6 key questions about US energy storage in 2026 answered

Energy storage has a critical role to play in evolving US power markets, providing rapid, flexible supply to meet unprecedented demand growth and ensure grids are resilient and reliable. The industry continues to break records for installations in 2026, driven principally by strong growth in long-duration utility-scale projects and demand from growth in standalone residential storage.  

Drawing on insight from Wood Mackenzie Lens Power & Renewables, we recently published our US Energy Storage Monitor for Q3 2026. Created with the American Clean Power Association, it provides comprehensive, timely analysis of the sector in the US.

Fill out the form to access a complimentary extract, and read on for the answers to six key questions about the current state of the market and the outlook for US energy storage over the next five years.

1. What was behind record overall energy storage installations by gigawatt hour in Q2 2026?

The US energy storage market installed a record 18.9 gigawatt hours (GWh) in the second quarter of 2026, even as growth in installed power in gigawatts (GW) fell. The key reason for this dynamic was an overall rise in average storage duration, the deployment of a long-duration project in California to meet state targets and utility-contracted storage assets in Texas.

Longer duration storage is supporting a transition from ancillary balancing towards a more structural role. This shift is being driven by higher penetration of intermittent solar and wind power, falling battery costs, data centre growth and policy incentivisation.

Find out more in the report extract.

2. Why are US utility-scale energy storage deployments down year-on-year in mega-watt terms?

The US utility-scale energy storage segment has stagnated in 2026 as the industry adapts to evolving supply chain dynamics. This stagnation will continue through 2027; after that, we expect growth to re-sume in 2028 as domestic cell manufacturing ramps up. State incentives, the need to manage large loads and an acceleration of renewable installations before Production Tax Credits for renewable and zero-emission energy sources end in 2030 will all help drive this rebound.

Get more insight on the segment’s future trajectory in the extract.

3. What’s behind consecutive quarter-on-quarter declines in US residential energy storage growth?

The elimination of Section 25D clean energy tax credits has weakened demand for residential energy storage, which suffered a third consecutive quarterly decline in Q2 2026. The success of battery-only installations in Texas is helping to offset a nationwide slowdown, which is being driven by tax equity tightness, consumer hesitancy, and a challenging third-party-ownership transition.

Can the segment return to growth? Download the report extract to get our view.

4. Which US states are driving residential energy storage demand growth?

Our overall five-year outlook for residential storage growth remains unchanged, but expected capacity has risen for some states and fallen for others. The top five US markets in Q2 2026 were California, Texas, Puerto Rico, Arizona and Illinois, although installations in all five fell quarter-on-quarter.

Access the extract to find out what percentage of overall capacity these markets account for and which declined most in absolute terms. 

5. What will propel energy storage installation growth over the next five years? 

Despite some short-term headwinds, annual US energy storage installations will grow significantly in megawatt terms over the next five years, as low costs propel storage into new regions and use cases. Large loads and renewable generation will drive utility-scale growth, while the community-scale, com-mercial and industrial (CCI) segment will expand beyond California into new state markets.

How much growth do we expect and how will each market segment contribute? Download the extract to find out.

6. How is data centre buildout impacting the US energy storage outlook?

Rapid data centre buildout is providing a boost to the outlook for US energy storage across all segments. Utility-scale storage in particular offers speed to power to hyperscalers, who increasingly face project delays due to grid-connection bottlenecks. Storage can either be used onsite to manage asset load or at the system level to support evolving grid needs. CCI and residential will also benefit as the industry seeks to position virtual power plants (VPPs) as a key enabler of load growth.

Fill out the form at the top of the page to download a complimentary selection of slides from the full report, which contain data on aggregate deployments by market segment and projected market size.