US grid-scale BESS market could shrink by almost a third in 2026, Wood Mackenzie says

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The US battery energy storage market is projected to face a significant contraction, with deployments potentially decreasing by 29% in 2026 due to ongoing policy uncertainties, according to Wood Mackenzie. Their latest report highlights that while the first quarter of 2025 saw record deployments across utility-scale, commercial, and distributed energy storage, the future remains precarious as proposed policy changes could severely impact growth. The report coincided with discussions surrounding a budget reconciliation act that threatens to cut tax credits for renewable energy sources, including solar and wind, which could further destabilize the market.

Despite the current challenges, the energy storage sector demonstrated resilience in Q1 2025, achieving 2GW of installations, with notable growth in states like Indiana. However, the potential removal of investment tax credits (ITCs) could lead to a drastic reduction in expected grid-scale additions over the next five years, particularly affecting commercial and residential storage segments. Experts emphasize the need for stable and supportive policies to ensure the continued expansion of energy storage, which is essential for meeting the growing electricity demand and maintaining grid reliability in the US.