The U.S. energy storage market installed a record 18.9 GWh of battery energy storage systems in the second quarter of 2026, according to the latest U.S. Energy Storage Monitor report released by the American Clean Power Association (ACP) and Wood Mackenzie.

Energy storage installations increased 17% year-over-year (y-o-y), while installed power capacity declined 7% y-o-y. The national average duration of installed battery energy storage systems increased from 2.8 hours to 3.5 hours, driven by resource adequacy needs.

Utility-Scale Storage Installations Decline in Q2

Utility-scale deployments totaled 4.7 GW/17.6 GWh in Q2, an 8% y-o-y decline in MW terms as key markets become increasingly saturated. However, installations during the first half of 2026 were up 5% y-o-y, with the report indicating that full-year 2026 installations are expected to remain on par with 2025.

Average project duration continued to increase in Q2 2026. The report attributes some of this increase to a long-duration project in California designed to meet state targets and utility-contracted storage assets deployed in Texas.

“Battery storage is one of the most important tools we have to meet growing electricity demand,” said John Hensley, Senior Vice President of Markets and Policy Analysis at American Clean Power. “Storage can be deployed quickly, strengthens reliability, and helps the grid make better use of both existing and new generation. With a strong pipeline and continued technology improvements, the outlook for storage remains exceptionally strong.”

CCI Storage Returns to Historical Deployment Levels

The Community, Commercial and Industrial (CCI) sector installed 48 MW in Q2, returning to historical deployment levels following California's record first quarter, which was driven by the state's Net Energy Metering 2.0 grandfathering deadline.

Overall, the CCI market declined 2% y-o-y. Growth in Hawaii, New Mexico and Texas offset some of the decline.

The residential sector recorded its fourth-largest quarter on record in Q2 2026, installing 676 MW. This represented a 15% quarter-over-quarter (q-o-q) decline and a 3% y-o-y increase.

The national residential storage market is expected to contract 4% in 2026 amid tax credit elimination, consumer hesitancy and a transition in third-party ownership.

California, Texas, Puerto Rico, Arizona and Illinois accounted for 88% of residential storage capacity installed in Q2, although all five markets declined q-o-q. Puerto Rico experienced the largest decline in absolute terms, with installations falling from 129 MW in Q1 to 73 MW in Q2.

Storage Market Expected to Expand Through 2031

The report projects that utility-scale storage will grow at an average annual rate of 8% over the next five years as data center demand increases.

The CCI sector is projected to grow 27% between 2026 and 2031 as deployment expands beyond California into emerging markets such as Maryland and Texas. The residential market is expected to rebound between 2027 and 2031, growing at an average annual rate of 9%.

Overall, the U.S. energy storage market is projected to reach 207 GW and 715 GWh of cumulative installed capacity by 2031.

"Data center buildout strengthens the U.S. storage outlook across all sectors. Storage can provide needed capacity faster, cheaper and more reliably than gas alone," said Allison Feeney, research analyst at Wood Mackenzie. "As hyperscalers increasingly face grid-connection bottlenecks, utility-scale storage will enable speed to power for data centers."

The report also notes that the role of distributed storage is expanding beyond customer-focused applications. Virtual power plants (VPPs) are increasingly being positioned as a way to support load growth while creating participation opportunities for CCI and residential storage.

Supply Chain Conditions Could Affect Near-Term Growth

Supply chain dynamics, including potential trade restrictions, could contribute to near-term bottlenecks in the storage market. The utility-scale segment may experience some stagnation in 2026 and 2027 as the industry adjusts to these conditions.

Growth is projected to resume in 2028, with the utility-scale market expected to expand at an average annual rate of 11% through 2031 as domestic cell manufacturing increases.

"The slowdown in EV demand has become an unexpected tailwind for storage. Manufacturers are repurposing idle EV cell capacity, accelerating the domestic supply base just as trade policy makes it most valuable," said Allison Weis, Global Head of Energy Storage at Wood Mackenzie.