The 50 States of Grid Modernization: States Leverage Distributed Energy Resources and Advance Storage Procurement in 2025
Raleigh, NC – (January 28, 2026) The NC Clean Energy Technology Center (NCCETC) released its 2025 annual review and Q4 2025 update edition of The 50 States of Grid Modernization. The quarterly series provides insights on state regulatory and legislative discussions and actions on grid modernization, utility business model and rate reforms, energy storage, microgrids, and demand response.
The report finds that 49 states, plus DC and Puerto Rico, took actions related to grid modernization during 2025 (see figure below), with the greatest number of actions relating to energy storage deployment proposals, utility business model reforms, smart grid deployment, interconnection rules, energy storage deployment in utility integrated resource plans, performance-based demand response incentives, and time-varying rates.
2025 State and Utility Action on Grid Modernization
The report highlights ten of the top grid modernization trends of 2025:
- Advancing state-led energy storage procurement initiatives;
- Establishing distribution system planning rules;
- Utilities filing new virtual power plant programs;
- Adopting targeting utility performance incentive mechanisms;
- Exploring flexible interconnection policies;
- Utilities pursuing energy storage additions;
- Enabling distributed energy resource participation in wholesale markets;
- Implementing commercial & industrial load curtailment tariffs;
- Integrating grid-enhancing technologies into utility planning; and
- Pivoting to performance-based incentive designs.
“Many states and utilities are seeing energy storage as a top priority to meet capacity needs,” observed David Sarkisian, Principal Policy Analyst at NCCETC. “Policymakers in several states have implemented state-led procurement processes for energy storage, while utilities are planning for large amounts of storage capacity in their IRPs, seeking new storage capacity through RFPs, and encouraging distributed storage with new incentive programs.”
A total of 713 grid modernization actions were taken during 2025, excluding introduced legislation that did not pass a chamber. The report notes that ten of the most active states in 2025 for grid modernization were:
- Connecticut, where regulators revised energy storage incentives and considered new rules for interconnection, performance-based regulation, and distribution system planning;
- Maryland, where utilities proposed new time-of-use rates and virtual power plant programs, and regulators began a storage procurement and adopted distribution system planning rules;
- Colorado, where regulators approved new storage programs for Xcel Energy, and three utilities announced plans to join the Southwest Power Pool and Markets+;
- Virginia, where regulators approved Dominion Energy’s grid plan and released a report on performance-based regulation, and lawmakers created a new virtual power plant program;
- Maine, where regulators released reports on various grid modernization issues and approved new storage incentives, while Central Maine Power filed its first integrated grid plan;
- Oregon, where lawmakers enacted multiple bills on microgrids, grid-enhancing technologies, and performance-based ratemaking;
- Minnesota, where regulators established a framework for distribution grid upgrades, while Xcel Energy proposed a distributed capacity procurement program;
- New York, where regulators released the first Grid of the Future plan and approved storage procurement plans, interconnection changes, and a proactive planning framework;
- Illinois, where lawmakers passed a major energy bill including a storage target, virtual power plant requirements, and an interconnection working group; and
- Massachusetts, where regulators completed studies on advanced transmission and grid services, while task forces proposed changes to time-of-use rates and interconnection.
“As states respond to changing energy demands, evolving policy priorities, and new technology procurements, they are reassessing how distributed energy resources can best support their goals,” noted Cleo Carter, Policy Analyst at NCCETC, “Along with a general shift towards performance-based incentives, utilities are also implementing new virtual power plant programs and load curtailment tariffs, which can deliver more nuanced outcomes.”
In Q4 2025, 45 states, plus DC and Puerto Rico, took some type of action on distributed solar policy or rate design. A total of 404 actions were taken during the quarter.
ABOUT THE NC CLEAN ENERGY TECHNOLOGY CENTER
The NC Clean Energy Technology Center, as part of the College of Engineering at North Carolina State University, advances a sustainable energy economy by educating, demonstrating and providing support for clean energy technologies, practices and policies. It serves as a resource for innovative, sustainable energy technologies through technology demonstration, technical assistance, outreach and training. For more information about the Center, visit: http://www.nccleantech.
Media Contact: Shannon Helm, NCCETC, shannon_helm@ncsu.edu