Battery Storage in the U.S.: From “Nice to Have” to Core Infrastructure for Big Energy Users

Manufacturing • Mining • Data Centers • Heavy Industry

If you run a large energy-hungry operation in the U.S. — steel, semiconductors, mining, chemicals, data centers, cold storage, you name it — battery energy storage systems (BESS) just moved from “interesting pilot” to core infrastructure decision.

Here’s the blunt version:

• By the end of 2024, U.S. utility-scale battery storage passed 26 GW, up about 66% in a single year, and still only around 2% of total generation capacity — meaning there’s a lot of runway left. (U.S. Energy Information Administration)
• Developers added more than 10 GW of new grid-scale storage in 2024 alone, and the pipeline for 2025 is even bigger. (EIA / preliminary generator inventory)
• The Inflation Reduction Act (IRA) introduced a 30% investment tax credit (ITC) for standalone storage, plus stackable bonus credits (domestic content, energy communities, etc.) that can push support significantly higher. (IRS IRA credits overview)
• States like California and New York layer on top:
  • California’s Self-Generation Incentive Program (SGIP) offers substantial rebates for commercial and industrial storage. (CPUC SGIP)
  • New York’s Energy Storage Program targets 6 GW of storage by 2030, with dedicated funding for C&I and community-scale projects. (NYSERDA Energy Storage Program)
• Federal rules — FERC Orders 841 and 2222 — opened wholesale power markets to storage and aggregated distributed energy resources (DERs), turning batteries into potential revenue assets, not just cost savers. (FERC Order 2222 explainer)

The upside: lower demand charges, peak shaving, resilience, new revenue streams, and decarbonization.

The downside: tightening domestic-content / foreign entity of concern (FEOC) rules, ugly interconnection queues, and rising local concern about safety and siting — all amplified by evolving federal tax policy. (Reuters energy storage outlook)

If you’re running a big load, the real question over the next 12–24 months is whether you treat storage as strategic infrastructure or watch your competitors do it first.

1. Why BESS is exploding now — and why heavy industry should care

The U.S. grid is being hit from three directions at once:

1. Massive renewable build-out
   Solar and wind are dominating new capacity additions. That’s good for emissions, but it creates steep ramps and price volatility.
2. Exploding loads from data centers and AI
   New AI-heavy data centers and digital infrastructure are driving sharp growth in peak demand and stressing local grids, especially in regions like Texas and the Mid-Atlantic. (Reuters on microgrids & Big Tech)
3. More extreme weather and reliability issues
   Wildfires, heat domes, polar vortexes, hurricanes — pick your regional disaster. Outage risk is now a board-level concern, not just an operations annoyance.

Batteries sit exactly at the crossroads of these problems:

• They’re fast (millisecond response).
• They’re modular (from a few hundred kW behind-the-meter to multi-hundred-MW grid-scale).
• They can be behind your meter or in front of it as a grid resource.

Despite the rapid growth, all that storage still represents only about 2% of U.S. utility-scale capacity. (EIA)

For large energy users, the point isn’t that batteries are cool tech. It’s that they’re one of the few tools that simultaneously hits:

• Reliability risk
• Power cost volatility
• Decarbonization and customer / OEM requirements

2. The current U.S. BESS landscape: what’s real, not hype

Some grounding numbers:

• 26+ GW of utility-scale battery storage online by end of 2024;
• 66% year-on-year growth in capacity;
• Around 10.4 GW of new utility-scale battery capacity added in 2024, second only to solar for new generation additions. (EIA)

Geographically:

• Texas and California are leading deployments, driven by high renewable penetration, volatile prices, and strong economics for arbitrage and grid services.
• Pipelines are growing rapidly in the Southwest, Midwest ISO regions, and the Southeast as utilities confront both new load and aging infrastructure.

Layer on top of that:

• A still-favorable IRA tax environment (for now);
• New DOE support via the Loan Programs Office (LPO) to finance large storage and grid projects. (DOE LPO energy storage projects)

Bottom line: At the grid level, BESS is already a core planning assumption — and that perspective is bleeding into how big customers think about their own sites.

3. The value stack for large energy users: what BESS actually does for you

Forget the buzzwords. A serious BESS project for a big power user usually leans on five main value streams.

