U.S. Battery Market Sees Strong Growth Despite Near-Term Hurdles

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)

Summary
Battery energy storage system deployments in the U.S. continue to rise sharply, but federal policies and other uncertainties cloud the outlook for the next few years. A trio of recent reports agree the long-term future is bright.

Recent Policy Uncertainties Cloud Near-Term Outlook for BESS
Just as the outlook for battery energy storage systems (BESS) in the U.S. was starting to brighten, fresh uncertainties were thrown over the industry in October with President Donald Trump's imposition of 100% tariffs on Chinese imports and the Department of Energy's reported decision to cancel about $700 million in funding for battery projects.

It's too early to say with certainty how these two steps will affect what has been torrid growth for the BESS sector in the U.S. And BESS' domestic growth trajectory could be affected in various ways in the near term, including:

• Trump's original 20% tariffs on Chinese goods, imposed in February and increased in April, was done pursuant to the International Energy Economic Powers Act (IEEPA). His actions are being challenged at the U.S. Supreme Court, which is scheduled to hear oral arguments in November. The administration already lost two lower-court cases on the legality of his actions. For more on that issue, see September 3, 2025, article - Trump Tariffs, and His Economic Agenda, Threatened by Court Decision.
• The 100% tariff slapped on Chinese goods announced by Trump on October 10 was not made pursuant to IEEPA. Rather, it was made in retaliation for China's imposition on export controls on rare earths minerals, which are used in military and civilian applications. This retaliatory tariff, due to become effective November 1, can be waived or trimmed if the president sees fit to do that, or if the U.S. and China can reach a trade accord.
• The BESS industry initially feared that Trump's huge tax and budget bill, signed into law in July, would zero out or sharply curtail tax credits for energy storage. It did not: they will remain in place until 2033.
• However, that tax and budget bill did preserve so-called Foreign Entities of Concern limitations for storage projects when components come from adversarial nations, particularly China, are used in batteries.

IIR Tracking More than 1,200 BESS Projects Under Development in U.S.
Industrial Info Global Market Intelligence (GMI) Power Project Database includes reports on more than 1,200 proposed battery projects in the U.S., valued at about $470 billion. Subscribers can click here for a list of detailed reports. The states with the largest dollar value of proposed BESS projects are Texas, Nevada, Arizona and California.

Click on the image a right to see a graph of the 10 states with the largest dollar value of planned BESS projects.

But limiting that list to projects deemed to have a high probability of beginning construction on time reduces the list to 158 projects, valued at roughly $39 billion. High-probability projects are estimated to have an 81% to 99% probability of beginning construction according to their schedules.

DOE Cancellation of Battery Grants a New Hurdle
The DOE's reported cancellation of about $700 million in BESS and manufacturing grants in October, initially reported by E&E News, means the industry's outlook will remain a least somewhat clouded. The department confirmed the cuts to E&E News but did not issue a press release on them.

The cancelled projects "had missed milestones, and it was determined they did not adequately advance the nation's energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars," DOE spokesperson Ben Dietderich said in a statement to E&E News. He did not specify the milestones that DOE says the projects missed.

Bloomberg NEF Report Upbeat on Battery Industry Ability to Adapt
The moves by Trump and his energy agency follow several reports of a brightening outlook for U.S. BESS deployments.

Bloomberg New Energy Finance (BNEF) said that "federal policy shifts brought uncertainty due to frequent changes in import tariffs and new restrictions on the use of equipment from China. Still, market players are quickly adapting to the new environment, supported by domestic battery manufacturing initiatives by leading Korean firms. With slower-than-expected battery demand for electric vehicles, battery makers are shifting focus to stationary energy storage."

In its analysis, "Global Energy Storage Boom: Three Things to Know," released October 21, it added, "lithium iron phosphate (LFP) remains the prevalent lithium-ion battery chemistry in the stationary energy storage market largely due to its cost advantage and higher cycle life compared to nickel-based lithium-ion battery chemistry."

Report Details U.S. BESS Growth
Another recent assessment of the U.S. BESS market, from consultants Wood Mackenzie and the American Clean Power Association, said the second quarter of 2025 "marked a new high for U.S. utility-scale energy storage with 4.9 gigawatts (GW) of capacity and 15 gigawatt-hours (GWh) of storage." It said it anticipated storage would reach 87.8 GW/261.2 GWh by 2029, driven by residential and utility-scale segments despite policy challenges.

That report, "U.S. Energy Storage Monitor Q3 2025," was released at the end of September, before Trump announced 100% tariffs on Chinese imports. It projected U.S. utility-scale storage installations would drop 10% year-over-year in 2027 but still reach 72GW/259 GWh cumulative installations through 2029. The vast majority of BESS deployments in the U.S. through 2029 are expected to remain utility-scale.

While that report said it expected growth in utility-scale and residential BESS deployments to be robust for the next few years, it noted that growth in community storage projects was expected remained limited due to high costs and policy constraints.

Troutman Pepper Report: Energy Storage a "Winner" in Trump Tax and Budget Bill
Yet another recent report on U.S. BESS market, from law firm Troutman Pepper Locke L.L.P. (Atlanta, Georgia), concluded, "Energy storage may have emerged as the 'winner' from the (new tax and budget law) reckoning, but the Act's FEOC (foreign entity of concern) provisions increase the complexity of project development, at least in the medium term." That report, titled "Brave New World: What's Next for U.S. Energy Storage," also was released in September.

Key Takeaways

• The BESS market in the U.S. continues to grow
• Federal policy may impose some intermediate-term hurdles to growth
• Longer-erm growth prospects remain strong
• The battery industry has shown a high level of adaptability to policy shifts

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).