Still pricing storage like it’s 2023? That’s the grid-scale equivalent of putting economy tires on a Formula E car. In 2026, US battery energy storage system costs are heading up, and the reasons are not subtle.

The short version

• Section 301 tariffs on lithium-ion non-EV batteries jump to 25% starting January 1, 2026, hitting imported LFP cells and packs used in grid-scale batteries, with natural graphite also moving to 25% in 2026 as noted in this summary and the Federal Register notice.
• Treasury and IRS updated the domestic content bonus rules for the Investment Tax Credit in 2024-2025, with manufactured product thresholds stepping to 50% in 2026 and 55% after, per the IRS guidance and Notice 2025-08 summarized here and here.
• Portland General Electric secured regulatory approval to increase pricing across a 1 GW BESS portfolio, explicitly citing tariff and ITC shifts, as covered here and reflected in its late-2024 rate decisions here.
• Samsung SDI is pivoting to prismatic LFP batteries for US energy storage under a major multi-year contract, retooling domestic lines to supply ESS demand as reported here and here.

The problem

Developers and utilities planned their grid-scale batteries around cheap imported LFP and a generous ITC stack. Then reality happened. Tariffs are rising in 2026, domestic content math is getting stricter, and projects that miss those thresholds lose a 10% ITC bonus that many pro formas quietly relied on. Meanwhile, procurement timelines are crunching as US demand outpaces domestic cell supply.

Why BESS prices are rising in 2026

• Tariffs bite into LFP economics. The US finalized higher Section 301 tariffs on imports from China. Lithium-ion batteries for non-vehicle applications move to 25% on January 1, 2026, and natural graphite also moves to 25% in 2026, pressuring LFP cathode and anode supply chains. See White & Case’s analysis, Mayer Brown’s summary, and the official USTR notice.
• Domestic content thresholds step up. The elective safe harbor for the ITC domestic content bonus uses default cost percentages to determine eligibility. Those thresholds rise to 50% in 2026 and 55% thereafter, which makes qualifying without US-made battery cells and key components far harder. See IRS guidance here and practitioners’ updates here and here.
• Utilities are resetting price expectations. PGE’s regulator-approved price refresh on its 1 GW BESS portfolio underscores the new baseline for storage pricing and risk allocation, with projects slated through 2027 to meet reliability needs. Coverage here. For context on PGE’s recent BESS activations, see PV Magazine.

LFP supply chains are moving

LFP batteries dominate grid-scale storage for cost and safety, but the US has leaned heavily on Chinese supply. That is changing. Samsung SDI is shifting US production capacity toward prismatic LFP cells for energy storage under a major multi-year contract, positioning itself as a non-Chinese source and reducing tariff exposure. See reporting here and here.

Expect more OEMs to localize ESS cell and pack assembly to help projects qualify for the domestic content bonus and to mitigate tariff risk. That realignment is good news, but capacity will take time to ramp, and 2026 is the transition year where prices reflect scarcity and policy friction.

What developers, utilities, and investors should do

• Model 2026 tariffs into every imported LFP scenario. Use 25% on non-EV lithium-ion imports starting January 1, 2026 and include natural graphite at 25% in sensitivity cases. Source: White & Case, Federal Register.
• Design for the domestic content bonus. The §48 ITC domestic content bonus can add 10% if thresholds are met. In practice, that means prioritizing US-made battery cells, inverters, and key manufactured products to clear the 2026 50% threshold. Guidance: IRS, RSM.
• Time your procurement and CODs. Where possible, advance procurements to pre-tariff windows and schedule placed-in-service dates to align with bonus eligibility and prevailing wage-apprenticeship requirements for the full credit. See industry guidance.
• Use flexible contracting. Include tariff adjustment mechanisms, price-index escalators, and domestic-content representations so that ITC value is appropriately shared and protected.
• Favor proven LFP safety packages. Containerized systems with mature thermal propagation controls and integrated fire safety reduce insurance and O&M risk. Samsung’s ESS platform highlights these features as covered here.
• Stack incentives smartly. Combine domestic content with energy community and PWA where applicable to offset tariff-related capex inflation. IRS resources here.

Pipeline outlook

Expect a price step-up on 2026 projects, followed by gradual easing as domestic LFP supply scales in 2027-2028. Utilities are staggering storage additions to manage reliability needs and cost exposure, as PGE’s 2024-2027 program indicates here. Developers that lock domestic-content-qualified hardware and flexible commercial terms can keep project IRRs intact despite the policy whiplash.

Bottom line

The combination of higher US energy storage tariffs and tighter domestic content math will raise grid-scale battery prices in 2026. LFP supply is realigning, but capacity needs time to catch up. Plan for tariffs, engineer for the ITC bonus, and contract with flexibility. If you do, the 2026 bump is survivable and the 2027 pipeline can still hit the mark.