Energy storage is increasingly a fixture on U.S. systems built to serve large electricity loads and to relieve stress on the grid.
The U.S. market for grid-scale battery storage surged to its best first quarter in history this year, highlighting how data centers and surging power demand are bolstering the industry despite federal policy headwinds.
Trouble ahead?
The industry is facing several challenges, including uncertainty about “foreign entities of concern” rules under Trump’s megalaw aiming to restrict imports of components from China and other adversaries. Those rules kicked in in January for projects seeking tax credits, but the Treasury Department has not fully outlined guidance on complying with the rules.
The rules “present a significant barrier for both storage project owners and manufacturers. Asset owners must track Chinese involvement in the supply chain, ownership, and financing of any storage project beginning construction in 2026 or later,” said Allison Feeney, a storage analyst at Wood Mackenzie.
At the same time, many projects began construction in 2025 to get around the rules, so the market is unlikely to contract through 2027, she said.
Jason Burwen, vice president of policy and strategy at battery developer GridStor, said in an email he expects an “increasing volume of new battery supply that is intended to be FEOC-compliant.”
Because demand for storage is at an all-time high, the biggest industry challenges are “issues that affect deployment schedules — interconnection completion, local permitting, and long-lead equipment availability,” said Burwen, who was not involved with the report.
In the meantime, the industry has expanded domestic manufacturing capacity.
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