Energy storage is arguably one of the biggest infrastructure investment success stories of the decade. But in one major market developers are struggling despite global tailwinds including drastic reductions in battery costs and a growing need for storage in grids increasingly dominated by renewables.
The US, the world’s second-largest battery storage market according to BloombergNEF, is experiencing significant levels of regulatory uncertainty under an administration that is committed to maximising fossil fuel production and exports.
The federal government has taken aim at climate-related investments, for example, limiting wind and solar tax credit eligibility and rolling back vehicle fuel economy standards. At the same time, the administration has slapped tariffs on materials used in clean energy infrastructure development, such as steel and aluminium.
Perhaps because battery plants are not as emblematically ‘green’ as wind and solar projects, the US energy storage sector has not been as hard-hit by regulations as other types of renewable generation infrastructure. For example, storage tax credits will last through 2033, unlike those for wind and solar that will now end in 2027.
This has allowed storage developers to retain a modicum of optimism amid regulatory turmoil.
The industry is described as being “bruised but buoyant,” with Troutman Pepper Locke partner Vaughn Morrison saying that “Energy storage’s versatility of use cases has untethered it from the fate of wind and solar to a meaningful degree.”
But this does not mean the industry is unscathed. According to Reuters, “US energy storage installations are set to hit record highs this year, but lower deployment rates are expected from 2026 as developers adapt to a suite of new policies from the Trump administration.”
One of the biggest challenges facing the industry relates to foreign entities of concern, the most notable of which is China. Federal rules now require that no more than 45% of the total material cost of an installation can be sourced from such an entity, which is a problem given China’s stranglehold on battery technology.
US market uncertainty has already led to some energy storage projects being paused. In contrast, investment in UK energy storage is booming, with government and private investors announcing plans for some £2 billion in projects in August 2025 alone.
“To a large extent, the US’s loss has been the UK’s gain, with global private debt and equity markets now avoiding major US projects due to tax, compliance and other barriers to inward investment created by US President Donald Trump’s One Big Beautiful Bill Act,” reported the industry information provider Tamarindo.
“Indeed, it has been estimated that Trump’s tariff war could cost the US economy around $31 billion a month in lost foreign investment. It seems clear that the UK’s energy storage market will be one of the key beneficiaries of this trend.”
Recent positive moves in the UK market include:
- A consortium made up of Eelpower, Equitix, Australian pension fund Aware Super and the UK’s National Wealth Fund planning to invest £500 million into a new battery storage platform that aims to deliver more than 1GW of battery storage capacity for the UK grid in the coming years.
- NatPower announcing a £1 billion investment in a Teesside gigapark for maritime electrification that will feature a gigawatt of lithium-ion battery storage with four hours’ duration, with the potential to double it to eight hours.
- The UK’s Gresham House Energy Storage Fund completing a £220 million refinancing agreement to support future expansion.
In addition, work continues on the 250MW, 500MWh Sheaf Energy Park that Pacific Green is developing in Kent for Italian asset owner Sosteneo, alongside the already operational 100WM, 100MWh Richborough Energy Park project.
While the UK is expected to install 19% of total European battery capacity by 2029, making it the region’s biggest market along with Germany, it is likely that other regions will also benefit if investment shies away from the US. In Europe, Pacific Green is also working on a pipeline of 400MWh in Poland and up to 3.2GWh in Italy.
The latter is set to be Europe’s third-largest energy storage market in 2029, with almost 17GWh installed, according to SolarPower Europe.
Elsewhere, Australia is already benefiting from major interest in battery storage, with Pacific Green developing a 7GWh pipeline that includes the giant Limestone Coast and Portland energy parks.
Aiding the global outlook for storage is the fact that renewable energy generation costs continue to fall despite the efforts of some governments to foster fossil fuel production and consumption.
In Europe, for example, the levelised cost of electricity (LCOE) from renewables fell 7% in 2025, on the back of an 8% drop in capital costs compared to the average from 2020 to 2024. “Utility-scale four-hour battery storage costs will fall below US$100/MWh by 2026, dropping another 35% by 2060,” says analyst firm Wood Mackenzie.
LCOE reductions mean the continued buildout of renewables seems assured worldwide regardless of regulatory developments. Even under the current US administration, “Renewable technology costs in North America will decline to 2060 despite policy challenges,” Wood Mackenzie says.
“New US tariffs have increased short-term solar capital costs. However, advancing module, inverter and tracker technologies will drive long-term price reductions.”
Given that batteries are increasingly the most flexible and cost-effective way of firming intermittent renewable generation, there seems little doubt that investment in energy storage will continue to ramp up across all major power markets.
For investors, this means being able to pick and choose the markets that offer the greatest benefits at the lowest risk. There is no question that the US still offers massive opportunities for asset owners, particularly in renewables-rich states such as California and Texas.
But risk-averse backers may now feel there are safer bets to be had elsewhere. Europe, with its longstanding commitment to energy transition and a growing need to foster renewables for security and sovereignty reasons, is one obvious choice. Australia, which got 40% of electricity from renewable sources in 2024, is another.
At Pacific Green, we are committed to developing major pipelines in these markets—and we look forward to welcoming new investment partners, from the US and anywhere else.
Publish date: 20 November, 2025