3.1. Demand charge reduction & coincident peak shaving

• The battery discharges during your most expensive 15–60 minute intervals, or during system coincident peaks.
• In high-demand-charge territories (California, New York, much of the East Coast), shaving even 1–5 MW of peak can be worth six or seven figures per year.

3.2. Time-of-use (TOU) arbitrage

• Charge when prices are low (often midday in solar-heavy markets).
• Discharge into evening peaks when prices spike.
• This is particularly lucrative in CAISO and ERCOT, where high renewables create intraday price swings that storage can monetize.

3.3. Backup power & resilience

For many operations, losing power for five minutes is worse than losing it for five hours:

• Wafers ruined in fabs
• Interrupted smelting or chemical processes
• Spoiled cold storage
• AI jobs lost mid-run
• Underground mines facing safety risks

BESS combined with on-site generation (solar, engines, fuel cells, hydrogen, etc.) can form a microgrid that can island for hours or days, depending on design. Microgrids are scaling quickly across the U.S. as data centers and utilities try to shore up reliability. (Reuters microgrid coverage)

3.4. Wholesale market & grid-services revenue

Thanks to FERC Orders 841 and 2222, storage and aggregated DERs can participate in ISO/RTO markets:

• Frequency regulation
• Reserves
• Capacity markets
• Energy arbitrage

In practice, this usually means:

• Your BESS participates in markets via an aggregator or a structured contract with a developer.
• You share in the revenue while retaining priority for your site’s reliability and peak-shaving needs.

3.5. Decarbonization & ESG

BESS doesn’t create clean electrons by itself, but it shapes how and when you consume:

• Increases your ability to match on-site renewables to your load profile.
• Reduces reliance on peak fossil generation.
• Supports corporate and supply-chain decarbonization targets that are increasingly contractual, not just marketing.

You don’t need all five to make a project pencil. Many industrials are moving forward on just two pillars:

Peak shaving + resilience, with any market revenues treated as upside, not the backbone of the deal.

4. Federal incentives: where the serious money starts

The Inflation Reduction Act (IRA) fundamentally changed U.S. storage economics.

4.1. Standalone Storage ITC (Section 48)

Key features:

• 30% base ITC for qualified standalone storage (minimum capacity threshold, placed in service after 2022).
• No requirement to co-locate with new solar — a major shift from pre-IRA rules.
• Applies to both front-of-meter and behind-the-meter projects.

High-level official info: (IRS IRA clean energy credits)

4.2. Bonus credits

On top of the 30%:

• Domestic content adders if enough U.S.-sourced components are used.
• Energy community adders for qualifying coal / fossil communities and brownfields.
• Specialized bonuses for certain low-income and affordable-housing projects.

Structurally, well-qualified projects can reach effective support levels north of 40% before you even account for depreciation.

4.3. Direct pay, transferability & depreciation

• Certain tax-exempt entities (public power, co-ops, tribes, etc.) can access direct pay.
• Taxable entities can sell (transfer) ITCs for cash to third parties, which has become a major financing tool for large projects.
• Most BESS assets qualify for accelerated MACRS depreciation, boosting after-tax returns.

4.4. Policy risk and FEOC rules

Here’s where the story gets less rosy:

• Under the new “One Big Beautiful Bill Act” and subsequent guidance, domestic-content and FEOC rules are tightening, pushing developers toward U.S. and allied supply chains if they want full credit value. (Reuters)
• Projects dependent on heavily China-linked components face higher risk that their assumed ITCs could be reduced or disallowed.

So: do not model your project assuming every bonus credit and best-case tax outcome. Get a specialist to run downside cases on tax treatment and content rules.

5. State & utility incentives: where projects really start to pencil

Federal incentives are the big macro lever. State and utility programs are where deals go from “interesting” to “sign the term sheet.”

5.1. California – SGIP and the storage pivot

California’s Self-Generation Incentive Program (SGIP) is still one of the most important storage programs in the country:

• Offers rebates per kWh of installed battery capacity.
• Supports residential, commercial, and industrial customers, with higher incentives in equity and resiliency categories.
• Can cover a meaningful share of installed cost for the right commercial/industrial projects.

