Following significant growth in 2024, the US battery energy storage (BESS) market is experiencing a nationwide boom this year.
Declining battery manufacturing costs are a key factor in the rapid expansion observed. Rystad Energy forecasts this downward trend to persist for the next five to seven years, driven by continuous design enhancements.
While lawmakers consider rescinding tax incentives for low-carbon energies, creating policy headwinds for renewable energy investment, the grid-scale BESS market is currently unaffected.
Rystad Energy predicts an increase in the installation rate to approximately 16 GW per year by early 2026, indicating a continuation of this growth.
“As energy demand rises in the US due to increased electrification, grid resilience will continue to be critical, with batteries playing a key role in meeting this need, along with both traditional and renewable energy sources,” Artem Abramov, head of new energies at Rystad Energy, said in a release.
In 2024, the US grid-scale BESS market experienced substantial growth, with installations reaching 10 GW. This represents approximately a 60% increase from the 6 GW of capacity added in 2023, according to Abramov.
Planned inventory is a very strong leading indicator of actual capacity additions and we believe this rate of growth will create increased annual battery demand for grid-scale BESS.
States with highest level of BESS market
Texas and Arizona are experiencing the highest growth in the BESS market, while the California market saw stabilization last year.
By 2024, Texas had emerged as the largest US BESS market, with an installation rate of approximately four GW per year, comparable to California’s, according to Rystad Energy.
In the past year, Texas has seen a substantial increase in its BESS inventory, rising from 5 GW to over 7 GW.
This contrasts with California and suggests a probable continued rise in installations throughout the current year in Texas.
“Notwithstanding the growth in Texas, it is the rest of the country that is currently experiencing a BESS boom,’ the Norway-based energy intelligence company said.
Currently, BESS inventory in emerging US markets, led by Arizona, stands at seven GW, a significant increase from the three GW recorded in the second quarter of last year.
Source: Rystad Energy
Batteries becoming significant power source
In established markets, batteries are becoming vital during peak power demand, effectively extending solar energy availability into the evening.
Batteries have fulfilled 13% of the power demand within the California Independent System Operator (CAISO) during their discharge hours over the past 90 days, Rystad said.
Although the trend is new, the days of batteries delivering more than 16% of electricity during discharge hours are becoming increasingly common.
During discharge hours, the average contribution is approximately 13%, but the peak contribution often reaches nearly 30%, it added.
The current 90-day average peak hour contribution has increased by 10 percentage points over the last 12 months, now reaching 26%.
Renewables
“Looking at the share of CAISO power demand satisfied by renewables – mainly solar, wind and hydro – we observed that the annual average increased from less than 30% in 2021 to more than 40% in the last 12 months,” Rystad said.
Renewable energy’s contribution continues to grow, peaking in spring to meet over 65% of daily demand on certain days in 2025, the data showed. However, its winter contribution remains consistent, supplying only 20-25% of demand.
Over the past four years, renewables integration has led to a significant reduction in CAISO’s reliance on energy imports, decreasing from approximately 27% to 16% of total system demand, according to Rystad.
“As both BESS and solar PV installed capacity continue to grow in California, it is important to remember two things in particular: which power system challenges are being addressed by batteries, and what batteries cannot really help with,” Abramov said.
Whether it is theoretically possible to have all renewable plus BESS systems in CAISO and what kind of overbuild – and economic implications for project developers and end consumers – will be associated with it remains to be seen.
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