Energy storage resources have become an increasingly important component of the energy mix as traditional fossil fuel baseload energy resources transition to renewable energy sources. Currently 23 states, plus the District of Columbia and Puerto Rico, have 100% clean energy goals in place. Storage can play a significant role in achieving these goals by serving as a “non-wires alternative” that can provide added reliability and grid services as renewable resources such as wind and solar replace fossil fuel baseload resources.
The US storage market had a record-setting third quarter of 2024, adding 3,806 megawatts (MW) (or 9,906 megawatt-hours (MWh)) of installed capacity to the grid.[1] It is expected that the US storage market will install another 74 gigawatts (GW) between 2024 and 2028.[2] As of July 2024, there was approximately 20.7 GW of operational utility-scale battery storage in the United States.[3]
The installation of utility-scale storage in the United States has primarily been concentrated in California and Texas due to supportive state policies and significant solar and wind capacity that the storage resources will support. By Q3 2024, Texas had installed 2,283 MWh of storage capacity, while California had installed 5,992 MWh of capacity.[4]
The most significant battery energy storage resource development has occurred in states that have adopted some form of incentive for development, including through utility procurements, the adoption of favorable regulations, or the engagement of demonstration projects.[5]
Approximately 17 states have adopted some form of energy storage policies, which broadly fall into the following categories: procurement targets, regulatory adaption, demonstration programs, financial incentives, and consumer protections.[6] Below we give an overview of each of these energy storage policy categories.
PROCUREMENT TARGETS
Procurement targets require utilities to acquire a specified quantity of energy storage typically by a specified deadline. To date, 12 states—California, Connecticut, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island, and Virginia—have adopted procurement targets.[7]
California was the first state to adopt a procurement target, initially mandating that the state’s investor-owned utilities procure 1,325 MW of energy storage by 2020,[8] before adding 500 MW distributed storage[9] to the goal for a total of 1,825 MW by 2020. In 2015, Oregon directed its two largest investor-owned utilities to each install 5 MWh by 2020 (minimum), up to a maximum of 1% of 2014 peak load.[10] In 2020, the Nevada legislature directed the Public Utility Commission to establish targets to procure 1,000 MW by 2030, with interim targets starting at 100 MW by December 31, 2020.[11]
New Jersey enacted its Clean Energy Act in 2018, which set a target of 2,000 MW of energy storage by 2030.[12] Massachusetts also set a target in 2018 through the Act to Advance Clean Energy, directing the Massachusetts Department of Energy Resources to set an energy storage target of 1,000 MWh by 2025.[13] Most recently, in November 2024, Massachusetts enacted a law directing each electric distribution company to solicit proposals for energy storage systems and enter into cost-effective long-term contracts in aggregate equal to 5,000 MW of energy storage systems by July 31, 2030.[14] The law requires that 3,500 MW be mid-duration energy storage, 750 MW be long-duration, and, if commercially available at a reasonable cost, 750 MW should be multi-day energy storage.[15]
Virginia’s target was enacted by law in 2020, which set a 3,100 MW energy storage goal by 2035.[16] A law enacted in 2021 directed the Illinois Commerce Commission to establish storage procurement targets for all utilities serving more than 200,000 customers to achieve by 2032.[17]
Connecticut set its goal in 2021 to achieve 300 MW by 2024, 650 MW by 2027, and 1,000 MW by 2030.[18] Maine also set its goal in 2021 to achieve 400 MW of installed storage capacity by 2030, with an interim target of 300 MW by 2025.[19] In 2024, New York adopted an updated goal of 6 GW by 2030, with an interim goal of 1,500 MW by 2025.[20] The New York State Energy Research and Development Authority filed with the New York Public Service Commission a proposed bulk energy storage program implementation plan designed to support the state’s build-out of storage deployments to meet the stated goal and to reduce projected costs by nearly $2 billion. The plan includes an Index Storage Credit mechanism to secure 3 GW of bulk storage and incentives for retail and residential storage projects.[21]
In May 2023, Maryland enacted an energy storage target, with a goal to deploy 3 GW of storage capacity by 2033.[22] The new law requires the Maryland Public Service Commission to establish the Maryland Energy Storage Program by July 1, 2025 and provides for incentives for the development of energy storage.[23] The Maryland Public Service Commission and the Maryland Energy Storage Initiative Workgroup have been working on a revised proposal to the Maryland Energy Storage Program through a rulemaking proceeding aimed at clarifying the rules to enroll and register in the program.[24]
In 2024, Rhode Island became the 12th state to establish an energy storage target with a goal of installing 90 MW of energy storage capacity by the end of 2026, 195 MW by 2028, and 600 MW by 2033.[25]
Procurement targets are beneficial in that they provide supportive signals for investors and reduce regulatory uncertainty.[26] Procurement targets can also vary from broad MW requirements to more specific mandates that focus on the adoption of certain storage technologies. For example, California limited pumped storage to 50 MW of the total procurement goal. Procurement targets have been set at both the state utility commission level (California, Colorado, Massachusetts, Nevada, New York) and by state legislatures (Connecticut, Maine, Maryland, Michigan, New Jersey, Oregon, Rhode Island).
