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How Battery Storage Can Tackle Load Growth and High Energy Bills

Battery energy storage is a fast, affordable, and reliable multi-tool—and developers can get a discount until 2033.

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100% Clean Power

Monday, September 15, 2025

Battery storage system on open land at sunrise

Key Takeaways

Battery storage is one of the best tools we have to tackle the nation’s energy affordability crisis and the load growth surge from data centers and electrification.
Battery costs in the US have drastically fallen in recent years.
Battery systems are comparatively easy to get sited and approved. Battery storage can be deployed much faster than gas-fired power plants, which are hindered by long construction timelines and supply-chain delays until at least 2029.
Right now, developers can leverage one of the few remaining federal investment tax credits to lower costs by 30 percent on energy storage through 2033.
Batteries are now commercially viable for utility-scale deployment. They can provide similarly reliable backup power as gas peaker plants at often lower costs and zero emissions. By harnessing battery storage—especially with solar—states and public utility commissions (PUCs) can deliver fast and price-competitive results.

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Battery Storage 101

Battery energy storage systems (BESS) collect and store electrical energy generated from renewable and non-renewable energy sources for later use. This technology cleverly takes advantage of the unused capacity in the system, storing surplus energy during periods of low demand and dispatching stored energy when necessary.

Think of it this way: Most grids have capacity that sits idle most of the day. But during times of peak load, grids need more power. Rather than building more power lines and power plants that will mostly sit idle, batteries can cheaply use existing capacity to meet peak demand. As such, BESS functions like a “multi-tool” for the electricity grid. They can smooth out supply and demand, improve integration with solar and wind energy, and support grid flexibility and reliability. Batteries are also valuable for reducing the need for transmission upgrades in congested areas.

Different grids require different storage capacity. Shorter-duration storage (2 to 4 hours) is often deployed to tackle short-term load balancing needs, such as using afternoon solar power to meet evening peak demand. Recent technological advances mean that batteries can now offer longer storage durations (over 12 hours), supporting multi-day or seasonal balancing.

Battery Storage Is Fast, Affordable, and Ready for Prime Time

Battery storage is a fast, cost-competitive, and commercially viable tool that states, PUCs, and developers must deploy to tackle surging load growth and the mounting energy affordability crisis. With 30 percent storage tax credits available until 2033, now is the time to deploy, deploy, deploy. Here are the facts.

Battery storage capacity has been skyrocketing.

Battery storage is being rapidly scaled across the country, especially in Texas and California, with energy storage installations growing over 33 percent nationally from 2023 to 2024. Solar-plus-storage made up 84 percent of new installed U.S. grid capacity in 2024. Why? It’s cheap, fast, and reliable.

Battery storage is a cost-effective energy resource.

The cost of battery systems has been steadily dropping globally by up to 40 percent per year since 2022. Within the United States, the battery storage market saw record growth in 2024, largely thanks to falling battery manufacturing costs—a trend that’s expected to continue for at least the next five to seven years. Technical and cost improvements in batteries are even making around-the-clock solar energy economically viable for the first time. By contrast, the cost of building gas-fired generation has tripled between 2022 and 2025, as recently noted by NextEra Energy CEO. Natural gas prices are also expected to increase 91 percent between 2024 and 2026, according to the Energy Information Administration (EIA). Lazard’s 2025 Levelized Cost of Energy (LCOE+) Report finds that 4-hour subsidized battery storage is usually cheaper than new gas peaker plants.

Battery storage is one of the fastest ways to add peak capacity to the grid—much faster to deploy than gas.

Since 2010, the average U.S. battery development timeline has been 1.69 years, according to U.S. Energy Information Administration (EIA) data. The average natural gas combined cycle plant development timeline was four years. But that statistic does not reflect recent gas turbine shortages that have stretched the timeline even further. Right now, the supply of gas turbines is effectively sold out until at least 2029, meaning that dispatchable storage and renewable energy are the only viable options for new generation before the end of the decade, according to new analysis from IEEFA.

With data centers and electrification driving unprecedented energy demand, batteries emerge as a clear winner.

The U.S. government is incenting a base 30 percent tax credit for battery storage through 2033.

Energy storage developers can obtain a discount on energy storage using the Section 48E Investment Tax Credit. Unlike the solar and wind tax credits, which the One Big Beautiful Bill Act (“OBBBA”) will phase down quickly, the federal tax credits for energy storage have been left largely unchanged. To obtain the full value of the storage tax credit, development should commence before the end of 2033. After that, a gradual phase-down in the tax credit value starts in 2034, before being eliminated at the end of 2035.

