Market Intelligence
Q2 2026 U.S. Distributed Generation Opportunities
May 20, 2026 5 Minute Read
Executive Summary
State incentives covered in this report create new revenues across distributed generation configurations. Active battery solicitations lift front-of-the-meter (FTM) lease values, while rebates and performance incentives amplify behind-the-meter (BTM) revenues for batteries and fuel cells.
U.S. Energy Markets Update
Gas supply risks, PJM's procurement can raise the value of distributed generation
Middle East Gas Market Update
- If gas supply disruptions in the Middle East persist, Europe and Asia could face severe gas shortages later this year. Extreme price volatility could spill over into U.S. gas and power markets, as seen during the 2022 energy crisis in Europe.
- Asia's limited gas stockpiles are drawing down, and Europe will soon begin to refill inventories, which stood at just 31% in April, the lowest level since 2022.
PJM Reliability Backstop Program (RBP) Overview
- On April 10, 2026, PJM proposed a one-time procurement of 15 GW of new capacity. Phase I would let behind-the-meter (BTM) and distribution-connected batteries sign long-term bilateral capacity contracts directly with data centers.
- Prices could settle above the current PJM capacity price of $333/MW-day, given the limited large-scale gas and batteries available to meet data center demand.
Maryland
Regulators approve first 50 MW round of distributed battery procurement
On April 8, 2026, Maryland approved the first 50 MW procurement round to meet the state's near-term 150 MW distributed battery goal. Regulators are also due to submit a proposal for a long-term battery incentive program by July 1, 2026.
Battery Storage Solicitations
- The first round allocated most capacity (29 MW) to Baltimore Gas and Electric (BGE). Distributed batteries in all utility areas could access a permanent incentive if regulators adopt a new tariff framework before November 2026.
- Another 800 MW transmission-scale battery solicitation closed on March 2, 2026. Selected projects will lock in 15-year payments tied to PJM's capacity prices.
- Projects must come online by November 1, 2027, a deadline some developers may struggle to meet given PJM's long grid queues.
Maryland is shifting from one-off procurements to a permanent incentive for batteries. Active 50 MW and 800 MW solicitations support FTM lease economics today, while new tariffs will likely open BTM bill savings potential next.
New Jersey
Regulators advance 500–800 MW distributed battery procurement
The New Jersey Board of Public Utilities (BPU) is designing the state's distributed battery solicitation and maintaining progress toward the state's 2,000 MW by 2030 storage mandate.
Battery Storage Solicitations
- Regulators are drafting rules covering timing and incentive structure for a total 500–800 MW of distributed batteries ( < 0.5 acre per project ). Final program design is expected in the second half of 2026.
- Separately, the state extended the deadline to participate in the 350–750 MW transmission-scale program ( > 2 acres per project ) from June 30 to December 31, 2026, and allowed projects in earlier development stages to participate.
New Jersey will run parallel solicitations for distributed and transmission batteries. Site owners can secure FTM lease offers in either track or soon earn new incentives for BTM through a new distributed program.
Illinois
New battery rebates and performance payments to launch in June 2026
Illinois' Clean and Reliable Grid Affordability Act (CRGA) creates new long-term battery incentives to meet the new 3,000 MW by 2030 storage target.
Battery Incentive Updates
- Regulators plan to approve new CRGA tariffs by July 31, 2026, establishing performance payments for batteries that dispatch during peak demand hours.
- CRGA upfront battery rebates of $250–300/kWh can cover roughly half of project costs, stacking with federal investment tax credits worth 30–40% of total system costs.
- Beyond incentives, rising capacity and transmission utility charges for C&I users in Illinois can drive high BTM battery bill savings.
CRGA establishes Illinois as a top-tier battery market by funding half of project costs. This translates into premium lease rates for sites hosting FTM batteries, while delivering the highest BTM bill savings of any state in this report.
New York
Offsite batteries gain new value as bill-credit and emissions-offset alternatives
Proposed reforms in New York expand the use of offsite batteries to lower rising grid charges and comply with tightening emissions requirements for NYC buildings.
Battery Market Reforms
- A new proposal would tie Value of Distributed Energy Resources (VDER) battery payments to the full avoided cost of grid investment. Project revenues could rise by up to 80% in some areas, benefiting companies that secure subscription agreements with offsite batteries to reduce utility costs.
- NYC buildings subject to Local Law 97 (LL97) can now contract with offsite batteries to secure LL97 Emissions Offsets to reduce compliance payments. With 57% of covered buildings not on track to meet their 2030 emissions limits, offsite batteries can help building owners reduce the grid-emissions exposure that drives their LL97 fines.
New York companies can now offset rising grid charges by contracting with offsite batteries. NYC buildings can comply with LL97 through offsite batteries to lower their exposure to gas-heavy power grid emissions.
Massachusetts
Upcoming solicitation opens 20-year battery contracts to distributed projects
Governor Healey's March 16, 2026, Executive Order added a 10 GW goal for new flexible energy resources on top of Massachusetts's existing 5 GW by 2035 storage target. Batteries are the most readily deployable of these resources, and the state is already procuring storage through 20-year fixed-payment contracts.
Battery Storage Solicitations
- Up to 3.7 GW remains open for new batteries across the upcoming procurement rounds. Round 2 of the state's battery solicitation is due by July 31, 2026, and distribution-connected projects are expected to be eligible for the first time.
- Winners can lock in $60–64/MWh for 20 years, with payments doubling for projects sited in grid-constrained areas designated under the state's Near-Term Resource Multiplier.
Massachusetts offers multiple long-term battery incentives, with payments doubling for projects in grid-constrained zones. Property owners can now field FTM lease offers from developers ahead of the new solicitations.
Energy Solutions
Accelerate your decarbonization efforts by transitioning to clean energy sources.
