The U.S. battery energy storage sector posted record installations in 2025 even as structural barriers in grid interconnection continue to threaten the pace of future deployment. Federal and state permitting reforms have advanced, cutting environmental review timelines and creating new pathways for storage projects on federal lands. Yet analysts warn that the interconnection queue - where projects wait years for grid access - remains the more consequential obstacle.
Background
The U.S. energy storage market hit a record 18.9 gigawatts of battery energy storage system installations in 2025, a 52% increase over 2024, according to the latest U.S. Energy Storage Monitor report from the American Clean Power Association (ACP) and Wood Mackenzie. New activity spread across 13 states, demonstrating market diversification beyond California and Texas, which have historically dominated utility-scale battery storage deployment.
That growth unfolded against a backdrop of significant regulatory activity. On July 28, 2023, the Federal Energy Regulatory Commission (FERC) issued Order No. 2023, adopting reforms to reduce backlogs for projects seeking transmission access, improve interconnection certainty, and ensure access for new technologies. The rule replaced the legacy first-come, first-served serial approach with a "first-ready, first-served" cluster study model requiring generators to demonstrate commercial readiness before advancing in the queue. FERC also eliminated the previous reasonable-efforts standard governing study deadlines, instead imposing financial penalties on transmission providers that miss targets - including $1,000 per business day for delayed cluster studies and $2,500 per business day for delayed facilities studies.
On the environmental review side, the Energy Permitting Reform Act of 2024 proposed new categorical exclusions for energy storage deployment on previously disturbed lands - exclusions that currently exist at the Department of Energy but not at the Department of the Interior or USDA, which more often review projects requiring such relief.
Details
Early data suggest FERC Order 2023 is producing measurable results in agreement volume. In 2024, U.S. grid interconnection agreements jumped 33% to a record 75 GW, credited largely to FERC Order 2023 reforms, with approximately 75% - or 58 GW - of those agreements covering solar and battery storage projects. According to Wood Mackenzie analyst Kaitlin Fung, "It's clear that these reforms are showing early signs of promise in accelerating the pace of interconnection studies."
The aggregate queue backlog, however, remains enormous. Total interconnection queue capacity dropped from 2,600 GW in 2023 to 2,300 GW in 2024, the first decline in at least a decade, with solar and battery storage collectively accounting for 80% of queued capacity. Analysts at the Solar and Storage Industries Institute caution that the decline is misleading. Hesitation around political uncertainty, elevated interest rates, tariffs, and local permitting challenges meant 47% less solar and 32% less battery storage capacity entered the queue in 2024 than in 2023. Both CAISO and PJM - two of the largest grid operators - were not accepting new interconnection applications in 2024 as they worked to clear the project backlog; applications in those territories accounted for nearly 30% of all new queue entrants in 2023 but exactly 0% in 2024.
Regional wait times remain severe. For projects that became operational from 2022 through 2024, development timelines in CAISO were the longest at an average of 9.2 years for all project types, while ISO New England had the shortest at about 3.8 years. For the 110 solar, wind, and energy storage projects active in the traditional NYISO queue, the average current wait time is 6.53 years, according to Enverus. Battery storage developers face a specific structural disadvantage: projects that adjust megawatt capacity or duration risk triggering re-studies, and while storage can ease congestion, the queue treats it like generation, slowing deployment.
Expedited pathways at major operators have produced mixed results. FERC approved MISO's Expedited Resource Addition Study (ERAS) proposal on July 22, 2025, but MISO data show 74% of ERAS fast-track applicants were natural gas facilities, while only 15% were battery storage. Because fossil fuel projects tend to be larger and better resourced, they benefit more from special-access processes, while smaller developers wait without assistance.
Some grid operators are developing alternative pathways. SPP's Surplus Cluster program allows developers to reuse existing interconnection capacity by adding new generation or storage to existing wind or solar sites, reducing study times and costs for projects that can share infrastructure.
Outlook
Processing the backlog and adopting new interconnection procedures will take grid operators several more years. PJM has promised speedier timelines of one to two years, but outcomes remain to be seen. The stakes for the storage market are significant: Wood Mackenzie's high-case scenario projects approximately 36 GW of new battery energy storage deployed in 2031, but only if conditions include higher demand growth, federal permitting relief, and workable Foreign Entity of Concern guidance on tax credits. Near-term supply chain adjustments are projected to drive an 11% contraction in the U.S. utility-scale storage market in 2026 and an 8% decline in 2027, with a recovery to double-digit growth expected in 2028 and 2029 as domestic manufacturing capacity comes online.
