Wood Mackenzie has put out research that lists five important themes that will shape the energy storage sector in 2026. These include changes to the supply chain and the growth of batteries that don’t use lithium.
In 2025, the worldwide energy storage industry hit a big milestone: for the first time, yearly installations went above 100 GW. The expansion happens even though there have been big changes in policy in the US and China, the two biggest marketplaces in the world.
China no longer requires new renewable energy projects to be built with storage. The nation is going toward systems based on the market. This makes it hard to predict future income.
Tax breaks are still available in the United States. But new problems with the supply chain are making it hard to employ Chinese battery modules.
The most recent research from Wood Mackenzie, “What to Look for in 2026: Global Storage,” lists five themes that will affect the next year.
1. Restructuring the Supply Chain
Chinese companies are altering the way they conduct business in the US. Chinese companies are anticipated to disclose new ownership arrangements in 2026 so they can keep access to the market. The study indicated that many would lower their holdings to less than 25%. This step is meant to address the needs of the Foreign Entity of Concern (FEOC).
Wood Mackenzie noted that supply is still constrained. Shortages that started in late 2025 will probably last until the middle of 2026. The survey indicated that there is a serious lack of approved batteries from top-tier providers. Wood Mackenzie thinks that pricing for systems will level out in the second half of 2026.
Chinese suppliers are also looking outside the U.S. and China. They are putting money into South and Southeast Asia, Europe, and the Middle East. The article added that the objective is to get more market share, even if it means making less money in the near term.
2. Technology for Making Grids
The paper concluded that grid-forming storage is no longer just an option; it is now required in many markets. Inverters in grid-forming systems help keep the voltage and frequency on the grid stable. This is really important since more coal and gas facilities are shutting down and more renewable energy sources are coming online.
In 2026, the European Commission is likely to create a standard set of rules for grid-forming needs. The paper noted that these systems used to cost 10% to 15% more than regular storage, but the price difference is becoming less. These functionalities are currently being added to regular goods by manufacturers at little or no additional expense.
3. Batteries That Aren’t Lithium Scale Up
Lithium-ion is the most used technology, although other options are becoming more popular. Sodium-ion, flow batteries, and iron-air systems are all becoming bigger. For certain purposes, some technologies are getting cheaper than others.
There is a lot going on with sodium-ion. Peak Energy is in talks with Jupiter Power in the US over a 4.75 GWh supply arrangement. This increase includes the first 720 MWh phase. In 2026, CATL expects to release sodium-ion batteries that are just for storing energy.
New legislative assistance in Europe is aiding long-term storage. The UK and Italy are utilizing “cap and floor” systems. These make it easier for investors to put money into initiatives that don’t use lithium.
4. Data Centers Make People Want Things
Batteries are being used by big data centers to get around grid problems. The grid can’t always keep up with the power demands of generative AI. To get speedier utility connections, data center developers are putting storage in the same place.
Batteries in data centers manage “training loads.” In milliseconds, these loads might go from 10% to 90% full. Storage gives you the freedom you need. Gas turbines are still the best way to get power on-site, but storage is currently the second most popular way to get electricity in the data center pipeline.
5. The Growth of Hybrid Projects
More and more, developers are putting storage along with solar and wind. Hybrid systems assist with curtailment when renewable energy is wasted because the grid can’t handle the production.
More than half of the storage projects proposed in 2025 in Australia and India were hybrids. The tendency is also developing across Europe. The survey noted that some areas now have more than 500 hours of negative electricity pricing per year. These market circumstances make it less lucrative to sell solar panels on their own. Developers are adopting hybrid power purchase agreements (PPAs) to keep their money safe.
Outlook for the Region
According to Wood Mackenzie, the U.S. market will slow down for a while in 2026 and 2027. It says that the slowness is due to changes in tariffs and the time it takes to reorganize supply networks. The analysis suggested that growth should start to pick up again by 2028.
Europe was pointed out as a good place. In 2025, installations in Europe climbed by 160%. Germany is the leader in small-scale, distributed storage, whereas the UK is the leader in big, utility-scale initiatives.
There will be new auctions in Latin America in 2026. Brazil is going to hold a nationwide storage auction in early 2026. Chile is also changing its laws so that storage companies are paid more for delivering grid services.
The change throughout the world is happening. Energy storage is no longer only a backup; it is now the main way to keep the grid stable.
