Where storage is set to thrive and fade under the OBBB

While the One Big Beautiful Bill (OBBB) didn’t crush the U.S. battery storage industry, it redrew where the industry’s next wave will likely break.  

Standalone storage kept its investment tax credit, but what’s waiting down the road for hybrid solar-plus-storage projects in slower-growing regions is murky at best.  

“The markets that will be hit the hardest are the ones who already have had the most growth of storage, and those who have been expecting the most growth so far,” said Michael Thomas, the founder and CEO of Cleanview, a market intelligence platform that tracks U.S. clean energy projects in real time.  

He told ESS News that markets across the country will feel the impacts of the bill, as storage “was expected to play this real role in balancing the grid and helping avoid things like brownouts and blackouts.” 

California has already reaped that benefit; Thomas cited the state’s summer of rolling brownouts and blackouts in 2022 as a key example of how the storage built in the three years since has already helped balance the state’s grid. He also noted that the ERCOT grid operator in Texas has reduced the risk of brownouts and blackouts from 10% to a single percent following the storage boom.  

Both markets are well-positioned for storage to continue. Battery buildouts already well underway may see fewer new competitors, which could strengthen profit margins for developers with projects already in the queue.  

But in places like the Midcontinent Independent System Operator (MISO) region — the U.S. grid operator covering a large swath of the Midwest and South and parts of the Southeast, where planned storage was often paired with large new solar developments, Thomas expects projects may be delayed or cancelled as solar economics cool. 

Cleanview data shows over 20 GW of utility-scale storage already online in California’s CAISO and Texas’ ERCOT. Energy arbitrage is profitable in both markets, thanks to volatile pricing and firm duck curves; storage can survive as more than just a complement to solar.  

The Midwest, on the other hand, was counting on a coming wave of solar-driven hybrid projects to enable storage growth.  

“I think the other place that you’re going to see a big impact is MISO because pre-OBBB, there was expected to be a big solar boom there,” Thomas said, noting that the solar projects are what help shape the price curves that create profitable conditions for energy arbitrage.  

With fewer solar projects, he said, storage developers face thinner margins and less predictable revenue, particularly if planned hybrid projects get cut from interconnection queues entirely. 

This narrative reverberates across the Southeast and within the PJM service territory—from Illinois through New Jersey—where PJM, the largest power grid operator in the U.S. serving about 65 million customers, is experiencing rapid growth driven by large-scale solar pipelines.

The OBBB accelerates the phase-down for solar and wind credits, changing the math for hybrid projects that had planned to stack tax benefits. Projects counting on those dual credits will likely now see tighter margins when the solar side of the deal falters. Rising equipment costs or domestic content requirements add further uncertainty. 

Still, Thomas flagged that state-level moves could help soften the blow of the bill. 

“You’ll see states pass their own clean energy policies in the wake of the loss of federal policies,” he said. “One of the open questions will be if states pass any regulations around utilities requiring storage procurement.”