A 2025 Update on Utility-Scale Energy Storage
There are three main types of procurement contracts: (1) power purchase agreements (PPAs) or energy storage services agreements; (2)
Energy storage PPAs are often tolling arrangements because developers will not want to assume the cost of electrical energy input into a project and utilities are almost always in a better position to bear that risk.
Approximately 11.9 gigawatts (GW) of storage was deployed in 2024. In only the third quarter of 2024, and despite mounting concerns over potential trade and policy developments, the US storage market added a record-setting 3.8 GW of energy storage—an 80% increase compared to the prior year.
These contracts allocate the risks of project development, construction, and performance between the parties and include the price that will be paid by the utility for the resource or the energy storage services that are to be provided.
Energy storage procurement contracts must also take into account the ever-evolving suite of laws and regulations applicable to energy storage projects, including as a result of the recent change in administration in the United States.
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