REGULATORY ADAPTION
Regulatory adaption refers to changes made in state energy regulations designed to create opportunities for storage.[27] All of the states with a storage policy in place have a renewable portfolio standard or a nonbinding renewable energy goal. Regulatory changes can broaden competitive access to storage such as by updating resource planning requirements or permitting storage through rate proceedings.
As a general matter, many states require utilities to produce integrated resource plans (IRPs) to demonstrate how that utility will be able to meet long-term demand projections using a combination of generation, transmission, and energy efficiency investments while also minimizing costs. In recent years, certain states have required that utility resource plans include energy storage, namely Arizona, California, Colorado, Connecticut, Florida, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Mexico, North Carolina, Oregon, Utah, Virginia, and Washington.[28]
Even still, incorporating storage into IRPs can be a challenge since storage is different from conventional electricity generators and demand-side resources. For example, storage has unique operational constraints, can be interconnected at various points, can serve a variety of applications, and has policy and regulatory uncertainty that may affect system profitability.
DEMONSTRATION PROGRAMS
Demonstration programs refer to instances where a state explicitly authorizes, and in some cases funds, energy storage for the purpose of exploring operation and gathering data. Demonstration programs are beneficial in that they allow states to study the benefits and logistics of energy storage deployment on an incremental basis.
Five states have adopted a programmatic approach to storage demonstration projects:
- Washington has provided $14.3 million through its Clean Energy Fund to utilities to deploy four utility-scale energy storage projects with the intention of testing different energy storage technologies and use cases.[29]
- Massachusetts has provided $20 million in grant funding to storage projects through The Advancing Commonwealth Energy Storage program to demonstrate various use cases.[30]
- Utah law has permitted utilities to invest in storage resources.[31]
- New York, under its Reforming Energy Vision Program, acts as facilitator between developers and utilities by opening a request for proposal for projects, coordinating the projects’ review by an independent evaluator, and then matching the projects with utilities.[32]
- Maryland has approved a pilot program for utilities to develop projects under different ownership frameworks.[33]
FINANCIAL INCENTIVES
Financial incentive policies typically come in the form of direct subsidies or tax credits made available to end-use customers for installing behind-the-meter storage resources. Behind-the-meter development has progressed in jurisdictions that adopted time-of-use (TOU) rates, which pair higher energy rates with time periods that experience high demand. TOU rates are intended to send an economic signal to customers, and may influence them to reduce usage or meet demand through customer-sited resources such as storage.[34]
California has implemented the largest financial incentive policy with its Self-Generation Incentive Program, which set aside $450 million in funding for behind-the-meter storage.[35] Most recently, in December 2024, the California Energy Commission approved a $2 million grant to build a long-duration energy storage project at Marine Corps Base Camp Pendleton in San Diego.[36] This grant is the largest awarded to date under the commission’s Long-Duration Energy Storage Program, which has awarded $170 million to seven projects since it began in 2022.
In 2022, Maryland became the first state to offer state income tax credit for energy storage that provides up to $5,000 for residential customers and up to $75,000 for commercial and industrial customers, subject to a program total of $750,000 per year.[37]
In November 2024, New Jersey Board of Public Utilities (BPU) published its updated New Jersey Storage Incentive Program proposal,[38] which included incentive programs for both front-of-meter and behind-the-meter for standalone energy storage devices.
Under the updated proposal, front-of-meter storage resources will be compensated through a fixed upfront payment through a competitive solicitation. Behind-the-meter storage resources will receive fixed incentives through annual installments and relevant performance incentives for reducing on-site load or supplying additional power to the grid when required by the utility. The proposal also states that the BPU would like to maximize private investment in energy storage systems and will allow private investors to own and operate the energy storage resources, collect revenue from the wholesale electricity market, utilize behind-the-meter resources to manage energy usage at the distribution level to reduce electricity costs, and participate in a Distributed Energy Resource Aggregation service.
The BPU proceeding to finalize the proposal remains ongoing. On November 20, 2024, the BPU hosted a virtual stakeholder meeting to discuss the proposed incentives. The BPU expects to launch the grid-connected incentive program in 2026.
