Energy storage prices diverge: utility drops, DG stalls
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- Anza Renewables reported Q1 2026 utility-scale energy storage system prices fell up to 8.6% since November and 20.9% since May, while distribution-scale prices were largely unchanged since November but remain 14% below May levels.
- Anza attributed the divergence to suppliers prioritizing larger projects for data center and independent power producer clients, treating the distribution-scale segment as an 'afterthought.'
- Wood Mackenzie reported the U.S. installed a record 18.9 GW/51 GWh of energy storage in 2025, with utility-scale at 16 GW/47.3 GWh — up 48% and 40% year-over-year.
- Distribution-scale AC and self-integrated DC energy storage prices flattened around $203/kWh and $175/kWh respectively, with Anza citing tighter supply conditions for DG-appropriate configurations as a reason prices are firming.
- Anza expects energy storage prices to stabilize or trend upward in coming months due to rising lithium carbonate prices and China's April 1 reduction in value-added tax rebates.
- Of 79 energy storage products in Anza's dataset, 40% are at 'low' risk of violating FEOC rules while 51% carry 'high' or 'highest' risk, per U.S. Treasury guidance allowing battery cells with sufficient FEOC-compliant material to qualify for the federal investment tax credit.
- Anza forecasts six 'complex domestic' battery cell suppliers will begin U.S. production by end of June, with seven more coming online in the subsequent 12 months.
Why it matters: Distribution-scale storage buyers are losing pricing leverage as suppliers chase data center and IPP demand, leaving prices flat at $175–$203/kWh while utility-scale dropped ~21% since May. Anza expects prices to stabilize or rise as lithium carbonate costs climb, China's VAT rebate takes effect, and 51% of tracked products sit at high FEOC compliance risk.
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