Momentum shifts from solar to storage

Cleantech growth expectations remain on a robust trajectory in 2026, even as markets such as the US and EU roll back sustainability policies from the first half of the 2020’s. Among cleantech options, battery energy storage systems (BESS) are overtaking solar PV as the segment outperformer.

The sheer scale of additions to S&P Global’s Clean Power Project Pipeline Tracker in January 2026 offers a counterpoint to concerns about sector growth that emerged as the US has deployed policy tools to rein in the expansion of renewables and the EU has curbed sustainability ambitions for its energy sector. Renewables on track for continued growth in the US, and they are on an upward trajectory in every other region, as well. For more, please refer to Clean Power Project Pipeline Tracker: February 2026.

The global clean power project pipeline increased by 165 GW in January alone, bringing the total pipeline to 6.7 terawatts. Newly added projects in the reporting period include both recently announced projects and existing projects previously absent from the database, though changes owing to the latter category comprise a minimal share of the change.

Increases were most pronounced in solar PV and battery storage, with both sectors benefiting from the tailwinds of price declines — thanks to manufacturing overcapacity in China — and surging power demand growth in some of the world’s largest and fastest-growing markets.   The current geopolitical climate, particularly the ongoing conflict involving the US, Israel and Iran, may add further tailwinds. Periods of heightened political risk and fossil fuel price volatility, even if brief, often correspond with heightened interest in energy-producing assets that mitigate fuel price exposure.

Despite the solar slowdown, S&P Global forecasts still show cleantech overall growing at a robust pace over the coming decade. In total megawatt terms, power generation additions are forecast at multiples of expected battery storage additions.

But the latest vintage of S&P Global’s forecast for cleantech additions has made significant downward adjustments to solar PV additions and upward adjustments to BESS additions in response to evolving market dynamics. Looking at the pipeline for new capacity relative to the installed base, BESS pulls far into the lead. The planned and proposed project pipeline for solar PV out to 2040 represents just under six times existing capacity. For BESS, that multiple is nearly 12.

As we have noted before, solar PV growth is expected to decline this year for the first time. This is not an indicator that the sector is falling out of favor; it remains highly competitive on both cost and speed-to-power, which is a critical differentiator, particularly in the US, as utilities and developers race to add capacity to meet a far higher pace of demand growth than the country has seen for more than a decade. Rather, the sector has matured (growth cannot skyrocket forever), and policy measures have been amended to reflect a diminishing need to continue turbocharging its growth. For more, please refer to S&P Global Energy Horizons Top Trends 2026.

There are several drivers behind the uptick of interest in BESS on both the demand and the supply sides.

On the demand side of the ledger:

• One significant tailwind is that renewables penetration in some markets has reached levels that increasingly call for battery storage to balance the rising share of generation from intermittent resources. For more, please refer to Boosting battery investment for better grid stability.
• Another is cost. Battery storage costs have declined dramatically since 2020 and remain on a downward trajectory, albeit at a more moderate pace. BESS’s cost-competitiveness could boost additions over and above S&P Global Energy’s robust expectations over the next decade. For more, please refer to Cost declines price batteries for growth.
• Surging electricity demand is also a factor. It is a rising tide for all forms of energy generation or storage, particularly in the US. Long lead times for grid connections are revving up interest in behind-the-meter options to either generate or store capacity. BESSs offer both quick installation of power storage now and the prospect of future value as backup power or for demand response if behind-the-meter capacity is later connected to the grid. For more, please refer to Prices override policy in US power.

Increased demand has been working in tandem with supply-side drivers that enable a breakneck pace of growth. The ongoing declining costs helping to make battery storage attractive across markets are a function of overcapacity in China. Through rapid scaling and intense domestic competition, China has developed a huge — if not insurmountable — lead in battery manufacturing on every metric: cost, scale, know-how, quality and technological sophistication. Though the risks of an economic model too heavily weighted toward exports continue to weigh on China’s economic outlook, official policy directives from Beijing do not yet constitute a meaningful effort to pivot away from export-led growth.

Supply chain risks persist for hyperconcentrated battery manufacturing, both in terms of control of inputs — especially metals, metals refining and critical minerals — and manufacturing capacity. However, new and acute supply chain risks in oil and gas markets amid ongoing conflict in the Middle East place put battery supply chain risks, which are more manageable for the moment, in perspective. Volatility in the Middle East and threats to traffic through the Strait of Hormuz are driving gas prices higher, putting more pressure on importers to find alternative sources and strengthen energy systems against future supply shocks.

Prices for battery metals for BESS systems have increased significantly in the last six months due to political interventions, export or production controls, and an influx of speculative capital into metals markets. But while elevated input costs can constrain further BESS price declines and pressure manufacturers’ margins, their impact on overall BESS capital expenditure is limited in part by manufacturers’ success in bringing down the cost of the non-cell components, especially the DC block.  For more, please refer to Battery Energy Storage System Capex Report: 2025.

Geopolitical risks remain elevated by rapid swings in trade policy and supply chain concentration, but there are currently no structural deficits set to constrain supplies in the near-to-medium term. The surge of demand for BESS across markets — and the shift of US manufacturing capacity from an EV to a BESS focus — suggests battery demand will remain durable even in the face of slowing US EV adoption rates. Whether it is for storage, defense manufacturers moving into drone value chains, or automotive original equipment manufacturers collaborating with Chinese partners, new projects can secure financing whenever prices rise long enough to make them competitive. The current bump in lithium prices, should it prove more prolonged over the next few quarters as energy markets digest the ramifications of conflict in the Middle East, would be enough to bring more capital into the upstream end of the supply chain.