Wood Mackenzie Forecasts US Commercial Storage Growing 27 Percent a Year Through 2031 While Residential Contracts

Wood Mackenzie’s latest US Energy Storage Monitor projects the US storage fleet reaching 200 GW and 655 GWh by 2031, with nearly 93 GW added over five years, roughly four times the installed base today. That cumulative figure conceals segments moving in different directions.

Commercial and industrial storage is forecast to grow 27 percent a year from 2026 through 2031. Residential storage is forecast to contract 5 percent in 2026. For a five-year forecast, that is not a small gap. It is two separate theories of what drives a battery purchase.

The quarter beneath the forecast. In the first quarter of 2026, the US installed 3.3 GW and 8.4 GWh of storage. Commercial and industrial storage accounted for 97.7 MW of that, less than one twentieth of the quarter’s total. Utility-scale projects supplied most of the remaining volume.

So the segment Wood Mackenzie expects to grow fastest is also among the smallest by a wide margin. A 27 percent growth rate compounding off 97.7 MW produces modest absolute capacity next to a grid-scale base measured in gigawatts. Percentage growth flatters the small.

The caveat does not change the direction of travel. A segment compounding at 27 percent while the segment next to it shrinks is telling a different story than the aggregate. What separates them is what each one runs on.

Residential’s anchor. Residential storage is forecast to contract because the subsidy under it is being removed. Wood Mackenzie ties the 2026 decline to the lapse of the Section 25D tax credit, the federal incentive that covered a share of residential clean-energy systems.

Strip out the credit and the residential value proposition gets harder. A home battery in most of the country offsets retail energy charges and backs up power during outages. Those are real benefits, but they are thin without the subsidy, and they do not scale with how a utility bills a house.

Commercial’s anchor. Commercial demand charges scale. A commercial or industrial customer is billed not only for the energy it consumes but for its single highest interval of demand in a billing period, often a 15-minute or 30-minute peak measured in kilowatts. In high-demand-charge territories that line item can be a substantial portion of a monthly bill.

A battery that shaves the peak reduces that charge every month, on every bill, whether or not a federal credit exists. The economics are anchored in the rate structure, not in the tax code.

And the rate structures are moving toward storage. PJM’s record capacity-auction clearing prices and data-center load growth are pushing commercial bills up across multiple territories. ComEd estimates electricity costs will rise about 12 percent on average from June 2026 through May 2027. Each increment of demand-charge increase widens the set of buildings where a battery clears the hurdle rate.

Residential storage demand was anchored to a subsidy that is now gone. Commercial storage demand is anchored to a recurring charge that is rising, reinforced by the same data-center load that Wood Mackenzie expects to drive 68 percent of US electricity load growth.

The supply constraint. The market also carries a supply-side limit that cuts across segments. Developers claiming the investment tax credit need battery cells that satisfy foreign-entity-of-concern rules to avoid clawback risk, and compliant domestic supply has been limited. That constraint weighs most on the projects that consume the most cells per installation.

That picture is shifting. On June 24, LG Energy Solution showcased its Holland, Michigan campus running LFP cell production dedicated to stationary storage at roughly 16.5 GWh a year, redirecting a plant built for electric-vehicle demand toward the grid. Each domestic, non-Chinese cell source that reaches volume eases the constraint for every segment, and reduces the share of the pipeline waiting on compliant hardware.

Commercial systems are smaller and consume fewer cells per installation, which makes the compliant-supply math more forgiving at the unit level as domestic LFP capacity comes online.

The sorting. Wood Mackenzie has put a number on a pattern the quarterly deployment data has been showing for a year. The US storage market is not one market growing at one rate. It is sorting itself by which economics survive the withdrawal of federal support.

The segment that leaned hardest on a consumer tax credit is the one now contracting. The segment whose value comes from a utility rate line that rises with grid stress is the one forecast to compound at 27 percent off a small base. The forecast is, in effect, a wager that cost-anchored demand outlasts subsidy-anchored demand.

Whether 27 percent off 97.7 MW becomes a large market by 2031 depends on how many commercial buildings cross the demand-charge threshold over five years. The forecast assumes many will. The capacity-auction results and the rate increases landing this year point in that direction.

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