Join us as we take a look at the shifts that defined the energy storage industry in 2025 & what we can expect as we head into 2026!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
If you asked industry analysts at the start of 2025 what the year held for energy storage, the forecast would have been swirling with uncertainty. Faced with a new administration, looming tariffs, and the threat of repealed tax credits, the domestic battery sector braced for impact. However, looking back now, 2025 wasn’t a time of retrenchment; rather, it was the year energy storage decoupled from broader renewables to become the “unexpected winner” of the U.S. energy transition.
As we close the book on a rollercoaster 12 months, the numbers tell a story of resilience and impressive growth. Global energy storage additions surged 23% year-over-year, hitting a record 92 gigawatts (GW). In the U.S., operational large-scale battery storage surpassed 38 GW by mid-year, with battery storage overtaking solar as the leading technology in some regions for the first time.
Here is a look at the shifts that defined 2025 and what we can expect as we head into 2026.
The Policy Pivot: Surviving the “One Big Beautiful Bill”
The most significant shift of 2025 was political. The industry began the year fearing that the Trump 2.0 administration’s trade policies and budget cuts would halt momentum. Early cancellations of greenfield manufacturing facilities by companies like Kore Power and Freyr Battery seemed to confirm these fears.
However, the narrative evolved in July with the passage of the GOP’s “One Big Beautiful Bill” (OBBB). While the legislation accelerated the phase-out of wind and solar tax credits, it largely spared energy storage. The investment tax credits (ITC) for standalone storage remain intact through 2033, signaling policymakers’ recognition that batteries are no longer just an accessory to green energy and renewables: they are essential infrastructure for grid reliability, energy independence, and national security.
The Great Decoupling: Batteries vs. EVs
For years, the stationary storage market was riding the coattails of the EV industry, competing for leftover lithium-ion supplies that were largely absorbed by the automotive sector. In 2025, that dynamic shifted mightily.
With EV demand softening and federal EV tax credits stripped away by the OBBB, manufacturers found themselves with overcapacity. The result? A significant pivot toward other market segments, including stationary energy storage. Major automakers like Ford and GM, along with recyclers like Redwood Materials, began reallocating manufacturing lines from EVs to grid-scale battery systems.
This overcapacity, combined with lower raw material costs, drove prices to historic lows. The average price for lithium-ion battery packs fell 8% to $108/kWh in 2025. More shockingly, prices for stationary storage specifically plummeted 45% to just $70/kWh, making it the lowest-priced segment in the battery market for the first time.
From new trade policies & budget cuts to rising power demands of AI data centers, 2025 has been a year full of major shifts for the energy storage industry.
Even so, the energy storage industry faces a significant transitional year as we enter 2026.
The New Driver: Artificial Intelligence and the Quest for Power
In 2025, the primary driver for storage deployment shifted from merely balancing solar energy cycles to feeding the immense energy needs of AI.
Data center power demand is projected to rise 17% by 2026, creating an urgent need for reliable, around-the-clock power. Tech giants and hyperscalers are no longer waiting for utility upgrades; they are deploying behind-the-meter (BTM) batteries to bypass interconnection bottlenecks that create challenges. Batteries are now being viewed as a complementary resource to gas, for example, offering superior speed to market.
Looking Ahead: What 2026 Holds
As we enter 2026, the industry faces a significant transitional year. Here are the key trends to watch:
The “Foreign Entity” Regulations: New Foreign Entity of Concern (FEOC) rules begin their rollout on January 1, 2026. To qualify for tax credits, projects will face strict limits on Chinese-manufactured components. While this presents a sizable hurdle in the short term, it is also driving reshoring and domestic manufacturing. Analysts suggest that ramping production from South Korean firms (LG, Samsung, SK On) and U.S. integrators may soon allow the U.S. to meet domestic demand without relying on Chinese imports.
Longer Duration Becomes the Norm: The era of the 2-hour battery is fading. To compete directly with peaker plants and support 24/7 data centers, the market is moving toward 6-to-8-hour duration systems. The rapid decrease in costs for LFP batteries changes the narrative on their use being solely limited to under 4 hours. This shift is also creating an opening for non-lithium technologies, such as sodium-ion batteries, which are rapidly nearing the scale needed for commercial viability.
Grid Modernization as the Bottleneck: It is no secret that domestic grids are ailing. The technology is ready, and the resource investment is there, but still, the grid is struggling to keep up. In 2026, the primary constraint on growth won’t be battery cost: it will be interconnection. Expect to see utilities utilizing distributed storage (batteries at local businesses or substations) to bypass the need for massive transmission upgrades.
If 2025 taught us anything, it is that energy storage has graduated from a “nice-to-have” renewable accessory to a “must-have” grid asset.
Think of the grid like a human spine. For decades, it was rigid, designed only to transmit power from central plants to homes. In 2025, batteries became the cartilage of our metaphorical spine, or the flexible, shock-absorbing layer that allows us to twist, bend, and carry heavier loads (like AI) without snapping. Even as political winds shift and tariffs grip our new geopolitical reality, the U.S.’s foundational structural needs will ensure that the battery boom is just getting started.