The US installed a record 9.7 GWh of energy storage in Q1 2026, up 32% YoY
Utility-scale projects led growth, while residential and commercial storage deployments declined
Rising AI and data center demand is accelerating investment in long-duration and grid-scale storage systems
The US energy storage industry added 9.7 GWh of new capacity in Q1 2026, marking the strongest 1st quarter on record for the sector, and a 32% year-on-year (YoY) increase, despite ongoing federal policy uncertainty and permitting delays affecting clean energy projects.
According to the latest U.S. Energy Storage Market Outlook Q2 2026 released by the Solar Energy Industries Association (SEIA) and Benchmark Mineral Intelligence, the utility-scale segment remained the main growth driver, accounting for 7.8 GWh of installations during the quarter.
According to the report, 71% of utility-scale storage installed was built in states that voted for President Donald Trump. Texas, Arizona, and California continued to lead the market, while states including Georgia, Iowa, and Mississippi also reported notable deployment growth.
Behind-the-meter (BTM) storage deployments declined during the quarter to 1.91 GWh, primarily due to a drop in residential demand. Residential storage installations fell to 515 MWh, down 35% quarter-on-quarter (QoQ) and 28% YoY, partly due to the expiration of the 25D residential tax credit.
Analysts expect this contraction in the residential segment to continue as the market adjusts to the end of the credits. Nevertheless, they believe the rise in electricity prices across international markets amid the ongoing energy shock could support a better outlook for residential batteries due to improved economics.
“Tax credit and incentive scheme removals often exhibit sharp but temporary downward impacts on deployments. Looking ahead, we expect continued recovery out to 20-30 in the residential storage market,” reads the analysis. The report forecasts 2,024 MWh of annual residential BESS installations in 2026, a 37% YoY decline.
Commercial and industrial (C&I) storage deployments in Q1 2026 also declined to 648 MWh, down from 785 MWh in Q4 2025, even though this was a strong improvement over 419 MWh in Q1 2025.
According to the report, data center growth in the US is driving different energy storage strategies. Along with lithium-ion phosphate (LFP) battery systems for peak shaving, companies such as Google and Meta are investing in ultra-long-duration energy storage (LDES) to support 24/7 carbon-free power. Some are also using a multi-stage battery setup, combining lithium-ion systems for peak shaving outside the facility with high-power uninterruptible power supply (UPS) systems to manage load swings inside facilities.
The report noted that several electric vehicle (EV) battery manufacturers are retooling production capacity toward energy storage, including Ford Motor Company and Ultium Cells. Analysts project that US battery cell manufacturing capacity could exceed 120 GWh if all of the facilities come online as planned (see Ford Enters Utility-Scale Storage With LFP-Based BESS).
Policy and trade developments also continued to shape the sector. Tariffs on imported battery systems and cells increased under Section 301 rules at the start of 2026, while new trade investigations and evolving foreign entity restrictions added uncertainty for manufacturers and developers.
At the state level, several governments introduced or expanded storage targets and procurement programs. New Jersey, Illinois, Virginia, and Nebraska announced measures aimed at accelerating storage deployment and supporting grid reliability.
“Energy storage’s remarkable first quarter only underscores the fundamental values of this technology: it’s insulated from fuel price shocks, keeps electricity costs down, and strengthens grid reliability,” said SEIA Interim President and CEO Darren Van’t Hof.
While rising electricity demand and energy security concerns are increasing the need for storage projects on the one hand, permitting delays in Washington could slow deployment, cautioned Van’t Hof. According to an SEIA analysis, 467 solar and storage projects have permits pending and are vulnerable to politically-motivated delays or cancellations. If federal permitting bottlenecks persist, residential household electricity bills will rise, and China will race ahead of the US in AI leadership, it warns.
“Storage can help America meet rising energy demand and strengthen American energy independence, but only if Washington lets the solar and storage industry build,” stressed the SEIA CEO.
“Energy storage is no longer just for backup, it’s critical energy security infrastructure,” said BESS and Energy Lead at Benchmark Mineral Intelligence, Shan Tomouk. He said supportive battery storage policies will be important for enabling AI and data center growth while limiting cost impacts for consumers.
The report forecasts that cumulative US energy storage installations will reach 613 GWh by 2030, with annual installations expected to surpass 110 GWh by the end of the decade.
The complete report can be purchased from Benchmark Mineral Intelligence on its website.