Washington, DC (March 26) – The proper role of regulations in the electricity market is to enable competition for generation services. However, many existing regulations actually suppress competition from energy storage resources and undervalue grid services where these resources have a comparative advantage. This is particularly constraining on hydropower, which makes up the majority of storage resources and holds large untapped potential.

In a new policy brief, R Street Electricity Policy Manager and Senior Fellow, Devin Hartman examines hydropower as a wholesale storage resource and makes the case for streamlining permitting processes, improving market access and ensuring market-based compensation. He goes on to argue that reforms such as these are essential to allow storage resources, such as hydropower, to compete on a level playing field and to drive voluntary innovation and deployment of cost-efficient resources.

Despite hydropower’s potential, its ability to participate as a storage resource faces unusually high artificial barriers to entry in wholesale power markets. According to the author, “these stem primarily from inadvertently discriminatory wholesale market rules and lengthy and ambiguous permitting processes. Considering the value of storage services is on the rise, reducing artificial barriers should have a potent effect on market outcomes.”

Given current bipartisan interest in hydropower at the federal level, now is the time to push for reforms that will unleash the full benefits of the most valuable form of energy storage today.