Official program page: (CPUC SGIP)

On top of that:

• Aggressive time-of-use rates, high demand charges, wildfire-driven outages, and a maturing storage ecosystem make California one of the most favorable markets for C&I BESS.

5.2. New York – NYSERDA & the 6 GW target

New York has set a 6 GW storage target by 2030 and backed it up with real money:

• NYSERDA runs incentive programs for residential, retail, community-scale, and large-scale storage.
• A recent order expands funding for storage across segments, including C&I. (NYSERDA Energy Storage Program)

For large users in NYISO territory, the combination of:

• High capacity and energy prices,
• Peak-shaving potential, and
• Incentive support

makes storage financially compelling, especially when reliability issues enter the picture.

5.3. Other states

Elsewhere:

• Texas (ERCOT) tends to favor market-driven revenue (arbitrage + ancillary services) over direct rebates. Volatile prices mean upside is big, but so is risk.
• States like Colorado and Georgia are rolling out grants and microgrid support targeting resilience and rural / critical infrastructure, often tying storage into local economic-development and grid-hardening strategies. (Reuters microgrid story)

The practical takeaway:

Federal incentives are national. Economics are local. You need tariff-specific and ISO-specific modeling — not a generic “U.S. average” ROI slide.

6. Wholesale markets: turning your BESS into a mini power plant

Regulatory changes at the wholesale level matter more than many industrial customers realize.

• FERC Order 841: required ISOs/RTOs to remove barriers preventing storage from participating in wholesale markets.
• FERC Order 2222: opened the door for aggregated DERs, including small behind-the-meter storage, to offer services into those same markets. (FERC 2222 explainer)

For a large energy user, this means:

• Your on-site battery can potentially earn frequency regulation, reserve, and capacity payments, in addition to your bill savings.
• You’ll likely work through an aggregator or developer who handles bidding, dispatch, and compliance while guaranteeing you a slice of the value.

This is also where long-duration energy storage (LDES) starts to matter — 10+ hour systems that can handle multi-day flexibility needs.

The U.S. Department of Energy’s Long-Duration Energy Storage portfolio explicitly targets cost reductions and commercial deployment of these technologies. (DOE LDES overview)

In short: markets are evolving to pay well for flexibility, and storage is being wired into those mechanisms.

7. How peers are using BESS today

You’re not the only one wrestling with this. Here’s what others are actually doing — not just talking about.

Data centers & AI clusters

• Pairing tens to hundreds of megawatts of BESS with on-site or nearby generation to control grid interface, smooth ramps, and avoid paying for oversized grid capacity.
• Big tech and hyperscalers are actively building microgrids with storage to protect new AI facilities from interconnection delays and outages. (Reuters microgrid coverage)

Manufacturing & heavy industry

• Steel, cement, glass, and chemical plants are using 5–50 MW, 2–4 hour systems to:
  • Cut coincident peaks
  • Provide ride-through for grid disturbances
  • Support participation in demand response programs

Storage turns grid volatility into something closer to a controllable input rather than a random punishment.

Mining operations

• Remote and weak-grid mines are combining BESS with diesel, gas, or renewables to:
  • Reduce fuel consumption
  • Improve power quality
  • Maintain safety-critical systems during outages or voltage dips

Reliability is not just a financial question underground; it’s regulatory and life-safety.

Ports, cold storage & logistics

• BESS is backing up cranes, refrigeration, and critical IT at ports and logistics hubs.
• Some are part of community or campus microgrids, designed to keep entire industrial districts running during grid events.

None of this is theoretical anymore. It’s being financed under real covenants and credit committees.

8. Risks, headaches, and what you need to be honest about

This is where the consultant slides tend to get vague. Let’s not.

8.1. Safety and community concerns

Large lithium-ion systems do carry real thermal runaway risk if poorly designed or operated. Several high-profile incidents have driven:

• Local moratoria in some jurisdictions
• Much stricter fire-code requirements
• Skepticism from communities and first responders

To get a project through in 2025+ you’ll need:

• Designs aligned with NFPA 855, UL 9540/9540A and current fire codes
• Proper separation distances and fire-suppression systems
• Documented emergency response plans and proactive engagement with local authorities

Any developer who hand-waves fire risk is a liability, not a partner.

