Legal barriers to the introduction of energy storage technology use: The case of the smart neighborhood battery

Decentralized energy systems are promoted as a solution to grid congestion and the growing share of renewable energy, yet their effective deployment depends on integrating Energy Storage Technologies (ESTs). Despite their technical potential, the uptake of ESTs remains limited by regulatory frameworks that have not kept pace with the transition away from centralized energy systems. Existing legal regimes are fragmented, often outdated, and poorly aligned with the multifunctional nature of storage, creating practical barriers for implementation at the local level. This paper examines how these regulatory constraints operate and interact in practice through a socio-legal case study of a smart neighborhood battery pilot in Almelo, the Netherlands. By analyzing the Dutch Electricity Act of 1998 and the Energy Act of 2024, the article identifies key legal barriers: the absence of a clear legal definition of storage, the lack of an independent classification, ambiguities in operational and network development rules, restrictive licensing requirements, unfavorable tariff structures, safety-related regulatory fragmentation, procedural complexity, and the persistence of outdated market rules. The findings demonstrate that these barriers limit the design, economic viability, and operation of decentralized energy systems. The analysis shows that recent legislative reforms introduce formal recognition of storage, but do not resolve the structural misalignment between regulatory categories and the functional characteristics of ESTs. Storage continues to be governed by rules designed for centralized energy systems, limiting its potential to alleviate grid congestion. • Identifies key legal and regulatory barriers limiting energy storage deployment. • Shows how Dutch laws restrict neighborhood batteries and decentralized storage use. • Demonstrates regulatory impacts using a real smart neighborhood battery pilot. • Finds new 2024 Energy Act still constrains storage through strict permitting rules. • Proposes reforms to classify storage and enable scalable decentralized systems.