Contributed by Finian Tran, Analyst, Manhattan University Investment Fund

Global BESS demand jumped 51% in 2025 as installations topped 300 GWh

Last year, the combined installations of grid-scale and behind-the-meter Battery Energy Storage Systems (BESS) reached approximately 315 GWh, marking a substantial growth of around 50% year-on-year growth, as reported by Benchmark Mineral Intelligence. Looking ahead, Benchmark Mineral Intelligence anticipates that 2026 will be another robust year for BESS, with projected additions surpassing 450 GWh and no significant supply constraints expected.

Grid-scale initiatives were the main catalyst for growth, representing nearly 240 GWh of global installations. The size of these projects continued to expand, with 46 giga-scale projects becoming operational in 2025, an increase from 17 in 2024. Looking forward, over 150 giga-scale projects are presently in the pipeline for 2026.

“2026 is set for another strong year for BESS, with our current forecast for new operational capacity at over 450GWh, compared to 315GWh in 2025”, Iola Hughes, Head of Research at Benchmark Mineral Intelligence, told ESS News. “There should be no material supply constrain here, with cell production for BESS cells outpacing this growth over the last year, and capacity set to expand further this year.”

It's evident that the rising demand for BESS in 2026 is driven by the increasing need for AI data centers, electrification, and electric mobility worldwide. As these sectors transform the global energy landscape, the United States confronts a significant power challenge. In this rapidly evolving digital age, it's apparent that existing energy frameworks are ill-equipped to manage the pace, scale, and fluctuations of contemporary advancements. The demand for electricity is surging faster than new sources can be developed, exacerbating a power gap that jeopardizes U.S. economic and energy objectives. As energy systems become increasingly strained under escalating loads, BESS emerges as a vital technology facilitating this transition by connecting fluctuating renewable energy outputs with persistent digital growth.

AI Data center growth reshapes storage strategy with risk of power outage 100 times by 2030

The surge in AI applications is generating an extraordinary demand for electricity, significantly altering the strategies that utilities and storage developers employ in their project planning. A report from the U.S. Department of Energy (DOE) released in July 2025 indicates that the combination of considerable load growth and the decommissioning of stable power capacity could elevate the likelihood of power outages by a factor of 100 by 2030.

“Data centers require very high up times and, as such, they need both [storage and solar], and they need short-term and long-term reliability,” said Waranch of Spearmint Energy. “We’re seeing more and more RFPs [requests for proposals] from tech companies of all types, not just the big data companies.” U.S. Secretary of Energy Chris Wright has been clear: The United States is experiencing an unprecedented surge in electricity demand and the United States’ ability to remain at the forefront of technological innovation depends on an affordable, reliable, and secure supply of energy. In late October last year, the DoE initiated rulemaking procedures with a proposed rule to rapidly accelerate the interconnection of large loads, including data centers, positioning the United States to lead in AI innovation and in the revitalization of domestic manufacturing. Secretary Wright’s proposed rule allows customers to file joint, co-located load and generation interconnection requests. It will also significantly reduce study times and grid upgrade costs, while reducing the time needed for additional generation and power to come online.

An investment bank representative interviewed by Troutman Pepper Locke emphasized that the data center sector's readiness to invest in premium prices bolsters the rationale for energy storage, despite rising costs due to tariffs. Importantly, the justification for battery storage extends beyond decarbonization; it also encompasses issues related to grid reliability. The source remarked, "It’s not unreasonable to expect that there would be some appetite to continue to support it [battery storage] even if there are price increases.”

AI Implementation in concert with BESS portfolio growth

Deloitte's 2026 Renewable Energy Industry Outlook indicates that 76% of executives intend to boost their AI expenditures this year. It is evident that both machine learning and artificial intelligence will be vital in enhancing asset production—whether by performing maintenance tasks to minimize downtime or identifying the causes of underperformance for operators to address strategically. However, AI's ability to generate valuable insights hinges on having a reliable and cohesive data foundation. Among the many executives increasing their AI investments, only those with trustworthy data sources will fully capitalize on its implementation, particularly in a landscape where electricity efficiency is paramount.

In light of this, 2026 is anticipated to witness portfolio growth, even amidst a transition towards more intelligent asset management. The most effective portfolio developers are likely to continue expanding their operations. Numerous Independent Power Producers have declared plans to double or triple their capacity from the previous year, and many are well-positioned to achieve these goals due to robust stakeholder relationships and access to committed capital. However, for these strategies to succeed, operators must pay attention to AI trends and optimize their portfolio expansion in order to meet the surging demand for energy.

BESS market remains solid as global supply chain concerns fade

The typically conservative EIA forecasts that the capacity of utility-scale BESS in the U.S. will rise from 45.6 GW at the close of 2025 to 65.6 GW by the end of 2026, representing more than a twofold increase in total installed capacity since the end of 2024. The anticipated addition of 20 GW is only a marginal rise compared to the 18.6 GW capacity increase projected for 2025, as detailed in its December 2025 Short-Term Energy Outlook.

In its latest forecast, Wood Mackenzie anticipates that supply chain challenges will lead to an 11% contraction in the U.S. utility-scale storage market by 2026, followed by a further 8% decline in 2027. However, despite this short-term downturn, the medium-term outlook for the sector appears more favorable than previously anticipated for 2025. Significantly, the five-year utility-scale forecast has risen by 15% compared to earlier projections made before the passage of OBBBA. The growth in battery manufacturing is bolstered by pre-existing factory constructions. By 2026, several of these facilities are expected to commence operations and others will ramp up production, enhancing the domestic supply of cells and batteries.

Over the past five years, Battery Energy Storage Systems (BESS, BESSWS) have begun to operate independently from renewable energy sources. Their adaptability has enabled them to address various challenges within the increasingly strained electrical grid. Although numerous solar farms currently utilize BESS, we can expect a significant rise in their deployment by 2026 to enhance resilience, stability, and reliability.

References

1. EIA (2026, February). Short Term Energy Outlook. https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

2. Power (2026, February 9). Battery Storage Comes of Age: From Grids Accessory to Essential Infrastructure . https://www.powermag.com/battery-storage-comes-of-age-from-grid-accessory-to-essential-infrastructure/

3. PV Magazine (2026, January 20). Global BESS demand jumps 51% in 2025 as installations top 300 GWh . https://www.pv-magazine.com/2026/01/20/global-bess-demand-jumps-51-in-2025-as-installations-top-300-gwh/

4. Wood Mackenzie (2025, December 16). Utility-Scale Five-Year Forecast Increase 15% Compared to H1 2025 . https://www.woodmac.com/press-releases/us-energy-storage-installations-through-q3-2025-surpass-2024-totals/

5. U.S. Department of Energy (2025, October 23). Secretary Wright Acts to Unleash American Industry and Innovation with Newly Proposed Rules . https://www.energy.gov/articles/secretary-wright-acts-unleash-american-industry-and-innovation-newly-proposed-rules#:~:text=Newly%20Proposed%20Rules-,Secretary%20Wright%20Acts%20to%20Unleash%20American%20Industry%20and%20Innovation%20with,and%20power%20to%20come%20online