CONSUMER PROTECTIONS
Consumer protection policies establish rights for customers who install energy storage. Two states have adopted legislation guaranteeing protections to customers who install energy storage. In 2017, Nevada enacted legislation prohibiting customers who own an energy storage resource from being placed in a separate rate class solely for that reason and also required utilities to develop optional TOU rates.[39] In 2018, Colorado enacted a law providing utility customers a right to install storage and directed the Colorado Public Utility Commission to adopt rules to ensure the interconnection process to do so was efficient.[40]
SAFETY CONCERNS
As a result of fires that have occurred at battery energy storage facilities, policymakers and regulators are developing new safety requirements that may slow down the development of new energy storage resources.[41] Ultimately, we believe that this will lead to the adoption of new requirements that will become industry standard safety procedures. However, until those standards are developed, developers could face potential cost increases and delays associated with these requirements.
CONCLUSION
Energy storage resource development will continue to grow across the United States as an important tool to enhance grid reliability and stability as intermittent renewable generating resources account for a larger share of generation resources. Supportive state laws and policies have fostered this growth and will continue to provide market stability and may become even more important amidst changing trade and tax policies.
Other Insights in this Report
[1] Wood Mackenzie Power & Renewables/American Clean Power Association, US Storage Energy Monitor Q4 2024, at 5 (Dec. 2024).
[2] Id.
[3] Batteries are a fast-growing secondary electricity source for the grid. US Energy Information Administration (Sept. 2024).
[4] Wood Mackenzie Power & Renewables/American Clean Power Association, US Storage Energy Monitor Q4 2024 (Dec. 2024).
[5] See generally Pacific Northwest National Laboratory, Energy Storage Policy Database.
[6] Pacific Northwest National Laboratory, Energy Storage Policy Database.
[7] SP 213 setting a goal for Maine to achieve 400 MW of installed storage capacity by 2030, with an interim target of 300 MW by 2025.
[8] AB 2514 (2013).
[9] AB 2868 (2016).
[10] HB 2193 (2015).
[11] SB 204 (2017).
[12] The Clean Energy Act, P.L. 2018.
[13] An Act to Advance Clean Energy, HB 4857 (2018).
[14] SB 2967 (2024).
[15] Id.
[16] HB 1526 (2020).
[17] SB 2408 (2021).
[18] SB 952 (2021).
[19] SP 213 (2021).
[20] In the Matter of Energy Storage Deployment Comments Submitted on Behalf of the New York State Reliability Council, 18-E-0130 (June 2024).
[21] New Initiatives Drive U.S. Energy Storage Expansion to Meet Ambitious Deployment Targets, EnerKnol Research, at 3 (Jan. 14, 2025).
[21] SB 2499 (2024).
[22] HB 910 (2023).
[23] Id.
[24] New Initiatives Drive U.S. Energy Storage Expansion to Meet Ambitious Deployment Targets, EnerKnol Research, at 3 (Jan. 14, 2025).
[25] SB 2499 (2024).
[26] A Review of State-Level Policies on Electrical Energy Storage, Jeremy Twitchell, Current Sustainable/Renewable Energy Reports, at 37 (April 2019).
[27] Id.
[28] See Pacific Northwest National Laboratory, Energy Storage Policy Database; Order Instituting Rulemaking to consider policy and implementation refinements to the Energy Storage Procurement Framework and Design Program (D.13-10-040, D.14-10-045) and related Action Plan of the California Energy Storage Roadmap, 15-03-011, Jan. 2018; Decision Amending and Adopting Rules, C18-1124, Dec. 12, 2018; PURA Investigation Into Distribution System Planning of the Electric Distribution Companies – Electric Storage, 17-12-03RE03, July 28, 2021; Instituting an Investigation to Reexamine the Existing Decoupling Mechanisms for Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc., and Maui Electric Company, Limited, 2013-0141, April 21, 2017; H.4857 (2018); HB 2193 (2015); SB 966ER (2018); Order Establishing Special Contemporary Resource Planning Issues, EO-2020-044, Oct. 30, 2019; S.216B.2422 (2019); HB 1414 (2017); LD 528 (2021).
[29] See Grid Modernization Program, Clean Energy Fund 1, Washington State Dept. of Commerce.
[30] Advancing Commonwealth Energy Storage, Massachusetts Clean Energy Center.
[31] SB 115 (2016).
[32] New York’s 6 GW Energy Storage Roadmap: Policy Options for Continued Growth in Energy Storage, New York State Energy Research and Development Authority (Dec. 28, 2022).
[33] SB 573 (2019).
[34] A Review of State-Level Policies on Electrical Energy Storage, Jeremy Twitchell, Current Sustainable/Renewable Energy Reports, at 37 (April 2019).
[35] Id.
[36] Long Duration Energy Storage Program, Docket No. 23-ERDD-07 (Dec. 11, 2024).
[37] SB 215, Energy Storage Systems – Income Tax Credit and Grant Program (May 12, 2022).
[38] New Jersey Energy Storage Incentive Program Straw Proposal, Docket No. QO22080540, September 29, 2022.
[39] AB 405 (2017), Nevada State Legislature.
[40] SB 18-000 (2018), Colorado State Legislature.
[41] AB 303 (2025), introduced in the California legislature.
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