A clean energy technology often linked with renewables is notching record growth in President Donald Trump’s America, encroaching on fossil fuels even in the Texas oil patch.
Batteries that can store and release big amounts of electricity are increasingly connecting to the electricity grid and major industrial projects like data centers, even without the federal grants and loans offered in the Biden administration.
Those batteries are providing critical backup to the wind and solar industries that Republicans routinely chastise as unreliable — and this year stripped of grants and long-term tax cuts.
“This year is looking extremely strong now with some projects moving ahead quicker than anticipated,” said Allison Weis, global head of storage at consulting firm Wood Mackenzie.
Batteries are expected to account for roughly a quarter of all installations to the grid this year, according to the Energy Information Administration, with storage costs projected to decline substantially in the coming years. In the second quarter of this year, battery installations were 63 percent higher than the same period last year, according to the American Clean Power Association.
All together, the battery market is threatening plans for new natural gas, diesel and coal plants. The reason is simple: Batteries allow companies to store and use power when they need it. That means a data center developer can store solar-generator electricity and use it at night, instead of relying on a fossil fuel plant, like a gas peaker, to step up.
“Batteries and solar are like peanut butter and jelly,” said Mark Dyson, managing director for carbon-free electricity with the environmental group RMI. “There’s a natural diurnal cycle to the sun, obviously, and also therefore to how batteries are going to be operating most economically.”
In deep-red Texas, the battery buzz is growing louder.
“We’re really trying to change the game,” Jon Parrella, the Houston area-based chief executive officer for battery firm Terraflow Energy, said in an interview. “We can get data centers online faster without having to have the grid infrastructure change as massively as everybody thinks [it needs].”
Several factors are driving private investment. Many companies are looking to batteries to meet clean energy pledges — and power demand growth forecasts not witnessed in the U.S. for decades, driven in large part by a scramble to stand up artificial intelligence data centers. Developers are also seizing on batteries to bypass sluggish permitting for new large projects like power plants.
Meanwhile, the One Big Beautiful Bill Act, the marquee Republican legislation this year that cut wind and solar subsidies, delivered a win for batteries, preserving a key tax credit through 2033.
And signs of trouble in fossil fuel markets are also spurring battery growth. Natural gas prices are projected to rise in the coming years, while low crude oil prices are forecast to stymie U.S. production.
Cutting carbon emissions
Parella’s company is developing a project in Bellville, west of Houston, using vanadium flow batteries. That’s a type of battery technology often considered long-duration energy storage (LDES) because they can discharge electricity for up to 10 hours or more. Other long-duration technologies include iron-air batteries and even pumped hydropower storage.
A separate Terraflow project on the Gulf Coast in the Port of Victoria is also advancing. Project partner Optimus Technology Group is planning to use Terraflow batteries at data center projects in Texas, Arizona, Ohio and other states, according to Keith Borie, vice president at Optimus.
The long-duration systems differ from lithium-ion batteries, which are more prevalent today but discharge for shorter periods of time and pose some risks for leakage and fires.
Parella says batteries are competing with “thermal” power generation, a reference to fossil fuels.
“From a carbon footprint, the biggest thing and impact we have is we significantly reduce the need for thermal generation of data centers,” he said. “They do not have to fire up anywhere near as much, and it gives us the ability to significantly reduce that footprint.”
Terraflow is just one company in a broad battery market in the U.S. that’s racing to catch up with global competitors.
“We are way behind other countries in terms of electrification and moving away from fossil-based economies,” said Anna Siefken, a former DOE official under Biden who now is North America policy and markets lead at the industry association LDES Council. “We have to make the market.”
Lithium-ion batteries, similar to technology in smartphones and electric vehicles, currently dominate the market.
They have changed how the grid operates over the past several years, increasingly providing power when demand surges, such as during evening hours in California when the sun is no longer shining. That differs from initial uses of batteries a decade ago to provide power mainly during small disruptions.
Among the biggest players are Tesla, whichunveiled a new grid battery product last week called Megablock, which combines four existing batteries around a transformer. The company is promising deliveries next year and claims it can reduce construction costs by preengineering the system in the factory, so it can plug easily into the grid.
“Lithium ion has gotten so cheap … it’s almost easier to just add more lithium batteries than to try and switch to a different technology,” said Weis.
As one example, a new battery complex on Oahu, Hawaii, began operating last year with Tesla Megapacks to replace power lost from the state’s last retired coal plant.
Skepticism at DOE
While Energy Secretary Chris Wright has said he supports long-duration storage, he also is critical of renewables.
“We need more affordable energy storage,” Wright said recently at the Council on Foreign Relations, arguing that batteries increase the costs of renewables “five- to fifteen-fold.”
“We don’t have a practical way to firm wind and solar today,” he said, referring to power that can be supplied 24 hours a day.
