Technological Iteration and Competitor Dynamics: Accelerated Industry Shuffling
U.S. Residential Energy Storage: Dual-Driver Behind the Growth Miracle
Driven by both policies and market demand, technological innovation and corporate competition in the ESS industry have also entered a fierce stage. Sungrow Power Supply launched its 125kW hybrid energy storage inverter (SH125CX), which adopts an all-DC coupling architecture and highly integrated design. It reduces the number of system components by 15%-20%, improves the charge-discharge round-trip efficiency by more than 1%, and reduces the floor space by 25%. Its 10 independent MPPT configurations and 2.0 ultra-high capacity ratio perfectly adapt to complex roof environments and high-power module needs, representing the technological development direction of residential energy storage systems.
The growth story of the U.S. energy storage market in 2025 is striking from the start. New installed capacity hit a record high of 5.6GW in the second quarter, with residential energy storage contributing 608MW, a year-on-year increase of 132%. Even in the third quarter, amid supply chain adjustments and policy uncertainties, residential energy storage still achieved a 70% year-on-year growth with 647MW of installed capacity, pushing the cumulative installed capacity in the first three quarters of 2025 to exceed the total of 2024. This "no off-season slump" growth is essentially driven by two wheels: the rigid demand for energy security and the improvement of economic benefits.
In Texas, the trauma of Winter Storm Uri in 2021 lingers, and real-time electricity price fluctuations (changing every 5 minutes) in the ERCOT power grid have created an arbitrage space of $1,600 to $4,400 per year for 10kWh energy storage systems, upgrading energy storage from a "safety guarantee" to a "profit tool". Meanwhile, the continuous improvement of economy has transformed energy storage systems from "luxuries" to "cost-effective consumer goods". Data shows that the initial investment cost of U.S. residential energy storage systems dropped from $1,200/kWh in 2018 to $280/kWh in 2025, a decrease of 77%.
Breakthroughs in sodium-ion battery technology have brought new possibilities to the industry. In January 2026, Zhongna Energy's world's first 10,000-ton-level sodium iron sulfate cathode material production base was put into operation in Meishan, Sichuan, with a total investment of 2 billion yuan. When fully operational, it will form an annual capacity of 30,000 tons of cathode materials and 5GWh of sodium-ion battery PACKs, with an annual output value exceeding 4 billion yuan. This breakthrough not only eases the dependence on lithium resources but also provides a new technological option for energy storage systems with lower costs and better safety.
Regional Differentiation: Differentiated Development of Four Core U.S. Markets
From the user demand side, extreme weather has become a key variable reshaping consumption decisions. Data from the U.S. National Oceanic and Atmospheric Administration (NOAA) shows that the United States experienced an average of 18 extreme weather events per year from 2020 to 2025, with power outages extending from 1.2 hours to 3.8 hours. In California, 12 Public Safety Power Shutoffs (PSPS) implemented by Pacific Gas and Electric (PGE) during the 2023 wildfire season turned "backup power" from an optional configuration into a household necessity. Families with energy storage systems not only ensured basic electricity use but also maintained indoor comfort through air conditioning, directly driving the matching rate of residential energy storage in California to soar from less than 20% to 80%.
The comparative analysis of four major U.S. state-level markets in the 7th Issue of the ESS Market Research Report vividly demonstrates the "regional characteristics" of the residential energy storage industry. California, with a total operational energy storage capacity of 16.9GW, remains the world's largest and most mature residential energy storage market. Its success lies in a "combination of policies": the NEM 3.0 policy significantly reduced feed-in tariffs for photovoltaic power, forcing users to configure energy storage; the SGIP incentive program provides subsidies of up to $1,100/kWh for vulnerable groups and high fire-risk areas, with a 10kWh system eligible for over $10,000 in subsidies, covering almost half of the equipment cost.
The corporate capitalization process is also accelerating. Shenzhen Pengcheng New Energy and Shuori New Energy have successively completed IPO counseling and filing registration, planning to list on the A-share market; Airo Energy signed a 1GWh residential energy storage general agency agreement with Australia's Raystech Group, choosing a strategy of "deepening channels + solution output" rather than simple "extensive deployment". These developments indicate that the ESS industry is moving from "barbaric growth" to a new stage of "regulated competition + capitalization", and enterprises with technological advantages, channel capabilities and cost control capabilities will stand out.
New York and Florida represent two development paths: "policy cultivation" and "potential awakening". New York, with an installed capacity of 3.2GW, is a typical policy-driven market, while Florida, known as the "Sunshine State", has an installed capacity of 1.5GW that is still lagging, but power outage risks brought by hurricane seasons and time-of-use electricity prices by FPL are activating the market. Globally, policy adjustments are also exerting a profound impact. The implementation of the U.S. Inflation Reduction Act (IRA) has raised the five-year forecast for utility-scale energy storage by 15%, but supply chain adjustments and tariff policies have brought short-term pains, prompting enterprises to accelerate supply chain diversification.
Texas, with an installed capacity of 14.1GW and a market-oriented gene, has become the most promising "challenger". As the only U.S. state with an independent power grid (ERCOT covering 90% of electricity load), Texas drives energy storage development entirely through market mechanisms. Real-time electricity price arbitrage creates stable returns, and the commercialization of Virtual Power Plants (VPPs) is leading the world. Hundreds of megawatt-level VPP projects operated by NRG, Tesla and other companies aggregate residential energy storage to participate in the auxiliary service market, creating additional income for users.
Conclusion: 2026, "Adjustment and Opportunities" for the ESS Industry
Looking back at the beginning of 2026, the ESS market is at a crossroads of "short-term adjustment and long-term opportunities". Although the U.S. residential energy storage market is facing tariff and supply chain challenges, its 8.7% penetration rate (doubled compared with 2020) and the expected re-growth period from 2028 to 2030 still make it the most attractive market in the world; policy dividends in countries such as Malaysia and the United Kingdom have opened up new growth space for the industry; breakthroughs in technologies such as sodium-ion batteries and AI energy management are reshaping industry competition barriers.
For enterprises, the core task in 2026 is to "navigate the cycle and layout for the future": on the supply chain side, it is necessary to accelerate diversified layout and reduce dependence on a single market; on the technology side, it is necessary to increase R&D investment and seize technological commanding heights such as sodium-ion batteries and long-duration energy storage; on the market side, it is necessary to customize differentiated products and service solutions according to the policy characteristics and user needs of different regions. As Allison Feeney, research analyst at Wood Mackenzie, said: "Despite new federal policies and tariffs, the market fundamentals remain exceptionally strong." The ESS industry in 2026 is full of challenges and opportunities. Only those enterprises that insight into trends and adapt quickly can win the future in this energy transformation.