Energy storage is the great enabler of the clean energy revolution, moving electricity in time, much like transmission moves it in space. In 2026, utility-scale energy storage projects in the United States will face headwinds that could slow the pace of a technology that is fast becoming a global grid staple.

The question is whether the challenges the energy storage industry faces will outweigh the strong demand for its services. And if they do, what implications will it have for the grid?

Battery energy storage systems (BESS) provide a vital service for clean energy that is generated with a side of intermittency — solar and wind — by taking electricity generated at one time of day and storing it until it’s needed. The obvious benefits of smoothing supply and limiting wasteful curtailment are just the start.

BESS can provide stability, resilience and resource adequacy services to the grid, even when wind and solar aren’t involved, supporting baseload reliability. And at a time when interconnection queues are measured in years, integrating BESS can enable developers to build larger renewable projects than the interconnection point otherwise would allow.

These benefits provide real, measurable value. For example, a recent report found that solar and battery storage growth could reduce New England wholesale energy costs by more than two-thirds of a billion dollars a year by 2030. (See Report Shows Cost Savings from New Solar, Storage in New England.)

Emerging Stability After a Year of Uncertainty

2025 was a doozy: on-again-off-again tariffs, supply chains redirected to avoid foreign entities of concern (FEOC) restrictions, political standoffs over critical minerals, massive renewables projects suspended on a whim and U.S. battery manufacturing rushing to fill the gap. Yet despite everything, growth in the onshore manufacturing base and deployment of utility-scale BESS grew throughout the year.

The energy storage market, which law firm Troutman Pepper Locke called “bruised but buoyant,” largely was spared in President Donald Trump’s tax bill (One Big Beautiful Bill Act, or OBBBA) because of batteries’ role in providing baseload power. “However, the battery storage industry faces significant constraints from the OBBBA, most notably, the FEOC rules. These restrictions — which vary depending on the tax credit and tax year in question — prevent entities linked to adversarial nations, particularly China, from accessing, directly or indirectly, the benefits of U.S. energy tax incentives,” its report said.

Wood Mackenzie and the American Clean Power Association attributed the year’s strength to rising demand and the need for grid reliability. “These installations deliver the flexible, reliable grid support America needs today, boosting reliability and keeping power bills in check,” said John Hensley, ACP senior vice president of markets and policy analysis.

So, what lies ahead for our versatile friends in 2026?

Trend 1: Market Solid as Global Supply Chain Concerns Fade

2026 should see a solid, but not stellar, market.

The good news: The volatility of early 2025 has settled. Early 2025 saw so much regulatory whiplash that analysts resorted to issuing high and low predictions. One thing the market hates more than new regulations is uncertainty, and the return to single-scenario forecasts shows a return to confidence.

Analysts are mixed about 2026. The most optimistic expect only a modest rise, while others expect a modest pullback. There’s no concern about demand; supply constraints and interconnection queues will dictate how the year will unfold.

The often-conservative EIA estimates that U.S. utility-scale BESS will grow from 45.6 GW at the end of 2025 to 65.6 GW at the end of 2026, more than doubling total installed capacity since the end of 2024. The 20 GW addition is only a slight increase from 2025’s 18.6 GW capacity addition, according to its December 2025 Short-Term Energy Outlook.

On the other end of predictions, Wood Mackenzie forecasts that supply chain issues in the near term will drive an 11% contraction in the U.S. utility-scale storage market in 2026, followed by an 8% decline in 2027. Despite the expected pullback in the coming year, the medium-term outlook is rosier than earlier in 2025. “Notably, the utility-scale five-year forecast has increased 15%” compared to pre-OBBBA projections.

Materials and manufacturing constraints will continue to throttle the market.

The U.S. may have some of the not-so-rare-earth materials needed to build batteries, but even when they can be mined, there’s often no way in the U.S. to refine them to battery-grade purity. It hasn’t been economically viable in the past, and building out those capabilities won’t happen overnight.

Similarly, building a battery factory requires a significant amount of time, as well as massive amounts of capital, which is flighty in a time of political intermittency. Battery manufacturing had a head start as factories already were under construction. In 2026, we’ll see several of those plants come online and others expand production, increasing the supply of cells and batteries made in the U.S. LG Energy Solution’s plant in Arizona should come online, and its Michigan plant should increase production. SK On’s Georgia plant should begin production in the second half of the year after pivoting from automotive to stationary energy storage.

Trend 2: Energy Storage Everywhere

In the past five years, BESS has begun to be decoupled from renewables. Its versatility means it’s solving problems throughout the increasingly overburdened grid. While many solar farms have BESS on site, 2026 will see an increase in the use of BESS to provide resilience, stability and reliability. A couple of examples: In Oregon, backup systems sited at substations provide resilience, while in California, a whole-town backup system with BESS and hydrogen fuel cells has been installed in Calistoga to power the town during public safety power shutoffs on high-fire risk days.

