The US battery energy storage system (BESS) market is experiencing unprecedented growth in 2024, continuing a robust expansion streak that has defied federal policy uncertainty and legislative debates over renewable energy incentives.
According to Rystad Energy, the market’s rapid acceleration is driven in part by falling battery manufacturing costs — a trend expected to persist for the next five to seven years as design improvements continue.
Grid-scale BESS installations soared from six gigawatts (GW) in 2023 to 10 GW in 2024, marking a year-over-year growth rate of around 60 per cent.
Rystad Energy forecasts that annual installations will reach approximately 16 GW by early 2026, underscoring the sector’s resilience even as lawmakers consider rolling back tax incentives for low-carbon energy sources.
“As energy demand rises in the US due to increased electrification, grid resilience will continue to be critical, with batteries playing a key role in meeting this need, along with both traditional and renewable energy sources.
“The US grid-scale BESS market delivered a very healthy growth of around 60 per cent in 2024, rising from six gigawatts (GW) of capacity added in 2023 to 10 GW of installations.
“Planned inventory is a very strong leading indicator of actual capacity additions and we believe this rate of growth will create increased annual battery demand for grid-scale BESS,” said Artem Abramov, Head of New Energies at Rystad Energy.
Texas and Arizona are at the forefront of this expansion. Texas emerged as the largest US BESS market in 2024, with an installation rate of about 4 GW per year — matching California’s output.
However, Texas’ BESS inventory has climbed from 5 GW to over 7 GW in the past year, signalling further growth ahead.
While California’s market has stabilised, Arizona is leading a surge across emerging markets, with BESS inventory in these regions rising from 3 GW in mid-2024 to 7 GW currently.
The actual installation rate in these emerging markets stands at about 3 GW, mirroring inventory levels from a year ago.
In mature markets, batteries are increasingly vital during peak demand periods, effectively extending solar generation into the evening.
Over the past 90 days, batteries have met 13 per cent of the California Independent System Operator’s (CAISO) power demand during discharge hours.
Peak contributions during these periods have reached nearly 30 per cent, with the 90-day average peak hour contribution now at 26 per cent — up 10 percentage points from last year.
Looking at renewables’ share of CAISO’s power supply, the annual average has risen from less than 30 per cent in 2021 to over 40 per cent in the past year.
On some spring days, renewables have supplied more than 65 per cent of daily demand, though winter levels remain lower at 20–25 per cent.
This increased integration has reduced CAISO’s reliance on energy imports from 27 per cent to about 16 per cent over the past four years.
“As both BESS and solar PV installed capacity continue to grow in California, it is important to remember two things in particular: which power system challenges are being addressed by batteries, and what batteries cannot really help with.
“Whether it is theoretically possible to have all renewable plus BESS systems in CAISO and what kind of overbuild – and economic implications for project developers and end consumers – will be associated with it remains to be seen,” Abramov added.
Despite policy uncertainty and the potential for legislative changes, the US BESS market’s strong fundamentals, falling costs, and expanding regional adoption point to continued growth and an increasingly critical role for batteries in the nation’s evolving energy landscape.