It’s worth noting that post-OBBBA, the storage tax credit is now subject to foreign entity rules, including the Prohibited Foreign Entity (PFE) framework and the Material Assistance Cost Ratio (MACR) threshold. PFE rules bar Chinese companies, including those with direct ownership, financial agreements, or licensing, from eligibility for the storage tax credit. The MACR threshold gradually incentivizes non-reliance on “prohibited entities." The MACR threshold goes into effect after December 31, 2025. States can help developers prepare by ensuring their storage supply chains are PFE- and MACR-compliant. Developers should leverage these crucial and time-limited tax credits to maximize ratepayer cost savings on this already-affordable technology.

Battery storage can help quickly tackle the energy affordability crisis.

In Texas, energy storage paired with renewables is enhancing grid reliability during peak heat days and keeping energy costs low. The addition of 5 GW of energy storage last year contributed to $750 million in energy cost reductions for Texans. By contrast, energy bills in the PJM grid region—covering Washington, D.C. and 13 states in the Mid-Atlantic and Midwest—tcontinue to skyrocket, in part because PJM’s broken interconnection queue has stalled renewable energy and battery storage projects for 5 years, on average.

Battery storage helps secure the grid during extreme weather.

For instance, following a summer of rolling blackouts in 2020, new storage helped California successfully endure last summer’s heatwave. By multiplying its storage capacity from 0.5 GW in 2018 to 13.3 GW in 2024, California was able to provide reliable power for customers despite the extreme weather. Solar and utility-scale battery capacity also saved the Texas grid last summer.

Policy Tools for States

1. Support developers to leverage the 30 percent federal tax credits for energy storage

Tariff and foreign entity navigation support: States can provide guidance on how to navigate tariffs and meet the foreign entity requirements for the 48E storage tax credit. States could publish toolkits, supplier lists, and model contracts to help developers vet suppliers and protect against future ineligibility.
Bridge to “begin construction”: States can leverage state green banks or use financing programs to help developers start projects before the foreign entity restrictions begin in 2026.
Cost-offset tools: States can offer temporary state incentives, including sales tax or property tax relief, clean-peak payments, and performance adders to combat any cost hikes associated with tariffs and foreign entity requirements.
Domestic supply boost: Target incentives toward local battery production, backed by workforce programs.

2. Enact renewable or clean electricity standards that are accompanied by procurement targets for energy storage

These procurement mandates can require utilities to purchase a specific amount of storage capacity. Such policies can encourage the development of storage technology and require utilities to consider lower-cost storage in their integrated resource planning processes:

States that pair renewable portfolio or clean electricity standards with storage procurement mandates include California, Michigan, New Jersey, New York, Oregon, Rhode Island, and Virginia.
States with energy storage targets or goals include Connecticut, Maine, Maryland, Massachusetts, and Nevada.

3. Invest in state battery storage programs

For example, the Maryland Energy Administration will fund the purchase and installation of battery storage to support residential and commercial storage. Meanwhile, New Jersey’s Board of Public Utilities has established the Garden State Energy Storage Program (GSESP), which will help deploy 2 GW of energy storage by 2030. New Jersey’s multi-phase program includes a competitive bidding procurement process for larger projects, as well as fixed and performance-based incentives for smaller energy storage systems connected to local distribution grids.

4. Help match energy storage developers with existing renewable energy projects and existing power plants

5. Speed up interconnection queues

For example, the Electric Reliability Council of Texas (ERCOT) has seen battery capacity skyrocket in Texas since 2022. Unlike California, Texas does not have a formal policy structure to incentivize energy storage. Rather, the state’s fast interconnection queue and competitive energy-only market have allowed the cheapest technologies to scale quickly—namely battery storage and renewables. Compared to regions with slow queues and a heavy reliance on clunky capacity markets like PJM, ERCOT has avoided the price hikes plaguing other regions. States should pressure RTOs and utilities in their states to expedite their interconnection queues to avoid the disastrously high prices seen in PJM.

Useful Resources

Policy Report: Resources for the Future (2025) Charging Up: The State of Utility-Scale Electricity Storage in the United States.
Podcast episode: “Solar+storage is so much farther along than you think.” (Volts, Interview with Kostantsa Rangelova and Dave Jones from Ember, July 16, 2025).
Example: Minnesota’s PUC recently approved the largest battery facility in the state.