Energy storage systems are increasingly recognized as uniquely flexible grid assets. Technically, they can inject and absorb power rapidly, respond to contingencies, support voltage, reduce overload risk, and help defer or complement conventional wires investments. That broad capability is part of why FERC Order No. 841 [1] required RTOs and ISOs to establish participation models that allow storage resources to provide the capacity, energy, and ancillary services they are technically capable of providing in wholesale markets [2]. But the story changes once storage is treated not as a competitive market resource, but as a regulated transmission asset. At that point, the challenge is no longer technical feasibility. It becomes a regulatory and economic design problem.
FERC’s 2017 Policy Statement captured this tension directly. The Commission acknowledged that storage resources can provide multiple services, switch among services quickly, and create greater system value when their full capabilities are used. At the same time, FERC made clear that concurrent cost-based and market-based recovery is not automatic. It requires careful treatment of at least three concerns: double recovery of costs, adverse market impacts, and preservation of RTO/ISO independence [3]. In other words, regulation recognizes storage’s flexibility, but also places guardrails around how that flexibility may be monetized when rate-based cost recovery is involved.
What has emerged across U.S. jurisdictions is not a rejection of storage as a transmission tool. In fact, the opposite is true. More and more regions now acknowledge that storage can solve certain transmission-related problems, especially when the issue is local, time-sensitive, or tied to difficult contingency conditions. The problem is that the same jurisdictions are also drawing careful boundaries around how far that recognition can go.
MISO is one of the most influential examples because its Storage as Tranmission Only Asset (SATOA) model became a reference point for later jurisdictions. The MISO framework requires that a storage as transmission-only asset be identified as the preferred transmission solution and that it address a transmission issue requiring functional control rather than acting as a conventional market resource [4]. These assets may participate in markets only to the extent necessary to receive energy from and inject energy into the system to provide its approved transmission service. It is not meant to trade freely or set prices. Rather, it is treated as a price taker, and the revenues and costs from those directed actions are netted through transmission-rate treatment so the owner receives exact cost recovery, “no more-no less” [4]. That is a powerful example of the tradeoff: recognition as transmission comes with severe limits on entrepreneurial market participation.
In SPP, energy storage classified as a SATOA is explicitly restricted to a single regulated transmission role, with market participation permitted only “to the extent necessary” to charge from and inject into the system for delivering the approved transmission service; operationally, the asset remains under transmission provider control, must follow predefined operating guides, and cannot be used for discretionary market activities such as arbitrage or ancillary service revenue generation. Consequently, storage resources in SPP face a binary regulatory choice: either operate as a regulated transmission asset with cost-of-service recovery or participate in markets as a competitive resource, but not both simultaneously in a revenue-maximizing manner, thereby demonstrating a clear structural limitation on multi-service revenue stacking despite the inherent technical capability of storage systems [5,6];
ISO New England follows a similar path, but with a particularly structured transmission-only approach. Its tariff revisions allow storage to be planned and operated as a transmission-only asset when selected through the regional planning process [7]. That sounds like a breakthrough, and in one sense it is. But the details tell a more careful story. The asset is brought under ISO operating authority, its purpose is tied to the transmission need for which it was selected, and market participation is restricted to limited interactions necessary to support that role [7]. The underlying message is unmistakable: the system is willing to use storage as transmission, but only if it remains tightly aligned with that identity. What makes ISO-NE especially interesting is that the framework still acknowledges that storage may offer technical advantages beyond what a conventional wires project would do. The evaluation criteria include attention to characteristics such as the ability to provide or absorb reactive power, which shows that the technical side of storage is not being ignored [7]. In that sense, the system is recognizing the richness of the asset. But financially, it still keeps that richness on a short leash.
PJM’s current direction points the same way. Its recent educational materials frame storage as a transmission asset not as a market opportunity, but as a reliability-oriented wires solution [8]. The guiding principles are revealing: SATA is not allowed to participate in PJM markets in the current phase of work, it is treated like a typical wires solution, and it is intended to respond to local post-contingency needs [8]. That is not the language of revenue stacking. It is the language of operational discipline.
NYISO may be the clearest example of how this tension is evolving in real time. Its 2024 market project materials openly recognize that storage can support transmission systems in multiple ways, including shifting demand, helping with congestion, and supporting ancillary services [9]. At the same time, NYISO admits that its existing rules were not built to evaluate storage as a regulated transmission asset in the planning process, nor to treat a supplier-type asset like storage as eligible for cost-of-service recovery alongside traditional transmission facilities [9]. That admission is important because it gets right to the heart of the problem: the technology has moved faster than the institutional categories.
