Solar and Battery Storage: Market Trends Shaping 2025-2026

2025 Market Overview

Photovoltaic solar accounted for 69% of all new electricity-generating capacity additions in Q1 2025, maintaining its position as the dominant form of new generation in the United States. In Q3 2025, solar and battery storage combined for 91% of the 11.7 GW total capacity added—solar providing 6 GW (51%) and energy storage contributing 4.7 GW (40%).

Texas (11.6 GW) and California (2.9 GW) account for nearly half of new utility-scale solar capacity in 2025. The U.S. Energy Information Administration projects 64 GW of new utility-scale generation for the year—which would set an annual record for U.S. power capacity additions if fully realized.

Battery Storage: Record Growth

Battery energy storage is experiencing unprecedented growth, with 2025 on track to set records across multiple metrics. The 4.7 GW installed in Q3 2025 established the strongest third quarter on record and the second-largest quarter for new storage additions in U.S. history—a 32% year-over-year increase compared to Q3 2024.

The residential solar-plus-storage market has transformed dramatically. So far in 2025, 40% of new residential solar installations include battery storage, up from single-digit percentages just a few years ago. Changes to incentive programs and net metering structures have encouraged homeowners to use batteries to optimize their PV system's value.

These dramatic cost reductions have opened new possibilities. In early 2025, the world's first 24-hour solar PV project was announced in Abu Dhabi—5 GW of solar paired with 19 GWh of battery storage to deliver 1 GW of baseload electricity around the clock, scheduled for completion in 2027.

2026 Outlook: Challenges Ahead

Despite the strong 2025 performance, the solar and storage industry faces significant headwinds that may slow growth beginning in 2026:

The battery storage sector faces its own make-or-break year in 2026. Rising demand from AI data centers, higher electricity prices, shifting battery costs, and new policies are pulling the industry in multiple directions. Performance and reliability expectations are increasing as storage becomes critical grid infrastructure rather than a supplementary technology.

DC Voltage Drop Optimization

For electrical professionals working in solar and storage, DC voltage drop optimization remains critical to project economics. Unlike AC systems where voltage drop is a recommendation, DC voltage drop in PV installations directly reduces energy production and project revenue.

With average string runs ranging from 50 to 500+ feet in utility-scale installations, conductor sizing decisions significantly impact both installation cost and lifetime energy harvest. The industry standard is to limit DC voltage drop to 1.5-2% from modules to inverter, with many projects targeting tighter limits for optimal performance.

• String Optimization: Calculate optimal string lengths to balance installation cost against voltage drop losses
• Distance-Based Sizing: Use graduated conductor sizes based on home run distance to optimize copper usage
• Temperature Considerations: Account for elevated operating temperatures in outdoor DC wiring

Battery System Voltage Drop

Battery energy storage systems present unique voltage drop challenges, particularly for high-power applications. At discharge currents of hundreds or thousands of amps, even short conductor runs can develop significant voltage drop that affects system efficiency and inverter performance.

Key considerations for BESS installations include:

Calculate Your Solar Installation

Our DC voltage drop calculator is optimized for solar PV and battery storage applications, helping you maximize energy harvest while controlling installation costs.