State Energy Storage Policy Trends for 2026

Energy storage resources have become an increasingly important component of the US energy mix as traditional fossil fuel baseload generation gives way to renewable energy resources. As of 2025, 24 states, plus the District of Columbia and Puerto Rico, have adopted 100% clean or carbon-free energy goals. Energy storage plays a critical role in achieving these targets by serving as a non-wires alternative that enhances grid reliability and flexibility as variable renewable resources such as wind and solar displace conventional generation. In addition to renewable integration, 2025 state storage policies increasingly reflect the role of batteries in addressing load growth, transmission congestion, and data center-driven reliability needs.

Despite evolving supply chain and continued policy uncertainty, the US storage market posted record growth in 2025. According to industry data, total installed US battery storage capacity is projected to approach approximately 40 GW by the end of 2026. The United States added approximately 10.9 GW (33.7 GWh) of energy storage capacity in the third quarter of 2025 alone, the largest quarterly addition on record. [1] Looking ahead, industry forecasts project that the United States could install more than 90 GW of additional storage capacity between 2025 and 2030, driven by load growth, renewable penetration, and grid reliability needs. [2] As of mid-2024, the United States had approximately 20.7 GW of operational utility-scale battery storage, a figure that has continued to increase rapidly through 2025. [3]

Utility-scale storage deployment remains heavily concentrated in California and Texas, reflecting supportive state policies and significant solar and wind capacity that storage resources support. In 2025, approximately 80%–85% of newly installed storage capacity was located in those two states. [4] However, other states have made meaningful progress in 2025 and, despite uncertainty surrounding federal tax and trade policy following enactment of the One Big Beautiful Bill Act (OBBBA), state-level programs continue to support forecasts of double-digit storage growth over the next five years. [5]

The most significant storage development has occurred in states that have adopted some form of incentive for development, including through utility procurements, adoption of favorable regulations, or engagement of demonstration projects. [6]

Approximately 17 states have adopted some form of energy storage policies, which generally fall into five categories:

• Procurement targets
• Regulatory adaptation
• Demonstration programs
• Financial incentives
• Consumer protections [7]

Each of these categories is summarized below.

PROCUREMENT TARGETS

Procurement targets require utilities to acquire a specified quantity of energy storage by a defined deadline. To date, 13 states—California, Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Oregon, Rhode Island, and Virginia—have adopted storage procurement targets. [8]

California was the first state to adopt a procurement target, initially mandating that the state’s investor-owned utilities procure 1,325 megawatts (MW) of energy storage by 2020, [9] before adding 500 MW distributed storage [10] to the goal for a total of 1,825 MW by 2020. This goal was achieved: as of July 2025 California has installed a total of 16,942 MW of battery storage capacity. [11] In August 2024, California set another target to achieve long-duration energy storage of 1 GW of 12-hour storage and 1 GW of multiday storage resources to be deployed between 2031 and 2037. [12]

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. [13] 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. [14]

New Jersey enacted its Clean Energy Act in 2018, which set a target of 2,000 MW of energy storage by 2030. [15] In June 2025, the New Jersey Board of Public Utilities issued an order establishing the Garden State Energy Storage Program, which will support standalone storage and solar-plus-storage projects, particularly those not eligible under New Jersey’s solar incentives. Phase 1 targets procuring at least 1,000 MW of transmission-scale storage through competitive solicitations, with initial tranches planned for 2025. This represents a significant state-level procurement initiative distinct from the broader 2,000 MW by 2030 mandate, with incremental capacity awards tied to incentive structures and ratepayer savings analyses.

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. [16] 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. [17] 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 multiday energy storage. [18]

Virginia’s target was enacted by law in 2020, which set a 3,100 MW energy storage goal by 2035. [20]

Connecticut set its goal in 2021 to achieve 300 MW by 2024, 650 MW by 2027, and 1,000 MW by 2030. 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. [21] In 2024, New York adopted an updated goal of 6 GW by 2030, with an interim goal of 1,500 MW by 2025. [22] 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 buildout of storage deployments to meet the stated goal and 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. [23]

In May 2023, Maryland enacted an energy storage target with a goal to deploy 3 GW of storage capacity by 2033. [24] The new law required 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. [25]The Maryland Public Service Commission and 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; most recently the Maryland Public Service Commission granted the workgroup’s request to extend the deadline for filing its Phase II Final Report until July 1, 2026. [26]

In 2024, Rhode Island established 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. [27]

Most recently, in January 2026 Illinois enacted the Clean and Reliable Grid Affordability Act directing utilities to install 3 GW of utility-scale energy storage by 2030 and develop programs that will compensate customers for utilizing demand flexibility resources such as batteries, smart thermostats, and electric vehicle chargers. [28]

Procurement targets are beneficial in that they provide supportive signals for investors and reduce regulatory uncertainty. [29] 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, Illinois).

