US power sector battery storage momentum keeps charging on

Reuters

4 hours ago

DENVER, June 24 (Reuters) - Rapid growth in the installation of batteries is upending power systems across the United States, with battery-deployed electricity volumes scaling new records nearly every month.
Steady cost declines combined with rising energy density levels are driving utilities to ramp up battery installations, and battery storage output now often exceeds all other power sources for key periods in certain electricity markets.
Batteries are also stabilizing electricity networks by helping to control frequency and voltage levels, and by preventing grid overloads by storing excess solar power output and then discharging that power during peak consumption periods.
Below are key trends to help track the continuing growth of battery systems within U.S. utility networks.
Until recently, battery systems played only a tiny role within U.S. electricity networks, as utilities focused more on building out capacity from natural gas plants, solar and wind farms and other generation sources.
In 2020, there was 30 times more solar capacity and 74 times more wind farm capacity than battery capacity within the U.S. generation system, according to energy data portal Cleanview.
However, dramatic drops in the cost of battery systems - by as much as 40% a year since 2022 according to industry consultants - have helped drive uptake across several U.S. markets with large solar farm installations.
As of April 2025, there was only around 5 times more solar and wind capacity in the U.S. than battery capacity, and battery capacity keeps climbing.
Utility networks mainly use batteries to store surplus power generated from solar farms during the middle of the day - when system demand and power prices are typically at their lowest - and then discharge them when demand and prices rise.
This solar plus battery combination allows utilities to avoid the need to throttle back output from across their network during the peak solar window, and to capture higher overall power prices by preventing the mid-day price dip.
As of April 2025, there was just under 30,000 megawatts (MW) of utility battery capacity across the U.S., according to Cleanview.
That total was over 28,000 MW more than was in place in 2020, and compares to solar power's growth of 84,200 MW and wind power's growth of 37,000 MW over that same period.
Since 2022, utilities have installed more battery capacity than wind capacity, and are set to continue prioritizing the build-out of battery systems.
As of April, there are 19 states with 100 MW or more of utility-scale battery storage.
California is by far the top battery storage user, with around 13,000 MW in place, or about 42% of the national total.
The California Independent System Operator (CAISO) is also the largest battery user among major U.S. electricity networks, and uses batteries to maximise the uptake and impact of its solar systems.
The CAISO system has around 21,000 MW of solar capacity and about 12,400 MW of battery capacity, according to the California Energy Commission.
That hefty battery capacity allows CAISO to use batteries as a key source of power during peak demand periods, particularly during the early evening when solar output drops off and household electricity demand picks up.
Between 7 p.m. and 9 p.m. on June 19, batteries were CAISO's single largest source of electricity and accounted for roughly 26% of total electricity supplies during that period, according to electricity portal GridStatus.io.
Natural gas was CAISO's next largest power source - accounting for around 23% of supplies, followed by wind and hydro.
The Electric Reliability Council of Texas (ERCOT), the main electricity market for Texas, is a more recent adopter of battery systems, and in 2024 added more battery capacity than any other state.
As of April, Texas had around 8,200 MW of installed battery capacity, which helped supply around 7% to 8% of ERCOT's total power during the evening of June 19, GridStatus.io data shows.
Other states rapidly expanding battery footprints include Arizona, Nevada and New Mexico, which all also have growing volumes of utility-scale solar capacity which can be better harnessed when paired with battery systems.
With battery prices widely expected to undergo further cost declines as vendors compete for business and new products are commercialized, more widespread uptake of battery systems is expected.
A recent report by asset management firm Lazard pegged the so-called levelized cost of energy from utility-scale solar farms paired with batteries at between $50 and $131 per megawatt hour (MWh), depending on system scale.
That compares to $47 to $170 per MWH for new natural gas peaking plants, around $24 to $39 per MWh for combined cycle gas plants, and up to $114 per MWh for new coal-fired plants.
Given that the solar plus battery combination is often also far faster to deploy than constructing new power plants, the increasingly economical cost of batteries is expected to help them penetrate even less sunny areas going forward.
That should ensure a steady widening in the deployment of battery systems across U.S. electricity networks in the years ahead.
The opinions expressed here are those of the author, a columnist for Reuters.
Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.