US battery manufacturing is scaling so fast it could cover most domestic BESS demand within a few years. Here’s how that rewires green tech projects and strategy.
Most people still assume the US grid storage market depends on cheap Chinese batteries. That’s already changing – and by the end of this decade, it could be flipped on its head.
US battery manufacturing capacity is expanding so fast that several analysts now think domestic factories could cover most, if not all, US battery energy storage system (BESS) demand within a few years. For anyone building green technology projects – from utility-scale storage to smart buildings and data centers – that shift matters a lot.
Here’s the thing about this moment: policy, manufacturing, and technology are finally lining up in a way that can make clean, dispatchable power both scalable and local. If you care about resilient grids, decarbonisation, or just predictable project economics, you should be watching US BESS manufacturing very closely.
This article breaks down what’s changing, why FEOC rules and tariffs might actually speed up US green tech manufacturing, and how project developers, utilities, and energy-heavy businesses can respond now instead of waiting for the dust to settle.
How US Policy Is Rewiring the Battery Supply Chain
US BESS demand isn’t rising in a vacuum. It’s being pulled up by three reinforcing forces: aggressive clean energy targets, massive data center growth, and new rules that favor domestic and “friendly” supply chains.
The FEOC rules: less China, more local content
The US still offers an investment tax credit (ITC) for standalone storage, but the Foreign Entity of Concern (FEOC) rules now limit how much Chinese-origin battery content can sit inside a project that claims those incentives.
In simple terms:
- From now, at least 55% of a project’s capex has to be spent on non-FEOC (non-Chinese-controlled) equipment to qualify.
- By 2030 that threshold rises to 75%.
- On top of that, Chinese BESS imports are facing combined tariffs approaching ~55% by January 1, 2026.
On paper, that looks like trouble: higher prices, tighter supply, and more project risk. In practice, it’s forcing a strategic reset that accelerates US and allied battery manufacturing, particularly for stationary storage chemistries like LFP (lithium iron phosphate).
The reality? The FEOC rules are turning BESS procurement into a "build local or pay dearly" decision. Most serious players will choose to build local.
Why this matters for green technology
For the wider green technology ecosystem – solar developers, microgrid integrators, electrified industrial sites, and smart city projects – this shift has a few big consequences:
- More predictable policy support: ITC eligibility tied to non-FEOC content rewards early movers who line up compliant supply chains.
- Lower long-term risk: Less dependence on a single geopolitical supplier (China) reduces the chance that your storage project is wrecked by a trade dispute.
- Better integration with AI and digital tools: Domestic manufacturing makes it easier to co-design batteries, BMS, and software platforms that optimise performance with advanced analytics and AI.
This is exactly where green technology, digitalisation, and industrial policy intersect.
US BESS Manufacturing: From Shortage to Surplus?
The core claim from industry consultants is bold: US-based cell and pack manufacturing could cover domestic BESS demand within a few years. Given where the market was even in 2022, that’s a dramatic pivot.
Who’s building the factories?
Several major players are either building or retooling plants in North America specifically for energy storage, not just EVs:
- LG Energy Solution is converting EV-focused NMC lines in Holland, Michigan to produce LFP cells for ESS. That’s a signal: higher-volume, lower-cost chemistries targeted squarely at grid storage.
- Tesla, SK On, Samsung SDI, and Fluence are all part of a growing cluster of US or US-linked manufacturing and integration capacity.
- New chemistries – like sodium nickel chloride and sodium-based batteries – are beginning to attract US manufacturing interest as well, adding diversity to the supply mix.
If you zoom out, the pattern is clear: EV gigafactories are mutating into broader battery platforms, with BESS lines spun up alongside or inside existing sites. Once those assets are amortized, the marginal cost of new ESS capacity drops sharply.
Why BESS is different from EVs
BESS doesn’t need the same energy density or form factor constraints as EV batteries. That has three critical implications:
- LFP dominates: LFP is cheaper, safer, and well-suited to stationary storage. It’s also less constrained by some of the most geopolitically sensitive minerals (like high-nickel cathodes).
- Form factor flexibility: Containers, cabinets, and racks can be optimised for thermal performance, safety, and ease of installation – not vehicle packaging.
- Faster localisation: Because stationary systems can tolerate a bit more weight and volume, manufacturers have more freedom to design around local material availability and process constraints.
That’s one reason why the US could realistically cover most domestic BESS needs faster than it can fully localise EV battery supply.
How This Shift Changes Project Economics
If you’re a utility, developer, or energy-intensive business, the key question isn’t just “Where will my batteries come from?” It’s “How does US manufacturing change my economics and risk profile?”
Fewer cheap imports, more stable total cost
Chinese-made BESS systems have dominated the global market on price. But once you fold in:
- 55%+ tariffs from 2026
- Lost or reduced ITC if you don’t meet FEOC thresholds
- Longer shipping and customs lead times
- The political risk premium of relying heavily on one country
…the “cheap” option stops looking so cheap.
