The US battery energy storage system (BESS) market is experiencing unprecedented growth, driven by declining battery manufacturing costs and surging demand for grid resiliency solutions, according to a new report from Rystad Energy.

After a strong performance in 2024, the sector has kept its momentum in 2025, with installations expected to reach 16 gigawatts (GW) per year by early 2026. This growth comes despite increasing political uncertainty in Washington, where lawmakers are considering rolling back tax incentives for low-carbon energy. So far, grid-scale BESS has remained largely unaffected.

Texas leads, Arizona and emerging markets on the rise

According to de report, Texas has emerged as the top BESS market in the US, with an annual installation rate of 4 GW — matching California’s. However, unlike California, which stabilized last year, Texas expanded its battery inventory from 5 GW to over 7 GW in the past 12 months, signaling continued acceleration in 2025.

But the most significant surge is happening outside the traditional powerhouses. Led by Arizona, battery storage capacity across emerging US markets grew from 3 GW in Q2 2024 to 7 GW currently. Installation rates are keeping pace at around 3 GW per year, and while some construction delays are anticipated, these regions are expected to drive most of the market’s growth through the end of this year and into 2026.

California: Batteries stretching the solar curve

In mature markets like California, batteries are becoming critical during peak demand hours, effectively “stretching” solar generation into the evening. Over the last 90 days, battery systems met 13% of total demand during discharge hours within the California Independent System Operator (CAISO) grid — with peak hour contributions averaging 26% and occasionally exceeding 30%.

In addition, renewable energy’s overall share of CAISO’s demand has also grown from under 30% in 2021 to over 40% in the past 12 months. On some spring days, renewables covered more than 65% of daily demand. Still, winter lows persist, with renewables contributing only 20% to 25% of demand, which means batteries alone can’t fully replace imports or traditional generation — yet.

The limits and promise of battery storage

As both solar PV and BESS capacity expand, Rystad Energy warns that the industry must stay focused on what batteries can — and can’t — solve. While BESS has helped reduce California’s energy import reliance from 27% to 16% in four years, seasonal gaps and peak demand remain challenges. “As energy demand rises in the US due to increasing electrification, grid resilience will be more critical than ever. Batteries are playing a key role, but we also need to be realistic about their limitations,” said Artem Abramov, Head of New Energies at Rystad Energy.

In 2024, the grid-scale BESS market in the US grew by 60%, jumping from 6 GW of new capacity in 2023 to 10 GW installed last year. With a robust pipeline of planned projects, Rystad expects continued momentum, solidifying battery storage as a cornerstone of America’s clean energy transition.