Battery Storage Survives Policy Changes — Can It Grow Without Support?

For years, the promise of battery storage in the United States remained more theory than reality. Experts recognized its potential to strengthen the electrical grid, yet actual deployment lagged behind the conversation. That changed dramatically in the 2020s. Now, each quarter brings headlines about record-breaking capacity installations. Grid-scale battery storage systems are becoming larger, safer, and increasingly common across the country, helping renewable energy projects deliver reliable power when it’s needed most.

Recent legislative changes disrupted many renewable energy incentives, but battery storage was largely preserved. The investment tax credit (ITC) for storage remains in place through 2033, even as solar and wind projects face stricter deadlines to qualify for incentives. Projects that use batteries and components manufactured domestically can still receive bonus credits, and qualified manufacturers remain eligible for production credits for building batteries within U.S. facilities. Together, these policies continue to encourage both deployment and local production of battery storage systems.

In short, battery storage has moved from the sidelines into a central role in the nation’s renewable energy strategy.

Mixed Signals for the Years Ahead

While the preserved ITC is a positive sign, certain restrictive clauses in the latest legislation may slow manufacturing progress and discourage investment in domestic supply. Industry experts and developers see strong opportunity but remain cautious about timing and regulatory complexity.

Hybrid solar-plus-storage projects are expected to remain the most common model. Pairing battery storage with renewable energy continues to offer cost advantages, faster construction timelines, and better grid flexibility than many traditional energy sources. These combined systems improve grid stability, balance peak loads, and support the growing demand driven by data centers, transportation electrification, and industrial growth.

Utilities are likely to focus on areas where high concentrations of renewables have yet to be paired with batteries, turning those regions into priority sites for interconnection and capacity upgrades. Grid congestion zones, in particular, could see new waves of battery storage projects designed to improve reliability and reduce curtailment.

Ultimately, utilities will determine the pace of growth. As energy demand increases, they will procure the resources they need — and in many cases, that will mean more battery storage.

Domestic Battery Supply at a Crossroads

A new “foreign entity of concern” (FEOC) rule is set to reshape the industry starting in 2026. Projects using certain imported components will no longer qualify for federal tax incentives, and manufacturers relying on restricted subcomponents will lose access to production credits.

This presents a major challenge. Both solar and battery storage supply chains have been heavily dependent on imports, and although domestic production has been expanding, it remains early in its development. Industry progress that once seemed on track to establish a self-sustaining battery manufacturing base may now face disruption before achieving scale.

Some facilities in the United States are better positioned, having already invested in lithium iron phosphate (LFP) battery cell production for stationary storage markets. Others are retooling electric vehicle battery plants to produce large-format cells for renewable energy projects. However, whether these efforts align with the new requirements in time remains uncertain.

Recent reports indicate that financial strain and policy instability have already resulted in the cancellation of planned cell production capacity. Industry analysts warn that once the FEOC rules take effect, volatility could increase further, potentially delaying projects, reducing investment, and impacting jobs.

The Future of Battery Storage in a Changing Market

Despite policy uncertainty, the fundamentals for battery storage remain strong. The demand for flexible, dispatchable capacity continues to grow. Hybrid renewable energy and storage projects remain more cost-effective and faster to build than fossil fuel alternatives. Utilities increasingly rely on batteries for grid stability, frequency response, and peak load management — all services essential for a modern power system.

The path forward will depend on how effectively policymakers, utilities, manufacturers, and developers coordinate efforts. The coming years will reveal whether battery storage can continue to scale — not only as a support for renewable energy but as a core pillar of a resilient, sustainable electricity system.