Grid modernization activity remained strong across the U.S. during the second quarter of 2026, with 44 states, the District of Columbia, and Puerto Rico taking legislative or regulatory action on policies affecting electric grid planning, operations, and investment, according to the latest 50 States of Grid Modernization report from the NC Clean Energy Technology Center (NCCETC).

The quarterly report tracked 481 grid modernization actions during Q2, in addition to more than 300 introduced bills. California, Maryland, Virginia, and New Jersey recorded the highest levels of activity, followed by Illinois, New Mexico, Louisiana, and New York.

Energy storage deployment proposals led all policy categories with 63 actions during the quarter. Other prominent areas included interconnection rules (47 actions), utility business model reforms (46), performance-based energy storage incentives (35), performance-based regulation (32), and smart grid technology deployment (29).

According to NCCETC, three themes emerged during the quarter:

• Utilities pursuing location-based incentives for distributed energy resources (DERs).
• Policymakers increasing scrutiny of utility spending on grid infrastructure upgrades.
• States expanding opportunities for virtual power plants (VPPs) to participate in wholesale electricity markets.

"We're seeing a continued trend towards increased scrutiny on utility investments," said Nick Montoni, senior program director at NCCETC. He noted that policymakers are requiring greater justification for infrastructure investments, evaluating cost-saving grid technologies, and expanding utility planning and scenario modeling requirements to better manage costs.

The report also highlights five notable policy developments from the quarter:

• Minnesota regulators approved Xcel Energy's first virtual power plant program.
• The Maryland Public Service Commission approved virtual power plant programs.
• California regulators launched a review of advanced electric rate design.
• Virginia lawmakers enacted several new grid modernization laws.
• The North Carolina Utilities Commission approved dynamic line rating prototypes.

NCCETC also identified growing interest in location-based incentives designed to encourage deployment of distributed energy resources where they provide the greatest grid value.

"Increasingly, location-based incentives are being incorporated into utility programs to encourage targeted deployment of distributed energy resources where the grid can benefit the most," said Autumn Proudlove, managing director of policy and markets at NCCETC. She added that these programs could reduce the need for additional grid investments while providing financial benefits to customers as affordability remains a priority.

The Q2 2026 edition of The 50 States of Grid Modernization examines state regulatory and legislative actions related to grid modernization, utility business models and rate reform, energy storage, microgrids, and demand response.