Navigating the Storm

Policy
Written By Andi Banez

How BESS Developers Can Thrive Despite Policy Uncertainty

In an era where the momentum behind clean energy collides with rising protectionist policies, the U.S. battery energy storage system (BESS) industry has found itself under pressure. Just weeks ago, new tariffs of 156.9% on batteries and 170% on inverters sent shockwaves through the market. Systems that once were about $225/kWh were suddenly nearing $450/kWh+, a 75-100% increase that threatened to stall critical projects and shake the foundation of America's energy storage ambitions.

But now, a temporary shift: a 90-day reprieve with the possibility to last until the end of the year, drops Trump’s tariffs back down to 30% on top of the pre-Trump 11.9% for batteries. This short and unpredictable window is a much-needed opportunity—one that developers, EPCs, and customers must act on quickly to get projects back on track as manufactuerers are backlogged and ships are hard to book given the short-term surge in exports. But despite this much needed break from the astronomical tariffs, it sure has been a wake-up call for the US energy storage market.

The message is clear: the BESS supply chain needs to evolve—not only to meet growing energy demand but to withstand future policy shocks with greater resilience. That in addition to building out domestic manufacturing an integration is an obvious solution, but the reality is that it will take a long time to localize and to build the scale, quality, and price that top tier Asian battery manufacturers have achieved. So having a diversity of supply in the meantime is crucial, finding ways to mitigate tariff risk, and leveraging buying power and financing mechanisms will be imperative.

The Harsh New Reality

The U.S. currently has around 83 GWh of energy storage capacity but must scale to 700 GWh by 2030 to meet clean energy and reliability targets. Even as deployments continue to grow — 55% year-on-year increase in deployments — the volatility of the policy landscape threatens to undermine momentum just when it’s needed most.

Projects built on tight margins have already been pushed underwater and largely put on hold. Contracts signed months ago are no longer financially viable. Domestic manufacturing incentives—$35/kWh for cells, $10/kWh for packs—are promising, but they cannot yet fill the cost or capacity gap in the short term and now their the latest bill that has passed the House of Representatives that could seriously curtail the Investment Tax Credits is stoking real fear in renewable energy developers across the country.

This is all happening at a time that the US desperately needs additional electricity capacity to power the every thirsty data centers that are popping up to serve the needs of AI. The electricity of AI driven Data Center’s has fast spikes and drops which is especially challenging for utilities to serve and makes batteries an even more necessary part of the solution for data centers. Electricity growth from Data Centers has increased at 12% per year over the last five years. From 2024 to 2030, the IEA expects data centre electricity consumption grows by around 15% per year, more than four times faster than the growth of total electricity consumption from all other sectors. (Source: IEA.org).

How We Can Move Forward

All of this policy uncertainty offers an opening to rethink how the industry develops BESS projects and sources BESS equipment. BESS developers must be nimble, modular, and well… resilient. Here are GridVest’s recommendations on how to proceed:

1. Embracing Modular Rightsizing and Value Engineering

With cost pressures front and center, every kilowatt-hour deployed needs to prove its value. Developers are moving away from overbuilding and toward surgical precision—leveraging modeling tools to size systems exactly to need. Value engineering is key, stripping out non-critical features, prioritizing modularity, and phasing deployments over time. Even small design adjustments—like removing rarely used islanding capabilities or scaling back auxiliary systems to code minimums—can create material savings without compromising safety. Load management is another crucial opportunity.

2. Building Resilience Through Revenue Stacking

As margins tighten, a single revenue stream won’t cut it. Developers are now designing systems with built-in flexibility—tapping into a mix of frequency regulation, capacity markets, energy arbitrage, resilience premiums, virtual power plants, and demand charge reduction. Whether through partnerships with utilities or direct contracts with large C&I customers, the most economic and bankable projects will be those that layer value in ways that cushion volatility and drive long-term returns. Great Energy Management Systems (”EMS”) are crucial for being able to optimize for this.

3. Rethinking Financing and Risk Allocation

This moment also calls for new financing options. Some developers are restructuring payment terms to reduce upfront exposure and extending payment timelines post-delivery. Others are implementing tariff-sharing agreements that distribute risk across the value chain. Creative tax equity structures and vendor financing are becoming increasingly important, while state-level incentives can help soften federal shocks. Developers who diversify how they fund and structure deals will be better positioned to ride out future disruptions. Also exploring safe harboring to secure tax credits can be essential to get the confidence to proceed on a project.

4. Reconfiguring Supply Chains for the Long Game

The tariff shock has accelerated efforts to diversify the supply chain. Partnerships are growing across Southeast Asia—Vietnam, Malaysia, Thailand, Indonesia—and domestic integration efforts are expanding to raise U.S. content levels. LFP chemistry, with its more accessible material inputs, is gaining traction but we have a long way to go in terms of innovation. China still dominates 80% of patents and double the US value chain on BESS production and while some developers are forming procurement consortiums to unlock economies of scale from non-Chinese manufacturers, government support will still be beneficial long term. These efforts will not fully pay off in the next quarter—but they are essential to building a more resilient supply base. This is where GridVest’s Master Supply Agreements, deep relationships and buying power can really help.