While most of the new utility-scale energy storage capacity will be in California and Texas, the need for resilience knows no borders. With the rise in extreme weather events that can knock the grid offline, there’s increased demand for grid-tied microgrids that support critical infrastructure such as hospitals.

Energy Storage and the Growth of AI

The rise in AI data centers has upended forecasts from just a few years ago and is driving creative ways to meet demand without yearslong delays. This need to move quickly in an industry slowed by regulation and the need for so many rounds of community engagement is bringing forth creative ways to slip energy projects in with AI data centers that are being fast-tracked.

One potential solution is what RMI calls “Power Couples,” which leverage batteries so AI data centers can be built out without impacting local electricity reliability and cost. RMI defines a Power Couple as the “pairing of a large electricity consumer with new-build solar, wind and battery resources sized to meet the on-site load, all located near an existing generator with an approved interconnection.”

This would mean the customer who benefits could bear the costs and take advantage of fast-track approval for connecting the new generation resources to the grid, and strict physical safeguards would ensure that the new load cannot affect grid reliability.

Trend 3: Community Resistance will Go Pro

While most other headwinds will die down in the coming year, community resistance will be an increasingly significant problem in 2026. Concern about BESS’ safety has grown following the high-profile January 2025 fire at Moss Landing, Calif., at the time the world’s largest lithium-ion battery system. It raised awareness of the potential risks of having BESS sited nearby, and armed community opposition groups around the country with a vivid example.

When they occur (which is not that often), lithium battery fires are difficult to extinguish and can produce toxic substances such as hydrogen fluoride, phosphorus pentafluoride and phosphoryl fluoride. Community groups can draw on a growing body of evidence that the risk persists beyond the initial fire, such as the recent report on toxic residue in the Elkhorn Slough wetland near Moss Landing.

Some lithium battery chemistries are safer than others; for example, lithium iron phosphate (LFP) batteries are less likely to have thermal runaway than lithium nickel manganese cobalt (NMC), the battery chemistry used at Moss Landing. For that reason, LFP will take an ever-larger share of the market — estimates put LPF at about 80% of the utility-scale market in the U.S. But once a developer is educating the public about the nuances of battery chemistries, it’s already losing the public relations battle.

NIMBY, Meet BESS

The forces that don’t want renewables to flourish (I’m looking at you, oil and gas) have taken a leaf from the misinformation campaigns used by the tobacco industry (if you haven’t seen Thank You for Smoking, it’s a must watch). So far, solar and wind farms have been their primary targets, but if they haven’t already, these “astroturf” campaigns will set their sights on BESS.

Astroturf is the tongue-in-cheek term for non-local organizations that are trying their darndest to look like grassroots efforts. Of course, some of the opposition is grassroots, but astroturf groups supercharge them, supplying ready-to-execute playbooks that savvy political insiders have tested and refined.

How to tell if they’re behind community opposition campaigns? Look for overly wholesome names (Patriotic Americans for Energy Freedom, anyone?) and search their materials for language that been used to stonewall projects throughout the country. For example, NIMBY groups protesting solar farms consistently described them as “industrial solar,” a negative term that proved effective in early anti-solar fights.

Astroturf is not the only resistance strategy. Other opposition will grow through under-funded local media, which spreads misinformation on a pay-to-play basis, and local codes or guidelines written to limit certain development.

Are they succeeding? In part. In the past year, significant projects were shelved due to community pressure, including a 650-MW project on Staten Island that was canceled. Others, like the 320-MW Seguro project in San Diego, are mired in hearings. Some of these projects are large enough to materially affect regional storage deployment, and all will cause developers to think twice about planning projects anywhere near communities.

Batteries Withstanding Market Battering

Taking all the positives and negatives together, 2026 should be a solid, though not soaring, year. Batteries will continue to be the bright spot in the clean energy landscape in the United States, and their ability to support the grid and delay costly transmission projects makes them critical.

To help the market grow, developers will need to get ahead of community resistance or focus on projects away from residential areas or rural idylls rather than risk being mired in endless permit fights. Groups like American Clean Power need to continue educating and lobbying critical audiences to ensure BESS projects aren’t unduly harmed.

And the industry needs to differentiate types of lithium-ion batteries to end-run community and fire service objections. LFP, despite its lower energy density, will continue to take an ever-larger share of the market, at least until new chemistry batteries are widely available.

Project developers and the grid their projects connect to operate in time frames well beyond any single administration. BESS projects are fortunate to have avoided the Trump administration’s crosshairs, which harmed other clean energy sectors. My hope for 2026 is that it will continue to work its magic, quietly installing reliability and avoiding controversy.

Power Play columnist Dej Knuckey is a climate and energy writer with decades of industry experience.