California lawmakers passed two virtual power plant (VPP) bills—AB 44 and AB 740—that now await Governor Newsom's signature, reports PV Magazine. United's Edson Perez spoke to the benefits of VPPs in reducing grid strain, lowering energy costs, and increasing grid reliability, urging Governor Newsom to sign the bills into law.
California passed two virtual power plant (VPP) bills that streamline how utilities use distributed energy resources (DERs) and use VPP programs to reduce electricity demand and lower costs for ratepayers. The bills now await Gov. Gavin Newsom’s signature.
VPPs are a system of distributed energy resources like rooftop solar, battery energy storage, bidirectional EV chargers and more. VPPs enable a flexible, resilient grid that can adapt readily to shifting electricity demand on a more localized basis than centralized power. Flexible energy resources can both dispatch power and reduce power usage from specific locations at peak electricity demand hours, delivering electricity when it is needed most.
AB 740 requires the California Energy Commission to collaborate with the Public Utilities Commission and the California Independent System Operator (CAISO) to develop a comprehensive VPP deployment plan, which will enable DERs, such as smart thermostats and home batteries, to coordinate together into a flexible power source.
The bill requires the California Energy Commission to include the VPP deployment plan in its integrated energy policy report, the requirements of which will be subject to available funding.
“Virtual power plants can respond quickly to deliver power or shift load, making the most out of our existing grid, giving consumers new ways to benefit from the clean energy technologies they’ve already invested in, and lowering costs for everyone,” Edson Perez, California lead at Advanced Energy United, in a statement. “AB 740 will unlock this potential and turn these virtual power plant networks into a consistent, everyday source of affordable and reliable power that keeps costs down for all Californians.”
Utility bills in California have risen an average 127% over the past decade, Assemblymember John Harabedian (D), AB 740’s author, wrote in a petition urging Newsom to pass the legislation.
The Climate Center said VPPs can help reduce costs for all ratepayers by reducing the need to build poles and wires to accommodate growing electricity demand.
Reducing the need to build poles and wires is important, as distribution was the largest source of capital expenditure in 2023, accounting for 44% of the total capital expenditure, according to the Lawrence Berkeley National Laboratory.
“California is leaving millions in energy savings on the table by shutting out demand-side resources like batteries, EVs, and smart thermostats from energy planning with opaque rules,” Perez said.
The Assembly Committee on Appropriations said AB 744 would create “significant new analytical work” for the California Energy Commission, and therefore, “it will need significant new resources for a limited time, likely in the hundreds of thousands of dollars.”
The California Energy Commission estimated one-time costs of $191,309 and ongoing costs of $114,976 annually, which will go toward a temporary and a permanent position to execute the required analysis. The energy commission said it has an ongoing structural deficit within the Energy Resources Program Account fund, its main operational funding source.
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