5. Engaging Policy to Shape the Future

The industry must also stay engaged in shaping the policies that define its operating conditions. The temporary tariff rollback shows that advocacy can work. Developers with strong use cases—particularly those serving critical infrastructure—should continue to seek exemptions, make the case for economic and grid security, and quantify the impact on local jobs and resilience. The more unified and evidence-based the industry voice, the more influence it will carry in the next round of decisions. Right now writing and calling your senators about the need to maintain the Inflation Reduction Act (”IRA”) and Investment Tax Credits is crucial right now. We have to remind them the importance of energy independence and the need for increased electricity capacity.

Conclusion: The Long Game of Facing Domestic Manufacturing Realities

Despite the boost from tax credits (the future of which are now uncertain), domestic battery manufacturing still faces cost and capacity constraints. Today, even the most aggressive efforts can only deliver about 40% domestic content—short of the 45% threshold required for the additional 10% ITC bonus. Competitive-scale domestic production is still two to three years away. In the meantime, developers must design for flexibility, secure supply across different countries, and push forward without waiting for perfect conditions.

This 90-day tariff reduction isn’t just a lifeline—it’s a chance to catch up, build smarter, and start paving the way for other countries to begin setting up. Developers who move fast to secure equipment, close deals, and get projects underway will benefit. But those who use this window to reimagine their procurement processes will lead.

The fundamentals haven’t changed. The U.S. still needs to scale from 83 GWh to over 700 GWh of storage. The opportunity remains massive. But it’s clear that the path forward will never be 100% smooth or certain. And those who emerge stronger from this period will be the ones who build resilient supply chains. Those that can adapt to price volatility, weather policy shifts, and capitalize on opportunity when it knocks. The time to act is now—and not just to take advantage of these next 90 days, but to create the kind of storage ecosystem that can thrive in whatever storm comes next.

Contact GridVest today in order to figure out which BESS solution makes the most sense for you and to get pricing and more about our flexible payment options.

Sources:

  1. MarketsandMarkets. (n.d.). Battery energy storage system market by battery type, storage system, energy capacity, connection type, application, ownership, and region – Global forecast to 2029. https://www.marketsandmarkets.com/Market-Reports/battery-energy-storage-system-market-112809494.html

  2. NBC News. (2025, May 14). Tariffs slashed to 30% as China and Trump reach deal on levies. https://www.nbcnews.com/world/asia/tariffs-china-trump-agree-slash-levies-duties-business-markets-bessent-rcna206193

  3. Indigenous Power Collective. (2024). Energy storage 2024: Innovation, policy & community. https://www.ipcollective.ca/energy-storage-2024/

  4. Bhattacharjee, S., Cheng, X., Yang, Z., & Zhao, Y. (2024). Optimal sizing and control of hybrid battery energy storage systems for renewable energy applications. Journal of Energy Storage, 85, 109385. https://doi.org/10.1016/j.est.2024.109385

  5. Interos. (2023, September 27). Battery supply chains’ reliance on China threatens the electric revolution. https://www.interos.ai/blog-battery-supply-chains-reliance-on-china-threatens-the-electric-revolution/

  6. Bloomberg News. (2025, May 16). Trump’s China tariffs seen staying at 30% through late 2025. Bloomberg. https://www.bloomberg.com/news/articles/2025-05-16/trump-s-china-tariffs-seen-staying-at-30-through-late-2025

  7. The White House. (2025, May). Presidential action: Modifying reciprocal tariff rates to reflect discussions with the People’s Republic of China. https://www.whitehouse.gov/presidential-actions/2025/05/modifying-reciprocal-tariff-rates-to-reflect-discussions-with-the-peoples-republic-of-china/

  8. Walton, R. (2024, May 23). Energy storage is needed to ensure grid reliability, SEIA says. Utility Dive. https://www.utilitydive.com/news/energy-storage-ensure-grid-reliability-seia/739194/

  9. ESS News. (2025, January 29). SEIA calls for 700 GWh of U.S. energy storage by 2030. https://www.ess-news.com/2025/01/29/seia-calls-for-700-gwh-of-u-s-energy-storage-by-2030/

  10. Wood Mackenzie. (2023, October 5). Global energy storage capacity to grow at CAGR of 31% to 2030. https://www.woodmac.com/press-releases/global-energy-storage-capacity-to-grow-at-cagr-of-31-to-2030/

  11. Visual Capitalist. (2023, March 28). The lithium battery value chain. https://elements.visualcapitalist.com/lithium-battery-value-chain/

  12. Shulruff, N. (2025, April). Understanding and embracing frequency regulation [Webinar]. AMPS Power Solutions.

Andi Banez