Executive summary
The global grid-scale battery storage system (BESS) market is entering a rapid growth phase: projected to reach 205 GWh installed capacity by end-2025 — roughly 50% growth from the prior year. This acceleration is concentrated in a few regions driven by tariff effects, capacity market reforms, subsidy programs and major announced projects. The United States, Europe, the Middle East and Australia account for the lion’s share of near-term additions; other regions will fill the remainder to meet the 205 GWh global projection.

Key figures (from aggregated securities reports and national sources)

• Global grid-scale battery storage system installed capacity expected: 205 GWh (end-2025, +50% YoY vs 2024).
• United States: added 17 GWh Jan–Jun 2025 (32% YoY); expected 40 GWh by end-2025 (≈+41% YoY).
• Europe: expected 17.6 GWh added in 2025 (+120% YoY).
• Middle East: about 4 GWh newly added; expected to reach 34 GWh in 2025 (+221% YoY) with major deals in Saudi Arabia, UAE and Egypt.
• Australia: added 1.6 GWh in 2024; projected to grow by 40% in 2025 (≈2.24 GWh).

What’s Driving Growth Regionally?

United States — tariffs and market signals
Tariff policy and capacity market structures accelerated deployments in H1 2025, producing a jump in installed capacity (17 GWh in Jan–Jun). The expected end-2025 total of 40 GWh reflects continued utility procurements and merchant project development supported by favorable market prices for capacity and ancillary services.

Europe — subsidy programs and auctions
Europe’s 2025 additions are concentrated among several markets and policy initiatives:

• UK — operational BESS: 9.2 GWh (May 2025). H1 2025 saw +20% YoY growth in energy capacity submitted/commissioned. Submitted capacity for approval reached 7.489 GWh (June 2025), indicating a strong near-term pipeline.
• Italy — connected storage reached 5.9 GWh in 2024 (+41% YoY); Q4 2024 added 1.3 GWh. Italy’s MACSE auction mechanism is introducing competition and scale—auctions (e.g., the first MACSE award) are adding large blocks of capacity.
• Germany — policy adjustments reintroduced stronger investment subsidies (e.g., higher € per kWh incentives) and broadened capacity market participation. Germany increased additions sharply in 2024 and into 2025: 2024 large-scale additions were 0.73 GWh, while Jan–Jul 2025 added 0.716 GWh (H1 growth in the high double digits).

Policy landscape across EU member states is supportive: new national aid packages, dedicated storage funds, and targeted subsidies in Spain, Netherlands, Italy and Poland are reducing project risk and improving bankability.

Middle East — utility scale project awards and large signed deals
The region shows a small base but very rapid growth — several multi-hundred-MWh to GWh-scale projects were signed in Saudi Arabia, UAE and Egypt. The projection of 34 GWh in 2025 (≈221% YoY) reflects both early-stage project awards and announced state and utility procurements.

Australia — steady approvals feeding steady growth
Australia’s 1.6 GWh added in 2024 and the 40% growth expectation for 2025–2026 are driven by utility scale projects approved alongside renewables and by demand for grid stability services at the distribution scale.

Interpreting the numbers — where the 205 GWh comes from
Aggregating the verified/regional projections (US 40, Europe 17.6, Middle East 34, Australia ~2.24 and other regions) yields the 205 GWh global projection. Notably, a portion of the global total comes from large projects currently in permitting/approval — as the EU and Middle East auction winners and signed contracts move toward construction, the 2025 commissioning pipeline will swell.

Market dynamics & implications

1. Supply chain and procurement pressures
   Rapid YoY growth, especially in concentrated markets like the US and Middle East, will press on cell supply and module assembly capacity. Suppliers with strong manufacturing footprints or long-term cell contracts will have an advantage fulfilling 2025 order books.
2. Contracting and pricing volatility
   Auctions (e.g., Italy’s MACSE), competitive subsidies and capacity market price signals are compressing returns — some auction results come in well below reserve premiums. Developers will need to optimize capex and opex and consider hybrid PPA or aggregator revenue stacking strategies to preserve margins.
3. Technology and duration mix
   Much of the recent capacity growth is in short-duration (1–2 hour) systems that participate in capacity and frequency markets. But national programs and some auctions are beginning to favor longer durations (2+ hours) — Germany’s subsidy design, for example, prioritizes 2+ hour systems for investment support, improving the business case for slightly larger energy capacities.
4. Geopolitical & policy risk
   Large subsidy schemes and state-directed infrastructure funds (e.g., Germany’s budget reallocation for climate infrastructure) de-risk projects but also concentrate policy risk. Projects that rely on single national schemes should plan for policy changes or delays.