Taken together, these cases tell a very clear story. The barrier today is not convincing system planners that storage can provide transmission value. That point is already landing. The barrier is deciding how much economic freedom a storage asset should retain once it begins to enjoy the protections of regulated transmission treatment. Every region seems to come back to the same instinct: if the asset enters rate base, its market freedom must narrow.
That is why transmission-owned storage still feels like an asset living between categories. It is technically flexible, but institutionally boxed in. It can often do more than one job, but the rules still ask it to behave like it only has one identity at a time. Either it is transmission and therefore tightly controlled, or it is a market resource and therefore financially exposed. That binary choice does not fit the technology very well, and it is probably why so much potential value remains trapped.
This is also why new coordination models matter. A sharing-economy-style platform such as Energy Storage as a Service (ESaaS) [10] is attractive because it offers a way to think beyond that rigid binary. The real promise is not simply using storage more often. It is using storage more intelligently, in a way that respects reliability priorities, compliance obligations, and cost-recovery rules while still finding a structured path to unlock more of the asset’s value.
That is the paradox regulators are now facing. Storage is increasingly accepted as grid-ready. But it is still far from revenue-free.
References
[1] Federal Energy Regulatory Commission, Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators, Order No. 841, 162 FERC ¶ 61,127, Feb. 15, 2018. [Online]. Available: https://ferc.gov/sites/default/files/2020-06/Order-841.pdf. [Accessed: Apr. 14, 2026]
[2] Southwest Power Pool, Inc., Cost Allocation Working Group, Evaluation of Cost Allocation for Energy Storage as a Transmission Asset White Paper, Jul. 8, 2021. [Online]. Available: https://www.spp.org/documents/65131/hitt%20c4%20study%20cost%20allocation%20transmssion%20storage%20devices_final.pdf. [Accessed: Apr. 14, 2026].
[3] Federal Energy Regulatory Commission, Utilization of Electric Storage Resources for Multiple Services When Receiving Cost-Based Rate Recovery, 158 FERC ¶ 61,051, Jan. 19, 2017. [Online]. Available: https://www.ferc.gov/sites/default/files/2020-04/E-2_34.pdf. [Accessed: Apr. 14, 2026].
[4] Midcontinent Independent System Operator, “MISO Tariff – Module A: Common Tariff Provisions,” Midcontinent Independent System Operator, Inc. [Online]. Available: https://docs.misoenergy.org/miso12-legalcontent/Module_A_-_Common_Tariff_Provisions.pdf. Accessed: Apr. 8, 2026.
[5] Federal Energy Regulatory Commission, “Southwest Power Pool, Inc.: Order Accepting Tariff Revisions to Allow Storage Facilities to be Transmission-Only Assets,” Docket Nos. ER22-2344-000 and ER22-2344-001, May 26, 2023. [Online]. Available: https://spp.org/documents/69447/20230526_order%20-%20revisions%20to%20allow%20storage%20facilities%20to%20be%20transmission%20only%20assets_er22-2344-000.pdf. Accessed: Apr. 8, 2026.
[6] Southwest Power Pool, “Integrated Transmission Planning (ITP) Manual, Version 2.14a,” Southwest Power Pool, Inc. [Online]. Available: https://www.spp.org/documents/69469/itp%20manual%20version%202.14a.pdf. Accessed: Apr. 8, 2026.
[7] ISO New England, “ISO New England Inc. et al., Order Accepting Tariff Revisions for Storage as a Transmission-Only Asset (SATOA),” Federal Energy Regulatory Commission, Docket Nos. ER23-739-000 et al., Oct. 19, 2023. [Online]. Available: https://www.iso-ne.com/static-assets/documents/100005/a06_2023_11_09_tc_satoa_order.pdf. Accessed: Apr. 8, 2026.
[8] PJM Interconnection, “Storage as a Transmission Asset – Operating Committee Education,” PJM Interconnection, Apr. 3, 2025. [Online]. Available: https://www.pjm.com/-/media/DotCom/committees-groups/committees/oc/2025/20250403/20250403-item-10—storage-as-a-transmission-asset-oc-education.pdf. Accessed: Apr. 8, 2026.
[9] New York Independent System Operator, “Market Project Descriptions,” Business Issues Working Group (BPWG), May 22, 2024. [Online]. Available: https://www.nyiso.com/documents/20142/44771842/03a%20BPWG%202024-05-22%20Market%20Project%20Descriptions_Final.pdf. Accessed: Apr. 8, 2026.
[10] Arteaga, J., Zareipour, H., & Amjady, N. (2021). Energy storage as a service: optimal sizing for transmission congestion relief. Applied energy, 298, 117095.
