The U.S. battery storage market is surging as data centers drive massive demand for electricity, but the aging power grid is creating a major obstacle: Battery storage developers face long waits to connect new storage projects.

The U.S. is on pace to install 24,000 MW of utility-scale battery capacity this year, a 60% increase from last year. But the backlog is far larger. About 750 gigawatts of energy storage projects are currently waiting in queues nationwide, enough to supply hundreds of millions of homes.

Many of those proposed projects will never reach operation. But the size of the queue shows the widening gap between demand for energy storage and the grid infrastructure needed to support it.

The median wait for a grid connection reached five years in 2025, compared with about 18 months in 2015. Connecting a large battery installation can require upgrades to substations, transmission lines, transformers and circuit breakers. Equipment shortages and a limited supply of skilled workers are extending construction schedules.

In California, PG&E told state regulators that procurement of certain specialized circuit breakers can take nearly four years. Delayed transmission work in the Bay Area has placed 800 MW of storage at risk of delay, while substation work in Solano County has affected two projects totaling 450 MW.

Southern California Edison faces an even larger backlog, with incomplete grid upgrades delaying 13 GW of new generation and storage.

Despite these constraints, the advantages of batteries are significant. Storage systems can absorb electricity when renewable generation is plentiful and power prices are low, then return that electricity to the grid during periods of heavy demand. This capability is crucial during summer peaks.

Hyperscalers and Battery Developers

Data center construction is driving the market. Hyperscalers need vast amounts of reliable electricity for expanding AI infrastructure, creating a new potential customer base for battery developers. It is likely that all data centers will be built with battery storage.

The way battery projects make money is also changing. Traditionally, operators have relied heavily on electricity price swings, charging batteries when power is cheap and selling it back to the grid when prices rise. Battery storage developers are now moving toward long-term agreements with utilities and large tech companies that pay for access to battery capacity and related services. These contracts can provide steadier revenue and make projects less dependent on unpredictable electricity prices.

In New York, Consolidated Edison requires battery developers to help pay for grid upgrades when their projects would put more demand on infrastructure than it can handle. This can get expensive. The policy boosted the price by an average of $21 million per project, according to a survey by the New York Battery and Energy Storage Technology Consortium.

As the situation unfolds, regulators are attempting to streamline the interconnection process by giving greater priority to projects that are further along in development, and discouraging speculative applications, which is a common practice among data center developers.