Why the American battery boom is on shaky ground

As energy bills rise and power companies struggle to keep up with booming electricity demand, giant batteries have become a crucial tool for keeping the lights on around the United States.

But after years of booming growth, analysts predict battery installations will slump this year due to tariffs and a hangover from the One Big Beautiful Bill Act, which left tax credits for batteries mostly intact but paralyzed the industry for months as companies waited to see how the legislation would shake out.

Battery installations smashed records in 2025, capping off a five-year run in which the industry grew more than twentyfold and surpassed even optimistic projections. They have slashed the risk of outages on once-rickety grids in Texas and California and have become the second-biggest source of new electricity capacity in the U.S. behind solar panels.

Unlike solar panels or gas turbines, batteries don’t generate energy — but they can store energy from any source and use it to shore up the grid during moments of peak demand, when prices surge and the risk of a brownout rises. They also keep electric frequencies stable and store wind and solar power for times when there’s no sun or wind, making the most of a cheap energy source.

“Batteries can help reduce costs and they definitely help keep the lights on,” said Max Schoenfisch, a power sector modeler at the International Energy Agency. “They are not the only thing, but they’re an increasingly important element of the [power] system.”

Fewer batteries on the grid could lead to higher energy prices, experts say. Batteries provide cheap backup power, so utilities don’t have to keep as many gas and coal plants on standby in case they’re needed to meet peak demand. These backup power plants, called “peakers,” are often more expensive and polluting than other plants, according to the U.S. Government Accountability Office. Batteries can also delay the need for pricey new power lines, transformers and substations.

“If battery deployment slows down, we might see higher costs for consumers,” Schoenfisch said.

Battery installations for homes, businesses and utilities will drop 10% next year, according to a new analysis from the energy research and consulting firm Wood Mackenzie. That’s not as bad as the 23% drop it projected early last year, when Congress debated eliminating battery tax credits, President Donald Trump imposed 145% tariffs on China, the world’s biggest battery supplier, and Texas lawmakers proposed bills that would make it harder to build renewable energy projects in one of the country’s biggest battery markets.

Over the spring and summer, companies delayed or canceled projects that would have come on line in 2026 or 2027, according to Chris McKissack, CEO of Fullmark Energy, a company that builds and operates energy storage projects.

“If you have that many unknown unknowns in your equation, there isn’t a capital provider out there that says, ‘Yeah, I’ll write the check, and you should build more of this right now,’” McKissack said.

Trump later dropped tariff rates, the Texas energy bills failed, and the federal battery tax credits survived — with tighter restrictions on Chinese parts. Wary battery developers are getting back to planning projects.

“Things were looking really bleak in the short term,” said Allison Feeney, a Wood Mackenzie research analyst. “But since then, we’ve seen a lot of things turn around.”

Wood Mackenzie expects U.S. battery installations to recover and start breaking records again by 2028. Ultimately, Feeney said, batteries are too useful for power companies to stop buying them — especially when there’s a yearslong backlog for natural gas turbines, the country’s main tool for meeting peak electricity demand.

“We can provide batteries very, very quickly,” said Julian Nebreda, CEO of Fluence, a company that builds and operates batteries in more than 40 countries. “We can connect them quickly. But if you are trying to look for a turbine to be a peaker plant, you have a two-year wait.”

As their prices plummeted over the past decade, batteries overtook natural gas in the interconnection queue, the list of electricity projects waiting for approval to hook up to U.S. grids. Although most projects in the queue are never completed, it gives you a sense of what developers are trying to build: There are six times as many battery projects awaiting approval as there are planned natural gas plants.

To keep their momentum, battery developers will have to shift manufacturing to the United States fast. By 2030, batteries that get more than a quarter of their parts from China — which currently makes three-quarters of the world’s lithium-ion cells — won’t qualify for federal tax credits.

The stationary battery industry may benefit from the EV market’s misfortune. Now that federal EV tax credits are dead and automakers are backtracking on their plans for electric cars and trucks, some companies are retooling U.S. factories designed to make EV batteries to build utility-scale batteries instead.

Korean battery giant LG spent $1.4 billion to convert a Michigan plant from making EV cells to stationary storage last year and plans to expand it this year.

“It’s not cheap or immediate, but it’s a lot faster … than building a whole new manufacturing facility,” Feeney said.

Meeting the 2030 deadline “is not going to be easy,” Nebreda said. But, “in the next five to seven years, we should see an industry that’s fully U.S.-based, or mostly U.S.-based.”

Feeney, Nebreda and McKissack said last year’s upheaval means batteries may be built more slowly or at a higher cost than they otherwise would have been — but the technology is here to stay.

“The demand for storage is really real and really strong,” Feeney said. “It’s going to be built, but it might just take a little bit of time.”