Battery proponents point to skyrocketing power costs from gas and coal plants during periods of highest demand. Meanwhile, they say batteries and renewables alone are not likely to fully power grids anytime soon, arguing that some gas peaker plants will continue to be important contributions to the grid.
Dyson said it would be “ridiculously expensive” to power grids with only renewables and batteries “because you’d need to oversize all three of those resources to a level that is untenable.”
“Nobody is asking for or suggesting that wind or solar should be 24-7 resources,” he said. “No resource is 24-7 — even so-called baseload power plants have frequent outages that are incredibly disruptive when they occur.”
But experts say Wright’s downbeat comments on batteries don’t match their increasing market penetration.
“Almost all of the planned capacity in Texas is solar and storage, so it must be penciling out for those developers,” said Seth Feaster, an energy data analyst at the Institute for Energy Economics and Financial Analysis. “Otherwise, you’d be building gas plants.”
“You could have a stampede that’s going over a cliff. I don’t think that’s true in the electricity markets,” he said.
DOE’s loan office is continuing to finance an Eos Energy Enterprises battery project in Pennsylvania, after the Biden administration closed a loan guarantee for the company in December. Other battery producers have applied to the loan office, according to a DOE spokesperson, who did not provide details on the applications.
The deployments come as renewables, which are tied to many battery projects, are under pressure in the U.S.
The Trump administration is frustrating permitting for wind and solar on public lands. In the first half of this year, solar energy provided more than half of new generation to the U.S. electricity grid, according to analysis earlier this month from the Solar Energy Industries Association and Wood Mackenzie. While that data demonstrates strength in the sector, new solar installations dropped in comparison to 2024. The analysis suggests a fifth less solar will be deployed in the U.S. in 2030, compared with previous forecasts.
Made-in-America challenges
While grid batteries emerged from the One Big Beautiful Bill Act with a preserved tax credit, the law is still creating headwinds for the industry.
The megalaw included “foreign entities of concern” provisions set to kick in in January aiming to prohibit imports of components from China, North Korea and other foreign adversaries.
While the measure allowed companies to obtain tax credits if they break ground through 2033, it included tighter timelines for the industry to comply with FEOC restrictions than many other industries. In 2026, storage projects will need to spend 55 percent of costs on non-FEOC components, a percentage that increases to 75 percent by decade’s end.
Considering that most battery components come from China, the restrictions add additional barriers for developers.
“There’s definitely a risk,” said Weis, noting that coming Treasury guidance will clarify how much the rules could exacerbate challenges for the sector. The guidance is required by the end of next year, but could be released earlier.
After the law’s passage in July, analysis firm BloombergNEF estimated grid battery installations could drop 15 percent over the next decade from where they would be otherwise, largely because of the FEOC restrictions.
Treasury’s guidance could be particularly important for battery cells, as the rest of a typical storage system is “relatively easy to source outside of China,” Weis said.
The growth this year is being driven partly by developers aiming to start projects before the restrictions hit in January, analysts say.
There’s a push to “really get things in the ground as fast as possible,” said Weis. The effects of FEOC may not be seen significantly in the industry until 2027, she said.
Tariffs and immigration raids
There also could be a contraction in growth next year because of the uncertainty from tariffs and policy shifts that occurred in the early months of Trump’s presidency — a period that takes time to show up in deployments.
“There was a pause in getting contracts signed,” she said.
After an expected drop in installations in 2026 and 2027, the industry should recover to 2025 levels within five years, but factors such as how much the Trump administration cracks down on permitting for solar projects tied to batteries could change things, according to Weis.
And despite the push for long-duration storage by Wright, that segment of the market may not be competitive until after 2030, said Isshu Kikuma, an analyst at BloombergNEF.
“It will be very difficult” to compete with the low costs of lithium-ion technology, although DOE could play a role in supporting startups, he said.
Among the startups that have pulled back on sodium-ion technology, a potential alternative to lithium-ion, is Bedrock Materials. The company halted operations earlier this year after facing cost challenges.
A wild card for grid batteries is how much domestic manufacturing may step up to get around the FEOC restrictions. Wood Mackenzie’s projections, for example, assume that growth in domestic supplies by the end of the decade will help counter any downturn.
LG Energy Solution, a Korean battery-maker, is among the companies well positioned to help drive domestic manufacturing because it has EV plants that are not being utilized and can be switched to produce grid batteries, Weis said.
“You don’t need that big of a change in EV demand to really create plenty of opportunities” for grid battery production, she said.
The company’s battery plant with Hyundai in Georgia wasrecently delayed after a raid by U.S. immigration authorities. White House immigration policies are threatening a brain drain at EV and battery plants.
Still, Parella said storage demand is likely to outstrip supply over the foreseeable future.
“The manufacturing capacity for long-duration storage is way short of where it needs to be,” he said. “The market’s so massive that there could be 20 more companies like us, and there’s still room for everybody to play.”
