Wednesday Watts: Batteryland

Across the country, utilities are quietly building enormous rechargeable batteries. Big ones. Megawatt-scale. The kind you’d need if you wanted to power a few thousand homes for a couple hours or help prop up a wind farm when the breeze cuts out. They’re cropping up next to solar arrays, old coal plants, and in some cases, out in the desert with not much else around. And they’re multiplying—fast.

The battery boom has taken hold thanks to a mix of falling prices, federal tax incentives, and a utility sector desperate to find something—anything—that can back up renewables without also burning gas. This week, Xcel proposed doubling its battery storage plans at its Sherco coal plant site in Minnesota. That’d bring its capacity to 600 MW, which would make it the biggest battery installation in the Upper Midwest. But it’s not alone: Georgia Power, Constellation, and others are lining up similar plays. So, we figured it was time to break this open and see what’s really going on in Batteryland.

What Exactly Are Grid Batteries?

Grid-scale batteries are massive, stationary energy storage systems built to absorb and release electricity on command. They’re typically lithium-ion (same family as your phone, but bulked up) and wired straight into substations, power plants, and solar farms.

They can discharge power for about 2 to 8 hours. That makes them ideal for smoothing out hiccups in supply and demand. But they’re not long-haul—they won’t keep the lights on for days if the wind dies and clouds settle in. Think of them less like a backup generator, more like a shock absorber.

Why Are We Building So Many?

The reasons fall into a few buckets:

• Time shifting: Soak up cheap solar at noon, dispatch it at 7 p.m. when people get home and flip on their AC.

• Grid stability: Batteries can inject or absorb power instantly, helping grid operators manage frequency and voltage with far more precision than a gas turbine.

• Peaker replacement: Instead of building new natural gas “peaker” plants for rare demand spikes, plug in a battery farm that sits quietly until it’s needed.

• Infrastructure hedge: In some areas, batteries are being used to delay or avoid expensive transmission upgrades. Cheaper to install a battery at the substation than rebuild 100 miles of wire.

Big Projects, Big Money

This isn’t a boutique trend. Battery storage has gone industrial.

• In the past five years, global grid battery capacity has jumped more than 20x.

• China leads with ~27 GW installed. The U.S. is second with ~16 GW.

• California and Texas are driving the U.S. numbers. One for policy reasons, the other for market ones.

• Saudi Arabia, Chile, and China are commissioning battery systems bigger than many small power plants.

• In the U.S. alone, over 300 new battery projects are in the queue. Most are expected online by 2026.

Trendlines That Matter

• Battery prices have dropped ~85% over the last decade, mostly due to economies of scale in EV manufacturing.

• Deployment is doubling year over year in some markets.

• The global project pipeline exceeds 400 GWh, suggesting the buildout is only just getting started.

• Short-duration (2–4 hour) lithium batteries still dominate, but longer-duration tech is creeping in.

Winners, Losers, and Question Marks

Winners:

• Utilities trying to meet clean energy mandates without blackouts.

• Battery manufacturers (CATL, Tesla, LG, BYD).

• Developers who can site and finance projects fast enough to catch the incentives.

• Ancillary services markets—suddenly flush with ultra-fast capacity.

On Watch:

• Gas peakers—getting undercut on cost and speed.

• Transmission planners—some battery projects are eating their lunch on grid upgrade budgets.

• Ratepayers—some of these battery plays are rate-based without much scrutiny.

Replacement Tech (or Not Yet):

• Pumped hydro is still king in capacity terms, but geography limits growth.

• Flow batteries, hydrogen, gravity storage—all contenders, none yet competitive at scale.

• Iron-air and sodium-ion batteries promise longer duration, but are still in pilot phase.

Who’s Cashing In

• Tesla is pushing its Megapack hard and booking billions in grid projects globally.

• Fluence (backed by AES and Siemens) is a major integrator with deals across five continents.

• NextEra, Vistra, and Neoen are leading on utility deployments.

• CATL, BYD, and LG are producing most of the battery cells used globally.

There’s a race on for market share, with some firms focused on tech, others on speed. The winners are the ones who can scale and navigate interconnection queues before the rules change.

The Policy Kicker

Let’s be clear: this market didn’t bloom from pure demand signals.

The U.S. battery boom got its main tailwind from the Inflation Reduction Act, which extended tax credits to stand-alone storage for the first time. Several states (CA, NY, MA) have layered on storage mandates and subsidies of their own. In China, developers are required to pair storage with new wind and solar projects. It’s not exactly laissez-faire.

There’s also the matter of market access. Until recently, batteries weren’t always allowed to bid into wholesale markets, and many grid rules still treat them like either generation or load—never both. Order 841 and other regulatory shifts are fixing that, but slowly.

Add in interconnection delays, mineral supply constraints (lithium, nickel, cobalt), and permitting headaches, and the battery boom looks less like a market miracle and more like a carefully tended policy garden.

So Is This Real or a Bubble?

A little of both. Batteries are clearly useful. They’re being deployed for real reasons, and they’re already stabilizing the grid in places like California and Australia. But the economics are still wobbly without incentives, and some developers are piling in more for the tax credits than the long-term value.

The real test will come when the grid asks for more than a few hours of backup. That’s when we’ll find out whether grid batteries are a permanent fixture—or just the bridge to whatever comes next.

Share Grid Brief

We rely on word of mouth to grow. If you're enjoying this, don't forget to forward Grid Brief to your friends and ask them to subscribe!