Hydrostor’s Regulatory Hack: How They Created Their Own Market Category

When your technology doesn’t fit existing regulations, most startups wait for the rules to change. But what if you could help write them instead? In a recent episode of Category Visionaries, Curtis VanWallenghem revealed how Hydrostor turned regulatory complexity into a competitive advantage.

The Regulatory Challenge

Energy storage in 2010 was caught in a regulatory void. As Curtis explains, “You look back five years ago and you’re like, we have really moved the business forward. It seems to move slow in the day to day, but when you stop and reflect and think back on the last year, you realize the team really is moving the ball forward.”

Creating Their Own Market Category

Rather than waiting for regulations to evolve naturally, Hydrostor took a proactive approach. “Getting the first our pilot system in Ontario was done through a storage pilot program that us, and we created an association of other storage companies, lobbied and got this program launched,” Curtis reveals.

Building Industry Alliances

The company recognized early that individual advocacy wasn’t enough. They needed to build broader industry support. As Curtis notes, they were “influential in some of the policies in the US. But also in Australia that favored storage and just really pushing the regulators to think ahead about wind and solar as a bigger part of the grid.”

The Forward-Looking Approach

Their strategy wasn’t just about current needs. Curtis explains they focused on “pushing the regulators to think ahead about wind and solar as a bigger part of the grid. And you don’t want to wait till you’ve got a problem to start looking at solutions, but you know it’s coming. Start testing things out, start putting the framework in place.”

Setting Industry Precedents

This proactive approach became a competitive advantage. “We’ve set a fair number of precedents with our projects being kind of the first of a kind to do something in a certain regulatory construct,” Curtis explains. “That’s, I think also why we’ve been successful is we’ve leaned into that as opposed to assuming they’re going to figure it out.”

The Results

The strategy paid off. In multiple markets, Hydrostor’s regulatory groundwork helped secure major contracts. “The fact that in Australia and California, we’ve come out on top on these pretty loud big procurements,” Curtis notes, “I think shows the value of our solution.”

Building an Industry Ecosystem

Beyond just regulatory changes, Hydrostor worked to build a complete industry ecosystem. They had to:

• “Get the ability to wrap it, guarantee and warranty that it would work”
• Convince construction companies to build caverns
• Get equipment suppliers to “sell us their equipment and stand behind it”

The Payoff: Market Leadership

Today, Hydrostor has secured “about two and a half billion dollars worth of contract signs for two facilities with more contracts to come.” Their regulatory strategy has helped position them as a market leader in long-duration energy storage.

Lessons for Tech Founders

Hydrostor’s regulatory strategy offers crucial insights for founders entering regulated markets:

1. Don’t wait for regulations to evolve – help shape them
2. Build industry alliances rather than going it alone
3. Think ahead of current market needs
4. Turn regulatory complexity into competitive advantage
5. Create precedents that benefit your business model

The Bigger Picture

The company’s approach reflects a deeper understanding of market creation. Rather than viewing regulations as obstacles, they saw them as opportunities to shape the market in ways that would benefit not just Hydrostor, but the entire energy storage industry.

For founders entering regulated markets, the lesson is clear: sometimes the best way to navigate complex regulations is to help write them. As Curtis’s experience shows, being proactive in regulatory engagement isn’t just about compliance – it’s about creating the conditions for your company to thrive.