US-made or FEOC-compliant systems may have a higher sticker price per kWh today, but:
- Tax incentives close a good chunk of the gap.
- Reduced shipping and inventory costs add up when you’re ordering hundreds of MWh.
- Local service, faster replacement, and lower downtime improve lifetime project returns.
From a green technology lens, that means more bankable projects, not just more projects on PowerPoint.
Better fit for AI-optimised and flexible grids
As storage portfolios grow, operators lean heavily on software and AI to extract value: forecasting prices, stacking revenue streams, and managing degradation. Local manufacturing enables tighter coordination between:
- Cell design
- BMS firmware
- EMS/SCADA software
- AI optimisation layers
When those layers are designed in the same ecosystem, you get:
- More accurate data on real performance and degradation
- Faster iteration on software models
- Smoother integration with grid operators and market platforms
In other words, domestic hardware manufacturing and AI-based optimisation reinforce each other, which is exactly where the broader Green Technology theme gets powerful.
Practical Playbook: How to Prepare for a US-Built BESS Market
Most companies get this wrong by waiting for a “mature” domestic supply chain before they adapt their strategy. That’s backward. The winners usually shape that supply chain by moving a bit earlier than everyone else.
Here’s what’s working for developers, utilities, and large energy users right now.
1. Build a FEOC-compliant sourcing strategy now
Don’t treat FEOC compliance as a box-ticking exercise right before financial close. Treat it like a design constraint:
- Segment your bill of materials by origin and ownership: cells, modules, racks, inverters, transformers, communication hardware.
- Pre-qualify multiple US or allied suppliers for each major component category.
- Model capex vs tax benefit for different sourcing mixes (e.g., 60% vs 75% non-FEOC) over the life of your pipeline.
If you’re using AI-driven planning tools for portfolio optimisation, feed the FEOC and tariff data into the model so you aren’t blindsided by 2026 imports suddenly blowing up project budgets.
2. Partner early with domestic manufacturers
Domestic factories ramp in phases. Early anchor customers often get:
- Priority allocation during tight periods
- Influence over product specifications
- Better visibility on long-term pricing
If you develop or operate multiple projects, consider:
- Framework agreements with US manufacturers that cover several years of BESS demand.
- Joint technical working groups to align on safety standards, grid code requirements, and software interfaces.
- Co-development of project templates (container layouts, AC/DC ratios, protection schemes) that cut engineering time for your whole pipeline.
3. Use software and AI to squeeze more value from each kWh
As hardware availability improves, the real differentiation moves to how intelligently you run your BESS assets. I’ve found the best green technology teams are doing three things consistently:
- Revenue stacking with precision: using forecasting models to sequence energy arbitrage, frequency response, capacity markets, and peak shaving without burning through battery life.
- Condition-based maintenance: predicting when modules or strings will drift out of spec and scheduling targeted interventions, instead of fixed-interval maintenance.
- Portfolio-level optimisation: treating multiple BESS sites as a flexible fleet that responds to grid needs, not just isolated projects.
Domestic manufacturing makes the data flows and feedback loops needed for that kind of optimisation much easier to manage.
4. Design for future recyclability and second life
A US-centric supply chain won’t stay sustainable if it just swaps one extraction-heavy model for another. The smarter approach is:
- Specifying cells and packs with clear end-of-life pathways, including recycling partners that can recover lithium, phosphorus, copper, and aluminum.
- Evaluating second-life applications (e.g., behind-the-meter storage, backup for data centers or EV charging hubs) for packs that fall below front-of-meter performance thresholds.
- Tracking serialised asset data from day one so AI tools can match used packs to the right second-life profile.
That’s where green technology stops being a buzzword and becomes an actual closed-loop system.
What This Means for the Future of Green Technology in the US
The US is on track to build enough domestic battery manufacturing capacity to support its own BESS-driven clean power build-out – and potentially export to other FEOC-constrained markets.
This matters because reliable, local storage is the backbone of every serious decarbonisation strategy: it stabilises renewables, supports EV charging, backs up data centers, and makes microgrids viable. Once you can source those systems domestically, you reduce geopolitical risk, cut lead times, and create a tighter feedback loop between hardware and the AI systems that run it.
For teams working anywhere in the green technology space, the next few years are a window to:
- Lock in FEOC-compliant supply chains
- Shape domestic product roadmaps
- Build AI-optimised operating models that turn storage from a cost center into a flexible, revenue-generating asset
The US doesn’t just need more clean electrons. It needs intelligent, locally rooted storage infrastructure that can match a grid getting more complex by the year. US battery manufacturing is finally stepping up to that job. The question is whether your strategy will step with it.