During the Biden administration, the battery industry was booming. Thanks to years of technological progress and the Inflation Reduction Act’s massive subsidies for clean energy, factories were going up all over the country, and grid-scale battery installation nearly quadrupled between 2021 and 2024. For a brief period in 2024, remarkably, American battery investment exceeded the habitually gargantuan Chinese level.
Now that future is in question. The domestic solar, wind, and EV industries got gored by Trump’s mega-bill, which will reduce demand for batteries. Now battery investment is stalling, thanks also to Trump’s madcap trade war. However, batteries got to keep their tax credit until 2034—apparently because they aren’t seen as woke, for some reason. And depending on how the Trump administration behaves, battery deployment might be able to at least tread water if not keep expanding, and in the process help keep the American solar industry from collapsing entirely.
The (sigh) One Big Beautiful Bill Act phased out the tax credit for solar, wind, and EVs this year. But the “45X” credit for batteries (named after the relevant section in U.S. law) won’t start phasing out until 2034—though the bill did include much stricter limits on components from “prohibited foreign entities.” What that means exactly will have to wait until the Treasury Department publishes guidance.
That’s where innovation comes in. As Kostantsa Rangelova and Dave Jones explain on David Roberts’s Volts podcast, there has been truly staggering progress in the advanced battery industry of late. Prices on the global market fell by a mind-boggling 40 percent just between 2023 and 2024, while the storage efficiency of containerized batteries roughly doubled. Such containers are themselves a recent innovation; previously, grid batteries had to have inverters and power control systems installed onsite, but now all that is built in, and they are therefore much cheaper and faster to deploy. Modern grid batteries also use iron phosphate rather than cobalt or nickel, making them safer and not so reliant on minerals sourced from unstable or rival nations. Even more promising sodium-ion batteries are already being deployed in China.
With solar having been grievously kneecapped by Trump, the most immediate use for batteries will be to wring more out of existing generation capacity. Rather than “peaker” plants being used only occasionally to handle unusual spikes in demand, for instance, they can run routinely to charge up batteries when demand is low, thus boosting overall generation.
That said, the most useful employment of batteries is to compensate for the intermittency of solar generation, particularly with some backup capacity. As Brian Potter demonstrates at Construction Physics, California could go 95 percent solar with 16 hours of battery capacity and just eight gigawatts of alternative generation capacity. Still, batteries are getting so incredibly cheap that less and less backup is needed. Rangelova and Jones estimate that a city like Las Vegas could theoretically meet 97 percent of its power needs with solar and batteries at a levelized cost of electricity of just $104 per megawatt-hour—cheaper than coal or nuclear power, and not too far from gas—and that is down from $132 in 2023. Going 60 percent solar-battery would cost just $60 per megawatt-hour.
Now, these are global prices, and don’t take into account local costs of permitting and such. But the trend is so powerful—a 22 percent decline in cost in just one year—that if it keeps up for even a few years, the economics will become impossible to ignore.
For any utility looking at a surging demand forecast, this is likely going to be a tempting option even if they can’t get the solar tax credits anymore—particularly if battery costs keep plummeting. Gas turbine manufacturing has hit serious supply bottlenecks; new turbines are reportedly booked out five to seven years, and gas plant construction costs have tripled since 2022. The price of gas is also highly unstable, and likely to increase as more and more LNG terminals come online and more gas is shipped abroad.
The dreaded interconnection queue is an obstacle—there are almost 40,000 projects in line to get hooked up to the grid, most of them solar, wind, or batteries—for grid-connected projects, but that raises the possibility of off-grid systems. Data centers, for instance, could be set up next to solar farms with batteries. One analysis from last year estimated that a 90 percent solar off-grid data center could be built in the rural Southwest (where sun is abundant and land relatively cheap) at $109 per megawatt-hour—more expensive than gas, but cheaper than the $130 that Microsoft is already paying to restart the idled nuclear plant at Three Mile Island. More important for speed-obsessed tech companies, with no need to wait for a grid connection, construction could start very quickly.
However, much depends on how the Trump administration interprets OBBBA. As my colleague David Dayen recently wrote, Trump has signaled that he will do all in his power to snarl solar and wind projects in red tape. If batteries come in for similar harassment—especially given how central China is to the global battery production—then he might kill the American battery industry anyway. As always, the nation awaits to see what the mad king might ruin next.
