Abstract: Renewable energy and battery storage are seen as complementary technologies that can together facilitate reductions in carbon emissions. We develop and estimate a dynamic competitive equilibrium model of storage investment and operations to evaluate the adoption trajectory of utility-scale storage under different counterfactual policy environments. Using data from California, we find that the first storage unit breaks even in 2027 when renewable energy share will reach 52%. Despite this, battery adoption is virtually non-existent until 2040 without a storage mandate or subsidy. Our model indicates this is because equilibrium effects reduce the marginal value of subsequent storage investments; expected future capital cost reductions incentivize delayed investment; and depreciation from cycling lowers the value of investment. We show that California’s 2024 storage mandate decreases future electricity generation costs by $511 million but also increases expected capital costs by $944 million by shifting adoption earlier, before projected capital cost declines are realized.