California Just Made Batteries Mandatory. Nobody Has Enough.

Forty-seven thousand buildings. That is the number of commercial structures in California over 50,000 square feet that now have a legal obligation to install battery energy storage by January 1, 2029. Governor Newsom signed AB 1373 on February 7, and the math is already impossible.

At minimum two hours of average peak demand per building, the mandate represents somewhere between 4.7 and 9.4 GWh of required battery capacity — in a single state, for a single building class, on a fixed deadline. The entire United States deployed 16.3 GWh of battery storage across all sectors in 2025. California just legislated the equivalent of half a year’s national output into existence with the stroke of a pen.

The supply problem nobody is modeling. The battery storage industry has spent a decade proving that the economics work. Demand charges are punishing. Incentives are generous. Payback periods are shrinking. The pitch has always been voluntary: install storage because it saves money. AB 1373 eliminates the word “voluntary” from the conversation. Commercial building owners in PG&E, SCE, and SDG&E territories are no longer evaluating whether storage makes financial sense. They are evaluating whether they can procure it at all.

The bill specifies UL 9540A certification for indoor installations — a standard that currently has fewer than a dozen commercially available systems qualified to meet it. CalFire is developing a fast-track permitting process, but “fast-track” is targeted for Q3 2026, leaving barely two years between permitting clarity and compliance deadline. For an industry that routinely quotes 12—18 month lead times on commercial installations, the timeline is not ambitious. It is adversarial.

The domino effect is already visible. California does not legislate in isolation. New York’s NYSERDA just launched a $400 million Inclusive Solar + Storage Incentive program with storage-only eligibility for the first time. Massachusetts has Eversource petitioning the DPU for a 1.2 GW commercial aggregation program. New Jersey’s PSE&G filed a $2.3 billion grid modernization plan with 500 MW of commercial storage baked in. The regulatory apparatus across the country’s largest energy markets is converging on the same conclusion: commercial buildings without batteries are a liability.

But convergence creates competition for the same finite supply chain. LFP cell production is concentrated among a handful of manufacturers — CATL, BYD, EVE Energy, CALB — all based in China, all navigating trade restrictions that add 25—50% to landed costs under current tariff structures. Domestic assembly is scaling, but “scaling” means Peak Energy’s Houston facility targeting first commercial shipments in Q1 2027. That is two years before California’s deadline and roughly the same moment every other state program expects to be deploying at scale.

The indoor certification bottleneck is worse than the cell bottleneck. AB 1373 does not just require batteries. It requires batteries inside buildings. Indoor-certified commercial systems occupy a vanishingly small corner of the market. The vast majority of deployed commercial storage sits in outdoor enclosures, on rooftops, or in parking structures — configurations that sidestep the fire safety complexity of occupied-space installation. UL Solutions published revised UL 9540A protocols for indoor systems under 600 kWh on February 3, reducing the test matrix from 12 to 7 scenarios and cutting certification costs by 40%. That helps. It does not solve the fundamental problem that most manufacturers designed their commercial products for outdoor deployment and are now scrambling to re-engineer for indoor compliance.

BYD’s MC Cube-T, unveiled at Intersolar Europe this month, offers indoor wall-mount and floor-standing configurations with UL 9540A certification. But BYD’s domestic content falls below Section 48E thresholds, meaning customers forfeit the 10% ITC bonus that makes the economics work for midsize buildings. The Inflation Reduction Act’s domestic content requirements and California’s indoor mandate are pulling the market in opposite directions: one demands American manufacturing, the other demands a product category that American manufacturers have barely begun to build.

The real constraint is labor. National Grid’s New York territory received 847 commercial storage interconnection applications in January alone — a 400% year-over-year increase — and promptly doubled its processing timeline from 90 to 180 days. That is one utility, in one state, before any mandate took effect. California has three major IOUs, 47,000 buildings, and a construction labor market already stretched by data center buildouts, residential electrification, and wildfire rebuilding. The electricians, engineers, and commissioning technicians required to install 4.7 GWh of indoor commercial storage do not currently exist in sufficient numbers. Training programs take years. The deadline does not move.

Mandates change markets in ways incentives never could. The Inflation Reduction Act drove storage adoption through economics. State incentive programs drove it through opportunity cost. AB 1373 drives it through legal obligation. The difference is not academic. When storage is optional, project timelines flex. Procurement delays push installations to next quarter, next year. When storage is mandatory, delays become violations. Building owners who cannot procure systems face compliance risk, and compliance risk becomes a line item on commercial property valuations, lease negotiations, and insurance underwriting.

The commercial real estate industry is not prepared for energy storage to become a code requirement on par with fire suppression or ADA compliance. But that is precisely what AB 1373 establishes. The bill does not frame batteries as an energy optimization tool. It frames them as building infrastructure — as fundamental to commercial occupancy as HVAC or emergency lighting.

The 2029 deadline will be missed. Not by every building. Not by most buildings. But by enough to trigger the inevitable extension debates, phased enforcement, and interim compliance pathways that follow every ambitious building mandate. California’s own Title 24 energy code updates have historically seen 18—24 month adoption lags despite years of advance notice. A mandate requiring a product category that barely exists at scale, installed by a workforce that has not been trained, permitted through a process that has not been finalized, will not achieve 100% compliance on schedule.

But that is not the point. The point is that the question has changed. The commercial storage industry spent a decade answering “why should buildings have batteries?” California just made that question obsolete. The only question left is “who can deliver them fast enough?”

The answer, for now, is almost nobody.