Energy Storage Pricing Beginning to ‘Fracture’ by Product Type: Report

Why It Matters

Falling utility‑scale costs improve project economics, while policy and supply‑chain shifts will shape future pricing dynamics across the storage market.

Key Takeaways

• Utility‑scale storage prices fell up to 20.9% since May.
• Distribution‑scale AC prices flat near $203/kWh, DC $175/kWh.
• Record 2025 U.S. storage install: 18.9 GW, 51 GWh.
• FEOC guidance enables tax credit for compliant battery cells.
• Domestic battery cell capacity expanding, six plants by June.

Pulse Analysis

The latest Anza Renewables market report highlights a pronounced divergence in pricing trends for utility‑scale versus distribution‑scale energy storage systems. While utility‑scale installations have enjoyed double‑digit cost reductions—20.9% for AC configurations since May—distribution‑scale offerings have largely plateaued, stabilizing around $203 per kilowatt‑hour for AC and $175 per kilowatt‑hour for DC. This split reflects supplier focus on larger projects serving data centers and independent power producers, leaving smaller, distributed‑generation (DG) configurations as a secondary priority.

Beyond the immediate price movements, broader market forces are reshaping the storage landscape. The United States recorded a historic 18.9 GW of storage capacity added in 2025, a surge powered by both utility‑scale growth and a residential rush before the Section 25D tax credit lapsed. However, rising lithium carbonate prices and a recent reduction in China’s value‑added tax rebates threaten to reverse recent cost declines. Simultaneously, clarified Treasury rules on foreign‑entity‑of‑concern (FEOC) battery components now allow many projects to qualify for the 30% federal investment tax credit, reducing financial risk for developers.

Looking ahead, domestic battery manufacturing is set to play a pivotal role in moderating price volatility. Anza expects six complex battery cell facilities to commence U.S. production by June, with an additional seven slated within the next year, bolstering supply resilience and potentially easing tariff‑related pressures. Yet, lingering trade uncertainties—such as possible 100% tariffs on Chinese anode material and broader national‑security duties—continue to cloud the long‑term outlook. Stakeholders must monitor these policy and supply‑chain dynamics to gauge future cost trajectories and investment opportunities.