US Battery Build-out Strains a China-Dependent Supply Chain
Record US storage deployments and surging AI demand cannot be met at pace without Chinese components that domestic and allied manufacturing cannot yet replace.
The US added a record 57.6 gigawatt-hours of new battery energy storage capacity in 2025, according to the Solar Energy Industries Association, bringing total deployed capacity to 166.1 GWh. The figure suggests momentum. It also reflects a structural problem: that supply chain remains heavily dependent on Chinese-made components, and demand is accelerating faster than any domestic alternative can fill the gap.1
Battery storage firms are seeing surging interest from power-hungry data centers, but panelists at the BloombergNEF Summit in New York in April (2026) were clear-eyed about the constraints. High battery pack prices, global shipping bottlenecks and a shortage of non-Chinese alternatives are all dampening near-term deployments, they said.2
Demand is accelerating regardless. Power consumption from US data centers could reach 9 to 17 percent of total US electricity supply by 2030, up from around 4 percent as of mid-May 2026, or as much as 790 terawatt-hours annually, according to projections from the Electric Power Research Institute. Battery storage is the preferred near-term solution for both utilities managing grid peaks and for data center operators trying to avoid lengthy interconnection queues by co-locating storage with generation.1
The commercial transactions already reflect that. Energy storage company Fluence is engaged in over 30 GWh of data center-related projects globally, with a meaningful share in the US, according to chief executive Julian Nebreda. Tesla reported $430 million in revenue last year from selling storage systems to Elon Musk's xAI. Calibrant Energy has agreed to provide a 31 MW/62 MWh battery system at an Aligned data center campus in the Pacific Northwest.1
SEIA projects annual US battery storage deployments will reach 110 GWh by 2030, roughly double the 2025 pace. Meeting that pace through domestic or allied-country sourcing alone would require manufacturing investments that are not yet online at the required scale.1
Global clean energy trade rose to $479 billion in 2025, up 1 percent from the prior year, according to BloombergNEF's Energy Transition Supply Chains 2026 report, with China retaining dominance in cell manufacturing and pack assembly.3
The Atlantic Council, in an analysis published on June 11 (2026-06-11), argued explicitly that the US and South Korea need to coordinate battery procurement and technology policy to reduce dependence on Chinese manufacturers. The paper cited the pace at which Chinese producers had moved through allied markets as evidence of the urgency: Chinese-made electric vehicles captured 30.9 percent of South Korean EV registrations in the first quarter of 2026, roughly a third of that market.4
The US-Korea pairing has a manufacturing logic. South Korean producers have established cell chemistry and production expertise that could substitute for Chinese supply in the medium term. But that partnership must compete with ongoing trade friction over semiconductor tariffs and market access, complicating coordination. The Pentagon has been developing its own battery plans through the Lithium-Battery Strategy (2023-2030) and the Battery Network program, though defence procurement volumes are well below what would be needed to anchor a domestic civilian supply chain.4
Interconnection queues add a second constraint independent of the supply problem. Reuters reported on May 18 (2026-05-18) that lengthy queues to connect to the grid are hampering rapid scale-up even for projects where equipment is available. Behind-the-meter deployments bypass the queue, but they put the procurement risk on data center developers who face the same China-concentrated component market.1
The 110 GWh annual deployment target for 2030 requires sustained compound growth from last year's record base. How much of that supply runs through Chinese manufacturers — and at what cost premium the domestic-content alternative emerges — will determine both the pace of the US storage build-out and whether the policy framework supporting it produces the supply chain shift it was designed to achieve.1