Canary Media reports on the potential funding cuts to California's Demand Side Grid Support (DSGS) virtual power plant (VPP) program, which has proven highly cost-effective and reduces reliance on fossil-fueled power plants. United's Edson Perez stated that VPPs are vital for the state to enhance grid reliability, increase affordability, and meet rising load growth.
California’s premier “virtual power plant” program is already reducing the state’s reliance on polluting, costly fossil-fueled power plants. And that’s just the start of what the scattered network of solar and batteries could do to stymie rising utility costs — if the state Legislature can stave off funding cuts to the program, that is.
So finds a new analysis from consultancy The Brattle Group on the potential of the statewide Demand Side Grid Support (DSGS) program to help California’s stressed-out grid keep up with growing electricity demand. The program pays households and businesses that already own solar panels and batteries to send their stored-up clean power back to the grid during times of peak demand, like hot summer evenings.
VPPs on the rise
Pressure to curb energy costs is particularly acute in California, where residential customers of the state’s three major utilities now pay roughly twice the national average for their power and where rates rose 47% from 2019 to 2023.
It is also among the best-positioned states to take advantage of VPPs to rein in those costs. California leads the country in rooftop solar, backup battery, and EV adoption, and a 2024 Brattle analysis found that VPPs could provide more than 15% of the state’s peak grid demand by 2035, delivering $550 million in annual utility customer savings.
DSGS is only one of a number of VPP options available in California. But advocates say it’s by far the most successful in a state that’s seen mixed progress on VPPs to date. In the past five years, stop-and-start policies from the California Public Utilities Commission have reduced overall capacity from demand-response programs that pay utility customers to turn down their electricity use to relieve grid stress.
DSGS, which is run by the California Energy Commission, has grown rapidly due to a combination of factors, said Edson Perez, who leads California legislative and political engagement for clean-energy trade group Advanced Energy United. It’s available to residents across the state, rather than being limited to individual utility territories and programs. It also has relatively simple enrollment and participation rules compared to many other programs, he said.
It can be tricky to quantify the costs and benefits of these kinds of programs compared to traditional utility investments in power plants or large-scale solar and battery systems. But Brattle’s new report is the “first analysis of what its value is out in the field,” he said, and the results show “it’s very cost-effective.”
Solar-charged batteries are also much less polluting than the state’s other emergency grid-relief resources, he said. DSGS is one of a set of emergency programs launched after California experienced rolling blackouts during summer heat waves in 2020 and more heat-wave-driven grid emergencies in 2022.
But most of the billions of dollars in emergency funding have gone to fossil-fueled generators. California had spent about $443 million on state-managed generators that burn fossil gas or diesel fuel as of December 2024, and has committed about $1.2 billion to keep fossil-gas-fired “peaker” plants in Southern California open until 2026, well past their scheduled 2020 closure date.
“We’re in a statewide affordability crisis,” Perez said. “Leveraging existing resources out there drives down costs for everyone.”
Read the full article here.