8.2. Supply chain and domestic content

• Tightening domestic-content and FEOC rules means cheap imported batteries come with growing policy risk. (Reuters)
• At the same time, U.S. cell, module, and pack manufacturing is ramping fast — but it’s still catching up to demand.

Your model needs explicit cases:

• Full base ITC
• Base + partial bonus
• “We missed domestic content and lose bonus credits”

8.3. Technology and performance risk

• Batteries degrade; you won’t have nameplate capacity forever.
• Aggressive cycling for arbitrage and grid services will age systems faster than conservative peak-shaving strategies.
• Long-duration, non-lithium solutions (flow batteries, thermal storage, hydrogen hybrids, etc.) are advancing quickly under DOE and state programs, but many are still at the early commercial stage.

If you intend to adopt LDES or hybrid systems (for example, hydrogen + BESS microgrids like California’s emerging projects), be honest about demonstration vs. proven tech.

8.4. Policy and market risk

• Today’s tax and market structures are highly favorable. Future ones may be… less generous.
• Evolving ITC rules, domestic-content guidance, ISO/RTO market redesigns, and utility tariff changes can all hit your value stack.

Strategy: front-load your economics. Rely on:

• Initial capital support
• Early-year bill savings
• Conservative assumptions on market revenues and tax treatment

Don’t build a project that only works if every upside scenario comes true.

9. A practical 12–24 month roadmap for large energy users

If you’re serious about BESS, treat it like any other major infrastructure decision.

Step 1: Get your data house in order

• 12–24 months of interval load data (15-minute or better).
• Full tariff structure, riders, and any demand-response programs you’re enrolled in.
• Planned changes in load: new lines, expansions, data centers, electrification of heat or vehicles.

Step 2: Run a neutral feasibility study

Not a vendor’s “ROI in 18 months” pamphlet. A real model that:

• Tests multiple BESS sizes (power and duration).
• Stacks: demand-charge reduction, TOU arbitrage, resilience value, and any DR/wholesale revenue.
• Sensitizes battery cost, degradation, ITC levels, and financing structure.

Step 3: Map incentives and policy reality

• Federal:
  • Confirm ITC eligibility and potential bonus credits.
  • Decide if transferability or direct pay (if applicable) makes sense.
  • Use official guidance as your baseline. (IRS IRA credits)
• State & utility:
  • Check SGIP, NYSERDA, or other local programs.
  • Confirm whether budget is actually available, not just “on the website.” (CPUC SGIP) · (NYSERDA storage)

Step 4: Choose your ownership / contracting model

Options typically include:

• You own the BESS and capture all savings and incentives.
• Energy-as-a-service (third party owns the asset, you pay for capacity or performance).
• Joint ventures or structured partnerships if you want to turn your site into a local grid hub.

Step 5: Start small—but not trivial

A 100 kW “pilot” at a 50 MW site is mostly an educational toy.

A better approach:

• Build a meaningful first tranche (e.g., 5–20 MW depending on your load) that can be expanded.
• Design interconnection, controls, and microgrid architecture assuming you’ll scale up later.

Step 6: Bake in safety and community strategy from day one

• Involve fire marshals, AHJs, and local stakeholders early.
• Be transparent about technology, standards, and emergency procedures.
• Make conservative design choices on siting and separation. Cutting corners here is the most expensive way to save money.

Step 7: Align storage with your broader decarbonization and growth plans

• Tie BESS sizing and timing to your plans for solar, wind, hydrogen, fleet and process electrification.
• Treat storage as a platform you’ll build on — not a one-off gadget to show in your sustainability report.

10. The bottom line: BESS as strategic infrastructure

For large energy users, U.S. battery storage is:

• A hedge against unstable tariffs, volatile markets, and increasing outage risk.
• A lever to unlock growth (new data centers, new lines, electrified processes) in a world where grid connections are slow and capital-constrained.
• A bridge to a future where long-duration storage and more complex microgrids become standard, supported by aggressive DOE programs and utility investment. (DOE LDES overview) · (DOE LPO energy storage projects)

The incentives are strong now. The grid needs flexibility now. Your competitors are not waiting.

So the real question isn’t “Should we look at BESS?”

It’s:

How fast can we build a credible storage strategy — and who do we trust to execute it without blowing up our risk profile?