The U.S. energy storage market maintained steady growth in the third quarter of 2025, with 5.3 GW of new capacity installed nationwide, according to the latest U.S. Energy Storage Monitor report released by the American Clean Power Association (ACP) and Wood Mackenzie. Year-to-date installations in 2025 have already exceeded the total capacity installed during all of 2024.

Overall installations in Q3 increased 31% year-over-year, although the market declined 6% compared to the record-high levels reached in Q2 2025. Utility-scale projects continued to lead the market, accounting for 4.6 GW of new capacity in the quarter, a 27% increase compared to the same period last year. Texas and California dominated deployments, representing 82% of installed utility-scale capacity.

Residential energy storage also recorded continued expansion for the sixth consecutive quarter, with 647 MW installed in Q3, marking a 70% year-over-year increase. California, Arizona, and Illinois led residential deployments as attachment rates reached new highs. Wood Mackenzie expects Q4 2025 to set a new record for the residential segment, driven by accelerated installations ahead of the expiration of the Section 25D tax credit.

In contrast, the Community, Commercial and Industrial (CCI) segment installed 33 MW in Q3, an 8% decline year-over-year. California accounted for 54% of CCI installations, totaling 17.8 MW, while Illinois emerged as a key growth market alongside Massachusetts, supported by state rebate programs and community storage initiatives.

John Hensley, ACP Senior Vice President of Markets and Policy Analysis, said the growth reflects increasing reliance on storage to meet rising electricity demand and maintain grid reliability, noting that storage provides flexible and reliable grid support.

Looking ahead, Wood Mackenzie projects an 11% contraction in the U.S. utility-scale storage market in 2026 and an 8% decline in 2027, driven by near-term supply chain adjustments related to new tariffs and non-foreign entities of concern requirements for the Investment Tax Credit. However, the market is expected to recover strongly in subsequent years, with double-digit growth projected for 2028 and 2029 as domestic manufacturing capacity expands.

Over the next five years, nearly 93 GW of energy storage capacity is forecast to be installed across the United States. The utility-scale five-year outlook has increased by 15% compared to projections made before the One Big Beautiful Bill Act, while the CCI segment is expected to grow by 23% between 2025 and 2029.

According to Wood Mackenzie, strong state-level incentive programs are helping to offset federal policy uncertainty. California’s Net Billing Tariff, Massachusetts’ SMART 3.0 program, and Illinois’ rebate schemes are supporting steady CCI deployment through 2029. In the residential sector, the growing adoption of third-party ownership models—representing 57% of the market in Q3 2025—is mitigating the impact of the Section 25D tax credit expiration.

Allison Weis, Global Head of Storage at Wood Mackenzie, highlighted that state initiatives, declining costs, and increasing grid dependence on storage are reinforcing the sector’s resilience, positioning energy storage as a critical component of the U.S. power system.

Recent market developments include Wisconsin installing 210 MW across Q2 and Q3 through its first large-scale storage projects, Puerto Rico leading quarter-over-quarter residential growth driven by resilience needs, and North Carolina and Arizona setting new quarterly residential installation records in Q3 2025.