The U.S. installed 3.8 GW of storage in the third quarter (Q3) of 2024, an 80% year-over-year increase compared to Q3 2023, according to the Q4 2024 U.S. Energy Storage Monitor by Wood Mackenzie and the American Clean Power Association.

The grid-scale segment achieved 3,431 MW/9,188 MWh in installations, becoming the highest capacity installed in any Q3 on record. Texas and California were responsible for 93% of the grid-scale capacity additions, with Texas tripling its installations compared to the previous quarter and California leading in the total MWh capacity, recording 5,992 MWh.

The residential storage segment also set a record with 346 MW installed, representing a 63% increase from Q2 2024. California accounted for 62% of residential installations, experiencing a 56% quarter-over-quarter increase. Installations in Arizona and North Carolina rose 73% and 100%, respectively, driven by declining battery costs, solar export incentives, and programs such as North Carolina’s Duke PowerPair initiative. Despite supply chain challenges, the residential market achieved a record-high national attachment rate of 28%.

The Commercial, Community, and Industrial (CCI) market remained steady, with 29 MW installed during Q3. California’s CCI segment achieved only 10 MW in installations compared to 14.4 MW in the previous quarter. Approximately 9% of installed capacity in this segment was in Net Billing Tariff projects.

The total grid-scale capacity forecast over the next five years has increased by 2% compared to the Q2 2024 projections. While the 2024 volume has reduced by 5%, consistent growth is expected from 2025 onwards, driven by new projects and the delayed capacity from previous forecasts.

Distributed storage is expected to reach 12 GW over the same period. The residential segment is projected to contribute 80% of this capacity as demand for backup power grows and costs decline continuously. The CCI market is forecasted to grow by 294%, although interconnection challenges in regions like the Northeast may constrain progress.

Despite the strong outlook, policy and economic factors could pose challenges, according to the report. Section 301 tariffs on lithium batteries from China are set to increase from 7.5% to 25% in 2026, with a proposed 60% tariff on all imports from China potentially raising turnkey grid-scale storage costs.

These measures could disrupt supply chains and increase costs, while uncertainties surrounding the continuation of investment tax credits (ITC) and bonus adders may impact project economics. The industry is also preparing for potential price increases exceeding 10% by 2026 in case of additional tariffs.

Even in a severe downside scenario—such as eliminating ITC adders, transferability, direct pay options, and earlier phase-outs of manufacturing tax credits—the U.S. energy storage market is expected to maintain steady growth, however, at a slower pace. Wood Mackenzie projects annual storage additions to average a 10% growth rate between 2025 and 2028 as early-stage development constraints ease and new opportunities emerge.

The report noted that while challenges remain, including policy uncertainties and supply chain constraints, the U.S. energy storage market is poised for long-term growth, supported by increasing demand for renewable integration, backup power solutions, and declining costs. With a cumulative forecast of 63.7 GW/222 GWh of grid-scale storage by 2028, the sector is set to play a pivotal role in the nation’s energy transition.

Wood Mackenzie reported that the U.S. solar industry installed 8.6 GWdc capacity in Q3 2024, marking a 21% year-over-year increase.