Change Agent: Energy Storage as a Driver of Regulatory Evolution

Dividing the electric grid into the functions of generation, transmission, anddistribution enabled the drawing of jurisdictional lines and the application of the U.S.Constitution’s federalist system to energy regulation. Energy storage technologies,which can be placed throughout the grid to increase flexibility, can provide serviceacross all three of those functions. But the jurisdictional boundaries that have beendrawn around those functions have created barriers that restrict energy storagetechnologies from achieving their full potential. This review analyzes regulatory changes made to reduce barriers to storage deployment and their broader impacts on energy regulation in the U.S. Major energy regulations promulgated at the state and federal levels have generally focused on liberalizing the U.S. electric system through deregulation and increased competition. Paradoxically, however, these efforts have erected strict regulatory barriers that prevent energy storage technologies from providing service across multiple functions. A new wave of regulations in recent years has endeavored to reduce and remove those barriers. Energy regulations adopted in recent years to reduce barriers to energy storage functionality in recent years have had deep and far-reaching impacts on U.S. electric regulation. These impacts go beyond storage and affect all energy technologies. This paper traces the development of energy regulation in U.S., the functional barriers that they created that impede energy storage functionality, recent efforts to remove those barriers, and the broader effects of those efforts. It concludes with a brief discussion of remaining barriers that prevent energy storage from reaching their full potential on the U.S. electric grid.