REGULATORY ADAPTION

Regulatory adaption refers to changes made in state energy regulations designed to create opportunities for storage. [30] All of the states with a storage policy in place have a renewable portfolio standard or 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, Washington, and Illinois. [31]

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.

Many states are also adopting policies to encourage virtual power plants (VPPs) and distributed energy resource (DER) aggregation. A recent report documented 106 state and utility actions advancing VPPs and DER aggregation, including 35 states and DC taking steps to enable policy or program frameworks for VPPs and related DER storage aggregation. [32] This reflects a growing trend where states are not only mandating storage capacity targets, but also developing market and operational integration mechanisms for distributed storage at scale.

Conversely, Texas continues to represent a distinct storage growth model. Despite the absence of a statewide storage mandate or incentive program, ERCOT added several GW of battery storage in 2025, driven by energy-only market price signals, ancillary services revenues, and load growth tied to data centers and electrification. This market-driven deployment contrasts sharply with mandate-based procurement models in other states.

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. [33]
• Massachusetts has provided $20 million in grant funding to storage projects through the Advancing Commonwealth Energy Storage program to demonstrate various use cases. [34]
• Utah law has permitted utilities to invest in storage resources. [35]
• 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. [36]
• Maryland has approved a pilot program for utilities to develop projects under different ownership frameworks. [37]

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 have 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. [38]

California has implemented the largest financial incentive policy with its Self-Generation Incentive Program, which set aside $280 million in funding for behind-the-meter storage. [39] Additionally, since 2022 California has allocated over $270 million under its Long-Duration Energy Storage Program investing in demonstration and deployment of non-lithium-ion long-duration energy storage technologies. Most recently, the California Energy Commission approved two grants in 2025, a $28 million grant to build a 33 MWh long-duration energy storage project to serve the Valle Children’s Hospital and a $14 million grant to deploy a 4 MW/32 MWh zinc hybrid cathode battery long-duration energy storage system to support the Mojave Micro Mill project. [40]

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. [41] This program was replaced by the Maryland Residential and Commercial Energy Storage Program, which includes a $2 million fiscal year 2026 budget to be awarded to residential and commercial applicants. [42] As of October 2025, the total funding budget had been requested.

In November 2024, New Jersey’s Board of Public Utilities (BPU) published its updated New Jersey Storage Incentive Program proposal, [43] which included incentive programs for both front-of-meter and behind-the-meter standalone energy storage devices.

The program is now known as the Garden State Energy Storage Program and will be rolled out in phases, each targeting different types and scales of energy storage. Phase 1 is focused on front-of-meter transmission-scale projects with a goal of procuring at least 1,000 MW through competitive solicitations of two separate tranches: tranche 1 will solicit between 350 and 750 MW and tranche 2 will secure the remaining capacity. The projects that secure a solicitation will receive annual incentive payments over a 15-year period. Phase 2 is focused on distributed storage systems, including behind-the-meter projects, and will include both fixed- and performance-based incentives. Phase 3 is still under review, and will include performance-based incentives.

The BPU proceeding to finalize the proposal remains ongoing; it expects to launch the grid-connected incentive program in 2026.

CONSUMER PROTECTIONS

Consumer protection policies establish rights for customers who install energy storage. A few 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. [44] 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. [45]

In 2026, Illinois enacted the Clean and Reliable Grid Affordability Act, which, among other things, directs the Illinois Power Agency to set additional program requirements and minimum contract terms for entities marketing, selling, installing, and financing distributed generation and community solar subscriptions. To prevent misleading or abusive practices, the act also requires large electric utilities to implement TOU pricing to help customers shift usage to lower‑cost hours. [46]

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. [47] 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 deployment is expected to continue expanding across the United States as renewable generation grows and grid reliability needs intensify. State-level policies—particularly procurement mandates, incentive programs, and regulatory reforms—have played a central role in supporting market growth and are likely to become even more important amid shifting federal trade, tax, and industrial policies.