The U.S. is set to plug over 18 gigawatts of new utility-scale energy storage capacity into the grid in 2025, up from 2024’s record-setting total of almost 11 GW, per Energy Information Administration data analyzed by Cleanview. Should that expectation bear out, the U.S. will have installed more grid batteries this year alone than it had installed altogether as of 2023.
The U.S. grid battery sector has been on a tear in recent years — and California and Texas are the reasons why. Combined, the two states have installed nearly three-quarters of the country’s total energy storage capacity of over 26 GW.
California has long held the top spot on large-scale battery storage installations. Even last year, when the EIA forecast that Texas would claim the lead, California held on by a few hundred megawatts. This year EIA again expects Texas to outpace California, only now by an even wider margin than last year. The Lone Star State could build nearly 7 GW of utility-scale storage in 2025 compared to California’s 4.2 GW.
But the new state-level storyline to watch is the rise of Arizona. The state built just under 1 GW of storage in 2024, buoyed by massive new projects like the Sonoran Solar Energy Center and the Eleven Mile Solar Center that pair solar with batteries to soak up as much desert sun as possible. This year, EIA says Arizona is on track to nearly quadruple last year’s total and build 3.6 GW of storage.
It’s worth noting that EIA’s 2024 storage forecast overshot actual installations by about 3 GW — and developers didn’t have the Trump administration to contend with then. President Donald Trump has not outright targeted energy storage, but the uncertainty surrounding the future of clean energy tax credits could have a chilling effect on investment, as it has had on projects in adjacent sectors like solar and battery manufacturing.
Despite the political chaos, developers are barrelling ahead. Just over 12 GW of storage projects are either under construction or complete and waiting to plug into the grid. And, as Cleanview points out, the crucial tax credit for battery storage projects is already locked into the tax code for 2025, giving developers some measure of certainty — at least for the months ahead.
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One area I’ve wondered about in recent years is the Compressed Air Energy Storage (CAES), a technology that got quite a bit of currency a decade ago but has languished with the massive drop in Lithium battery prices.
Now it looks like one company, at least, might have solved some of the competitive issues.
If all goes to plan, Hydrostor would begin construction late this year, with the goal of starting operations in 2030. Much of the construction will happen aboveground, as Hydrostor installs the compressors that will use electricity to pressurize air, the turbines to turn that air back into electricity, and the tanks and reservoirs containing the water that’s vital to the company’s unique approach.
But the heart of the project will be a cavern, roughly the size of a football field in length and width and about 100 yards high, carved by miners out of the bedrock about 2,000 feet below the surface, VanWalleghem said.
Those caverns will be able to store up to 4,000 megawatt-hours of energy in the form of air compressed to high pressures using cheap excess renewable electricity. Hours, days, or weeks later, that air can be expelled to spin power-generating turbines to feed carbon-free power back to California’s grid, at a capacity of up to 500 megawatts for up to eight hours or longer.
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CAES has been held back by its high upfront capital cost and its requirements for large and durable underground salt caverns to store compressed air. It’s also a relatively inefficient way to store energy. What’s more, CAES has a poor round-trip efficiency — the ratio of energy coming out of a storage system compared with the energy going into it — of less than 50 percent.
As befits its name, Hydrostor uses water to solve those problems. Every cavern the company excavates has two shafts connecting it to the surface — one for air and one for water. But while the air shaft is used only when air is injected or extracted, the water shaft is in continuous use to maintain a constant pressure within the cavern.
The water column descends about 2,000 feet from the reservoir above, takes a U-turn at the bottom like the piping under sinks, and then rises to flood the bottom of the cavern, stabilizing pressure within the cavern as air is pumped in and out. “It doesn’t matter how much air is in the cavern — it’s that weight of water that maintains the pressure,” VanWalleghem explained.
That offers two key benefits, he said. First, unlike traditional CAES, which has to contend with changing pressures while releasing air, Hydrostor’s method maintains steady output pressures as air is expelled from the cavern. That helps turbines run more efficiently.
Second, the high air pressures of traditional CAES projects require the use of impermeable salt caverns, which are relatively rare geologic formations and in high demand as sites to store oil and gas. By using water as a sort of pressure absorber, Hydrostor’s caverns, in contrast, can be excavated anywhere “the rock is hard enough to hold itself open,” he said. About 80 percent of the geology of the U.S. qualifies, according to the DOE.
Hydrostor’s other water-based innovation deals with temperature. Gas gets hotter as it’s compressed and colder as it expands. Traditional CAES systems deal with that cold-air outflow by burning fuel to heat it. Otherwise, it would be cold enough to “turn the turbine into an icicle,” VanWalleghem said.
Hydrostor avoids burning fuel — and emitting carbon and air pollutants — by capturing and reusing thermal energy generated during the air-compression process in pressurized water storage tanks that reach about 200 degrees Celsius, he said. The air being released from the caverns is reheated by running it through the same thermal exchange system that heats the water during compression, only in reverse.
These innovations — the “advanced” part of its A-CAES designation — allow Hydrostor to achieve a round-trip efficiency of about 65 percent, he said. That’s been proved out in the company’s first 10 megawatt-hour project in Ontario, Canada, which has been running since 2020 and actively bids its energy storage capacity into energy markets.
That’s a lot better round-trip efficiency than traditional CAES. But it’s well below the round-trip efficiencies of about 80 percent achieved by pumped-hydro projects, the other large-scale long-duration contender. On the other hand, Hydrostor doesn’t need to find places to build dams and reservoirs, VanWalleghem said.