US energy storage will likely see robust growth this year and through the mid-2030s despite tightened foreign content rules as manufacturers retool supply chains to meet booming demand, BloombergNEF asserted in its second half of 2025 forecast.
The US is set to install some 13.3GW/34.5GWh of battery energy storage systems (BESS) this year, an 8% rise over 2024 and a record for installations.
States and grid operators are increasingly seeking out BESS capacity to balance loads and deal with renewable intermittency that is only expected to grow.
Research consultancy Wood Mackenzie sees wind power maintaining an upward trajectory despite President Donald Trump’s hostility, gaining 35.5GW of new and repowered capacity by 2029.
The Solar Energy Industries Association projects the nation adding 45GW of solar power annually through 2030.
The ramp is further driven by developers racing to beat the clock on meeting stringent ‘foreign entities of concern (FEOC)’ stipulations in the Big Beautiful Bill (BBB) passed last July.
To access lucrative investment tax credits (ITC) retained in the BBB, project owners must limit the proportion of content from FEOC nations comprised of Iran, North Korea, Russia, and especially China.
BNEF expects this to “accelerate annual build over 2025-2027, as companies rush to start project construction this year and avoid the new restrictions starting from 2026.”
The BBB retains 30% ITC for storage through 2033, compared to solar and wind, for which tax credits sunset at the end of 2027.
To qualify for tax credits, energy storage projects starting construction in 2026 or later “must spend at least 55% of project costs on equipment and services supplied by non-PFEs,” BNEF noted.
Once FEOC stipulations take effect, developers will face a massive challenge of decoupling from Chinese suppliers.
China dominance
China already refines 65% of the world’s lithium while manufacturing 80% of battery cells and three quarters of packs and components, according to the International Energy Agency (IEA) and the US Energy Information Administration (EIA).
BNEF is optimistic that this challenge can be met by a major retooling of existing EV battery manufacturing capacity.
“We expect the US market to adapt quickly to the new environment and establish its own supply chain without ‘prohibited foreign entities’ (PFEs),” BNEF said.
PFE and FEOC are synonymous in the US law.
“Beyond 2027, domestic manufacturing capacity and battery imports from non-PFE countries such as South Korea and Southeast Asia are expected to drive further growth despite the policy changes,” BNEF added.
Companies with major EV battery manufacturing capacity include Tesla, LG Energy Solutions, Samsung, e-Storage, and AESC. Several of these have links to China, and BNEF assumes they will “meet the new restrictions by modifying their company structure, though these companies are likely to be considered PFEs today.”
According to law firm Troutman Pepper Locke, Tesla has already unveiled a lithium-iron phosphate (LFP) battery cell manufacturing facility in Nevada, while Canadian Solar has disclosed plans for a BESS and cell manufacturing facility in Kentucky.
LFP batteries with four-hour duration remain the dominant BESS technology.
Jacob Sandry, CEO of Euclid Power, told Troutman: “We’ve seen supply chains be more nimble than we expected over the past few years. You’ve seen manufacturing move out of China to other Asian countries very quickly, and we are starting to have domestic supply abilities like we’ve never had.”
Korean manufacturers, meanwhile, are ramping battery manufacturing “by converting production lines originally dedicated to electric vehicles into ones that deliver energy storage,” the consultancy said.
BNEF has raised its forecast for non-FEOC battery cells in the US in 2028 by 80% to exceed 60GWh, reaching 90GWh by 2035.
Need surpasses costs
Tariffs will be a wildcard, and the consultancy said that despite system cost declines to around $200/kWh last year, recent tariff hikes on Chinese imports to nearly 41% by the Trump administration could see them rise to $250-300/kWh.
Need will likely surpass cost concerns, though, and BNEF forecasts the US adding 13.5GW/48GWh of storage in 2026, with cumulative capacity reaching 125GW/458GWh by 2030, up 9% from its previous forecast.
By 2035, the US’s energy storage market should reach 235GW/948GWh, “seven times the cumulative installations in 2024,” BNEF noted.
Top markets include the perennial heavyweight Texas, on track to add 4GW/8.5GWh this year towards some 50GW/153GWH by 2035.
California will track its Lone Star state rival closely, adding some 3.8GW/12.6GWh in 2025 on course towards 55.6GW/227GWh by 2035.
Massachusetts, New Jersey and New York all have storage solicitations in the works as well.
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