The U.S. energy storage market installed a record 5.4 GW/18.9 GWh of battery energy storage systems (BESS) in the second quarter of 2026, according to the latest U.S. Energy Storage Monitor released by the American Clean Power Association (ACP) and Wood Mackenzie.
While installed power capacity declined 7% year-over-year (YoY), energy capacity increased 17% YoY, marking a new quarterly record. The growth was driven in part by a shift toward longer-duration storage systems and increased residential storage capacity.
The national average duration of newly installed battery storage systems increased from 2.8 hours in Q2 2025 to 3.5 hours in Q2 2026, reflecting growing demand for storage to support resource adequacy.
Utility-Scale Storage Accounts for Majority of Deployments
The utility-scale segment installed 4.7 GW/17.6 GWh during Q2 2026, representing an 8% YoY decline in MW terms as some established markets experienced increasing saturation.
However, utility-scale installations during the first half of 2026 were 5% higher YoY, indicating that full-year deployment could remain broadly comparable with 2025 levels.
Average project duration continued to increase during the quarter, supported by a long-duration project in California developed to meet state requirements and utility-contracted storage projects deployed in Texas.
Residential Storage Records Fourth-Largest Quarter
The U.S. residential storage market installed 676 MW in Q2 2026, making it the fourth-largest quarter on record.
Installations declined 15% quarter-over-quarter (QoQ) but increased 3% YoY.
California, Texas, Puerto Rico, Arizona and Illinois accounted for 88% of residential storage capacity installed during Q2. All five markets recorded sequential declines, with Puerto Rico experiencing the largest absolute decrease, falling from 129 MW in Q1 to 73 MW in Q2.
The national residential storage market is projected to contract by 4% in 2026, amid the elimination of certain tax credits, consumer uncertainty and challenges associated with the transition in third-party ownership models.
CCI Storage Returns to Historical Deployment Levels
The Community, Commercial and Industrial (CCI) segment installed 48 MW of storage during Q2 2026, returning to historical deployment levels following an elevated first quarter in California associated with the Net Energy Metering 2.0 grandfathering deadline.
CCI installations declined 2% YoY, although stronger deployment in Hawaii, New Mexico and Texas helped offset the contraction.
U.S. Storage Market Projected to Reach 207 GW by 2031
The U.S. energy storage market is projected to grow by more than 50% in MW terms over the next five years, reaching approximately 207 GW/715 GWh of cumulative installed capacity by 2031, according to the report.
Utility-scale storage is expected to record an average annual growth rate of 8% through 2031, supported in part by increasing electricity demand from data centers.
The CCI segment is projected to grow 27% between 2026 and 2031, with deployment expected to expand beyond California into emerging markets such as Maryland and Texas.
The residential segment is expected to recover between 2027 and 2031, with an average annual growth rate of 9%.
Wood Mackenzie said increasing data center development is strengthening the outlook for energy storage across market segments, particularly as large electricity consumers face grid-connection constraints.
Virtual Power Plants Gain Importance
The report also highlighted the expanding role of virtual power plants (VPPs) in the U.S. distributed storage market.
VPPs are increasingly being positioned as a mechanism to support growing electricity demand while enabling residential and CCI storage assets to participate in broader grid services and electricity markets.
Supply chain conditions, including potential trade restrictions, could create short-term bottlenecks for the storage industry. The utility-scale segment could experience slower growth during 2026 and 2027 as the market adjusts to these conditions.
Growth is projected to resume from 2028, with utility-scale installations expected to expand at an average annual rate of 11% through 2031, supported by increasing domestic battery cell manufacturing capacity.
Solar-Plus-Storage Attachment Rate Reaches 46%
The national residential solar-plus-storage attachment rate reached 46% in Q2 2026, up from 41% in Q2 2025.
Meanwhile, the share of hybrid utility-scale installations declined to 33% in Q2 2026, compared with 45% a year earlier, primarily due to a contraction in California.
Utility-scale battery system prices also continued to decline. Average system prices fell 2% YoY to $916/kW in Q2 2026, according to the report.
The continued decline in system costs, longer-duration deployments and growing electricity demand are expected to support the expansion of energy storage across the U.S. power market.
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