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by Cliff Rose and Laura Fletcher
With ambitious climate policies driving electric vehicle adoption and building electrification, California’s demand for clean energy is surging. To meet the California energy target of net-zero emissions by 2045, the California Independent System Operator (CAISO) estimates it will need 79 gigawatts (GW) of new renewable generation and 50 GW of battery storage in the coming years – a shift that will reshape CAISO’s battery storage capacity and the broader state grid.
At the same time, demand from data centers and other large energy users is climbing. The California Energy Commission (CEC) expects peak demand in the CAISO balancing area to reach 68 GW by 2040, up 20 GW from 2024.
Additionally, extreme weather events, including wildfires, heat waves, and storms, are increasingly damaging California’s transmission and distribution infrastructure, posing significant threats to the resilience and reliability of the state’s power grid. According to Climate Central, extreme weather caused nearly 61% of California’s major power outages between 2020 and 2023.
To address these challenges, CAISO is building one of the largest and fastest-growing battery storage fleets in the world.
Explore how CAISO’s expanding battery fleet is reshaping the grid and what you need to know to stay ahead.
Why Battery Storage Is Key to California’s Clean Energy Future
Grid operators across the country are increasingly turning to battery energy storage systems (BESS) to manage peak loads, integrate more renewable energy resources, and ensure resilience during climate-related disruptions.
In California, with renewable generation on the rise, batteries play a pivotal role in balancing supply and demand. These grid-scale systems store energy generated during peak production hours – often in the late morning and early afternoon when solar is abundant – and dispatch the energy during periods of higher demand, typically in the late afternoon and evening when solar production declines but demand is high.
This flexibility reduces strain on fossil fuel peaker plants and helps minimize rolling blackouts during heat waves or other high-demand events.
Beyond peak shaving, battery storage is emerging as a key part of CAISO’s resource adequacy framework, helping ensure reliability while decarbonizing supply.
Inside CAISO’s Battery Storage Market Growth
California’s battery storage capacity growth has been dramatic in the past five years, ballooning from 500 megawatts (MW) in 2020 to more than 13,000 MW in early 2025. Batteries now represent a substantial share of the region’s dispatchable energy. By mid-2024, non-generating resource (NGR) batteries accounted for almost 12% of CAISO’s nameplate capacity, as shown in the chart below.
Source: CAISO. Total CAISO balancing area nameplate capacity by fuel type and year
In 2023, batteries supplied an average of 5.6% of CAISO’s electricity between 5 and 9 p.m. On April 21, 2025, that share peaked at 36.6%, with batteries meeting 9.72 GW of load and discharging 42.6 GWh of energy during that same part of the day.
Looking ahead, CAISO’s energy storage interconnection queue includes 101 GW of battery capacity. While not all of that capacity is expected to come online, the volume indicates strong market interest and momentum in California battery storage markets.
Co-Located Storage: The Hybrid Model Powering California’s Grid
Much of California’s battery storage capacity is co-located with wind or solar farms, where batteries can store clean electricity for later dispatch. These co-located resources typically share a grid interconnection point or operate as a single hybrid resource, improving operational efficiency and flexibility, as seen in the image below.
CAISO expects that nearly half of the battery storage capacity in its queue will follow the co-located or hybrid configuration.
Source: CAISO. Active battery capacity in CAISO balancing area 2018-2024
Storage development is accelerating statewide, with projects spanning from urban hubs to remote installations and ranging in size from 3 MW to more than 5,000 MW. Yes Energy’s Infrastructure Insights is currently tracking nearly 500 battery energy storage projects under construction or in development across the CAISO region, totaling over 133 GW of capacity, as seen in the image below.
Source: Yes Energy’s Infrastructure Insights. Battery projects in development or under construction in CAISO as of April 17, 2025
Nearly 75 players are active in the CAISO battery storage ecosystem. Top players include EIG Management Company, NextEra Energy, Arevon Energy, Hectate Energy, and Cultivate Power, all of which have eight or more projects underway.
What Could Slow California’s Battery Boom?
Despite its explosive growth, the CAISO energy storage market faces headwinds. A major obstacle has been the slow interconnection process. To reduce the backlog of roughly 500 GW of generation and storage projects in the queue, federal regulators recently approved reforms that include:
- A zonal approach that prioritizes projects in areas with existing or planned transmission capacity.
- A scoring mechanism to identify and advance the most viable projects.
- Accelerated approvals for projects that don’t require extensive network upgrades.
The reforms also align CAISO with the Federal Energy Regulatory Commission’s (FERC) Order 2023, which mandates cluster studies and increased financial commitments from developers.
Meanwhile, shifts in federal policy, particularly around tax credits and grant funding, could influence financing and development timelines for future California battery projects.
How to Compete and Win in CAISO’s Battery Storage Market
Maximizing value in CAISO’s battery storage market demands more than just assets – it requires deep historical and forward-looking intelligence. Yes Energy’s GridSite platform provides the data and tools developers need to make confident, data-driven decisions about where and how to deploy energy storage in the CAISO balancing area.
GridSite helps developers pinpoint the best locations for new battery projects by analyzing historical price trends and the underlying fundamentals driving those prices. The below chart shows historical average daily real-time locational marginal price (LMP) spreads to help you understand optimal locations to engage in energy arbitrage.
Source: Yes Energy’s GridSite. Average Daily Real-Time LMP Spreads, CAISO and WECC Nodes, January 1, 2024, to May 15, 2025.
GridSite also includes data to help show how similar assets are operating and monetizing. The below chart depicts revenue by month and product for the CAISO’s Stanton Energy Storage Facility.
Source: Yes Energy’s GridSite - EQR data. Reported Transaction Charges by Product and Month, Stanton Energy Storage, January 2024 to August 2025
GridSite also includes a long-term, nodal pricing forecast through 2050, giving you a window into future market dynamics.
Source: Yes Energy’s GridSite. Average Nodal LMPs, 2025 to 2050, CAISO.
Yes Energy’s Infrastructure Insights complements this by delivering a holistic view of the evolving grid. From upcoming transmission projects and generation assets in the interconnection queue to new large loads that may impact local demand, the platform tracks critical developments that shape market opportunities and risks.
Together, GridSite and Infrastructure Insights provide an integrated view of pricing, capacity, infrastructure, and competition, empowering you to choose the right locations, sizes, and strategies for your CAISO energy storage assets.
Learn how Yes Energy can help you optimize your CAISO market participation. Get in touch today.
About the author: Cliff Rose is a senior product manager at Yes Energy currently focused on building products that help power plant developers leverage wholesale power market data in their decision-making. He has 12 years of experience helping companies navigate power markets in both a consulting and software development capacity. Outside of work, you can find Cliff engaging in stereotypical Colorado activities such as skiing, running, and biking.
About the author: Laura Fletcher is on the Yes Energy product team as an associate product manager. Prior to joining the team, Laura studied environmental engineering at Georgia Tech. She started working with energy data as a college intern, and she has worked on various consulting projects, annual market forecasts, client relations, and database management.
