Congress Took Away the Battery Tax Credit. Home Installations Fell 27 Percent. Commercial Installations Did Not.
By Keith Reynolds | Publisher & Editor, ChargedUp!
Two markets lost the same federal support and responded in opposite directions. Homeowners stopped buying batteries. Businesses did not. The reason is that a commercial battery earns its money from the way electricity is billed to commercial buildings, and that billing structure did not change when the tax credit went away.
The Numbers Split in Half
The United States installed a record amount of battery storage between April and June, 20.2 gigawatt-hours, the largest quarter the country has ever recorded. A gigawatt-hour is roughly the electricity a large office tower uses in a year. More than a tenth of every battery ever installed in this country came online in those three months.
Inside that total, two segments moved in opposite directions. Batteries installed at businesses and industrial sites reached 1.8 gigawatt-hours. Batteries installed at homes reached 657 megawatt-hours, a decline of 27 percent from the same three months a year earlier. Commercial installations now run roughly three times residential volume. Analysts attribute the residential drop to the removal of the federal tax credit that had covered part of a homeowner's purchase, and to homeowners rushing to install in 2025 before it expired. Residential installations are forecast to fall 16 percent across the full year.
The same federal support was available to both markets. Only one of them depended on it.
Why a Business Battery Pays for Itself Differently
Homeowners buy batteries mostly for backup power and to store their own solar production. Those are real benefits, but they are hard to put a dollar figure on, so the purchase decision often turns on the upfront price. Remove a credit that lowered the price, and fewer people buy.
A commercial electricity bill works differently, and the difference is the whole story. Most commercial customers pay two separate charges. The first is for the total electricity used during the month, measured in kilowatt-hours. The second is a demand charge, based on the single highest rate of electricity draw the building hit at any point during the billing period, usually measured over a 15-minute window.
That second charge can be a large share of a commercial bill, and it is set by one brief moment. A building can use the same total electricity in two different months and pay meaningfully different amounts, purely because of when that electricity was drawn. A battery addresses this directly. It charges when the building's draw is low and discharges during the brief peak, so the meter never records the spike. The savings can be calculated in advance from the building's own past bills.
Many commercial customers also pay different rates at different times of day, with the highest prices in the late afternoon and early evening. A battery charged during cheaper hours and discharged during expensive ones captures that difference every day it operates.
Neither of those savings came from a tax credit. The credit made a good project better. It was not what made the project work. That is why the credit's removal changed the residential market and did not change the commercial one.
Batteries Are Being Bought on Their Own Terms
A second shift in the data points the same direction. Of the large utility-scale batteries installed during the quarter, 56 percent were built on their own and 44 percent were paired with a solar project, a reversal from the pattern that dominated earlier buildouts. Storage used to be an accessory to solar, installed to hold solar production for later. It is now more often purchased by itself, to move electricity from cheap hours to expensive ones and to have capacity available when the grid is strained.
That is the same reason a commercial battery works on a building. The value comes from controlling when electricity is used, not from generating it. A property with no solar at all can still cut its demand charges with a battery.
What This Means for a Building
The practical conclusion is that a battery should be evaluated against the building's actual electricity bills rather than against the incentive landscape. The information needed to do that is already in the owner's possession.
Every $1,000 of durable annual energy cost removed from a building's operating statement supports roughly $12,500 in value at an 8 percent capitalization rate. A demand charge reduction is among the more predictable ways to produce that kind of savings, because it depends on the building's own usage pattern rather than on weather, occupancy or energy prices in general.
The caution is that the savings depend entirely on the building's specific rate structure and usage pattern. A building with steady, flat electricity use through the day has small demand charges and little to recover. A building with sharp, brief peaks, from equipment starting up, refrigeration cycles, or vehicle charging, has more to gain. Two similar buildings on different utility rate schedules can produce very different results from identical equipment.
What to Do
1. Pull 12 months of electricity bills and find the demand charge line. Determine what share of the total bill it represents. If it is a substantial portion, a battery has something to work with. If it is small, the case is weaker regardless of equipment pricing.
2. Ask your utility for interval data, the record of the building's electricity draw in short increments. This shows when the peaks occur and how long they last, which determines what size battery is needed.
3. Require any vendor proposal to show its savings calculation against your actual bills and your actual rate schedule, not against regional averages.
4. Ask what happens if your utility changes its rate structure during the equipment's life. Savings built on a specific rate design carry the risk that the design changes.
5. Consider whether a third party will own and operate the system in exchange for a share of savings. That removes the upfront cost and shifts performance risk, at the cost of some of the benefit.
The Bottom Line
The clearest evidence that commercial battery economics stand on their own is that they survived the removal of the support that the residential market could not do without. A building owner evaluating storage is not making a bet on energy policy. The decision rests on how the building already uses electricity and how the utility already bills for it.
Sources
https://electrek.co/2026/08/31/the-us-added-a-record-20-2-gwh-of-battery-storage-in-just-3-months/
https://seia.org/news/largest-quarter-on-record-for-energy-storage/
Frequently Asked Questions
How much storage did the United States install in the second quarter?
A record 20.2 gigawatt-hours, the largest quarter on record and a 108 percent increase over the prior three months. First-half installations reached 30.8 gigawatt-hours, up 23 percent from a year earlier.
Why did home battery installations fall while commercial installations did not?
The federal residential clean energy credit was removed, and homeowner purchases depended heavily on that price reduction. Commercial batteries earn their return from demand charges and time-of-day rate differences, which did not change.
What is a demand charge?
A fee on most commercial electricity bills based on the building's single highest rate of electricity draw during the billing period, typically measured over 15 minutes, rather than on total electricity used.
Does a building need solar to benefit from a battery?
No. Most large batteries installed during the quarter were built without an accompanying solar project. A battery reduces demand charges by controlling when electricity is drawn, which does not require onsite generation.
What determines whether a battery works on a specific building?
The building's rate structure and its usage pattern. Buildings with sharp, brief peaks in electricity draw have more to recover than buildings with steady use, and results vary significantly between utility rate schedules.
