid with both growing renewables and growing load,” said Allison Weis, global head of energy storage at Wood Mackenzie. “However, the industry stands at a crossroads, with potential policy changes threatening to disrupt this momentum.”
In the near term, the report expects 15 GW/49 GWh of new storage capacity to be installed across all segments in 2025, with utility-scale installations projected to grow 22% year-over-year. However, the utility-scale segment is at risk for a potential 29% contraction in 2026 due to policy uncertainty.
Bottom line: the energy storage boom isn’t slowing down – yet. But all eyes are on Congress.
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