15 hours ago
1
A decade ago, large-scale battery storage was considered the mythical Holy Grail to solving renewable energy’s intermittency woes with sunshine and wind. The early pilot projects remained in their infancy—too expensive to rapidly ramp up.
Today, technology advances and dramatic cost decreases combine to set up battery energy storage as the savior for both renewables and the overarching electric grid as power demand soars and Congress rapidly phases out tax credits for wind and solar energy.
The modern electric grid wastes a tremendous amount of power generation when demand isn’t peaking, and battery systems—whose tax credits were largely spared in President Trump’s One Big Beautiful Bill—are now here to store that excess power and deploy the electricity as needed when the sun isn’t shining or the wind isn’t gusting or natural gas and coal plants are disrupted, enhancing both grid efficiency and stability. Close to half of all battery storage projects are paired with solar or wind energy projects as part of their symbiotic relationship.
“Without batteries it would be mayhem,” said Izzet Bensusan, founder and CEO of the Captona energy transition investment firm. “The utilities are realizing that without batteries they cannot manage the grid.
“If you don’t have batteries, there’s a chance you may not get power in your home,” Bensusan told Fortune, arguing that the world needs more power—much of which can only come online quickly enough from renewables—and batteries are increasingly necessary for stability.
After record growth in 2024, U.S. battery energy storage systems (BESS) could grow from more than 26 gigawatts (GW) of capacity—enough to power 20 million homes—to anywhere from 120 GW to 150 GW by the end of 2030, depending on the range of projections. The Department of Energy estimates that nearly 19 GW will come online just in 2025 after 10.4 GW were added last year—second in the world after China—although tariff uncertainty may cause a temporary slowdown this year. California and Texas easily lead the way in battery deployment with massive grids and ample land, but the rest of the country is beginning to catch up.
Lithium-ion battery costs have plunged 75% in a decade and the next generation of battery chemistries—sodium-ion, lithium-sulfur, lithium iron phosphate (LFP), and others—are more easily sourced in the U.S. and potentially better aligned with the grid than lithium-ion units initially designed for moving electric vehicles. And battery manufacturers now see grid demand overtaking slumping EV needs in the U.S.
“We’re right at the beginning of the supercycle of investment,” said Cameron Dales, cofounder and president of Peak Energy, which is developing battery storage systems from commonly sourced sodium in the U.S. Dales contends that more than $1 trillion will be spent on BESS growth worldwide over the next 10 years. “We need to get going and build out the capacity. You started to see that over the last two years with the massive growth, but I think we’re at the beginning.”
Painful and beautiful
While the new GOP spending law targets wind and solar power as part of a partisan crusade against renewables, cutting tax credits off after 2027—projects must begin construction by July 2026 or be placed in service by the end of 2027—the key tax credits for large-scale batteries stay in place until 2033 after beginning to phase down in 2030.
One catch is more parts must be manufactured in the U.S.—and less from China, a “foreign entity of concern”—but supply chains are evolving for financial and security needs.
“Energy storage is important whether you’re on the blue side or the red side. Everybody agrees this is critical for the country,” Dales told Fortune.
“We don’t outsource F-16 (fighter jet) manufacturing to another country, and so I think it’s a similar dynamic in batteries,” Dales said. “You need to control the building blocks for how you generate and ultimately store electricity.”
Of note, the U.S. Department of Defense is contracting more with domestic battery manufacturing to power military drones.
Peak has a new Colorado pilot manufacturing plant for sodium-ion batteries that utilize abundant U.S. materials without any of China’s dominance of critical minerals. The systems require less cooling so they can operate in harsher temperatures.
After a couple of decades during which U.S. power demand has remained relatively stagnant, domestic electricity consumption is expected to spike by 25% from 2023 to 2035 and roughly 60% from 2023 to 2050, according to the International Energy Agency. A big part of that increase comes from the hyperscalers: Amazon, Google, and Microsoft are investing anywhere from $75 billion to $100 billion each into building data centers for 2025 alone.
The combination of much more demand plus the loss of tax credits is expected to result in more spikes in commercial and residential electricity costs. But incentivized battery storage can at least help mitigate costs.
After all, supply chains for gas-fired turbines for power plants are sold out for the next few years, and new nuclear power is almost a decade out. So, renewables and batteries will represent most of the new power generation for the rest of this decade—regardless of cost.
“I’m going build solar at all costs, and I’m going to charge for it, and people are going to have to pay for it,” Bensusan said. “It can come on online in six to nine months. We don’t really have a choice.”
Evolving dynamics
The new dynamic added to the mix is the improved tax credit environment for battery systems relative to wind and solar, which could change how projects are prioritized.
Of late, more battery systems were co-located with solar farms. Now, more developers might build battery systems and pair them with ancillary solar power instead, said Ravi Manghani, senior director of strategic sourcing for Anza Renewables, which develops software platforms for solar and BESS.
“We might be entering a paradigm where energy storage would actually drive solar growth,” Manghani said. “Up until now, solar was driving the energy storage option. That switch may have flipped because of the way the tax credits phase out.”
While wind power pairs well with battery systems, the highs and lows of gusty weather patterns are harder to predict than the sun and the daily rotation of the Earth. That’s why most new solar farms are paired with battery storage.
While most rechargeable battery systems are designed to hold four or six hours of electricity, they can be built to hold 10 hours or more—it’s just costly. But even four hours of electricity deployed when people come home from work and energy usage spikes in the early evening is extremely beneficial for the grid.
“It’s like getting a washer without a dryer. These things really reinforce each other,” said Aurora Solar cofounder and CEO Chris Hopper about the natural pairing of solar and batteries.
Still, while many solar and wind projects will sget built with or without tax credits, at least 20% fewer will become reality than anticipated, according to projections. Those losses could still impact battery deployment.
And, while costs continue to fall and domestic manufacturing for batteries ramps up, much more progress is still needed—and faster.
Silicon Valley’s Lyten is betting on building BESS using lithium-sulfur batteries with materials from the U.S. and Europe—negating any needs for nickel, manganese, cobalt, and graphite, which are all critical minerals dominated by China.
“To really get to that next jump that we call mass-market energy storage where you can deploy these very economically everywhere around the world, you need another step change down in battery costs,” said Keith Norman, Lyten’s chief sustainability officer. “Our bet on lithium sulfur is that, in the long term, the lowest cost materials are going to win.”
Already focusing on battery-cell manufacturing in California and a planned lithium-sulfur “gigafactory” in Nevada, in July, Lyten just acquired Europe’s largest BESS manufacturing operation in Poland from Northvolt. Lyten also aims to add more BESS manufacturing in the U.S., Norman said.
“We do believe renewables are going to keep going forward, and almost all of that is going to be paired with batteries. What we’re seeing is just an insatiable demand for more power,” Norman said.
“In a world where the tax credits are going to be harder to come by you really need to juice the economics as much as possible for renewables. That really leads you to needing energy storage so you can get every electron that asset produces turned into value.”
This story was originally featured on Fortune.com
English (US) ·