The conversation around battery storage in the US is still largely focused on deployment, with more projects to get more capacity connected to the grid. But as grids become more distributed and congested, the bigger challenge is how batteries actually operate within the system once they are connected.
Today, batteries are still mostly being used in relatively static ways. They charge when solar output is highest, discharge later into higher price periods, support peak reduction programs and provide backup capacity when needed, but that’s still all a very basic use of batteries.
Batteries are complex technologies that can do complex things, but we’re not incentivizing them to do it in the right way. The grid is becoming more dynamic, but battery operating models and market structures are still catching up.
Batteries are still being used too statically
In many regions, batteries paired with solar are effectively operating within this static PPA type model where you charge when the sun’s brightest and then you dispatch later or batteries are enrolled in static programs charging during a certain period during the day and discharging to limit system peak.
That creates value, but it also leaves a significant amount of flexibility unused.
Increasingly, the constraints utilities are dealing with are localized e.g. a constrained feeder or a thermal overload, leading to excess generation on a specific circuit during a particular period of the day. Those conditions require batteries to respond dynamically to local grid conditions rather than broad system signals.
That is where battery storage becomes much more interesting. How can you incentivize batteries to do localized dispatch?
The challenge is increasingly local
Right now, utilities struggle to value distribution-level benefits. It is easier to quantify the value of reducing overall system peak or shifting load at a broad level. But local flexibility is much harder to measure and operationalise.
A battery’s value increasingly depends on local conditions:
- where it is located
- what constraints exist nearby
- when excess generation appears
- and what other distributed resources are operating around it
A battery responding to a local overload for two hours on a constrained circuit may provide more operational value than a battery performing generic arbitrage or system peak reduction elsewhere on the network. But current operational models and market structures are not always designed to recognise that distinction.
What is being done today – and what’s needed next?
As technology evolves, programs and markets need to evolve with them.
A similarly timed static charge/discharge schedule for a battery may relieve issues in one location while causing issues at another. The one size fits the whole grid approach will not work as battery penetration grows.
This is where dynamic programs or flexibility markets come in. Utilities value dispatch of batteries more in areas where it relieves congestion and that will differ across the grid. Flexibility markets provide the tool necessary for distribution utilities to incentivize battery developers, aggregators, and owners to dispatch at the time and in the area where there is the most need.
Utilities benefit by utilizing lower cost DERs to relieve grid congestion. Owners of the batteries benefit through access to more revenue streams.
It shouldn’t be ignored that this is a change from current North American program practices and requires a level of education both within the utility as well as to customers.
Right now, customers in separate locations likely receive the same incentive payment for providing the exact same dispatch. Under a more dynamic model, that may not be the case, which will require the utility to engage with the customer to understand the new world.
Battery deployment across the US will continue to grow rapidly over the coming years; battery capacity in the USA grew 60% in 2025 vs. the previous year.
The challenge now is therefore creating and enabling the operational models and incentives that allow them to provide the right flexibility, in the right place, at the right time – allowing them to participate more dynamically in increasingly constrained distribution systems.
