California’s 2025 legislative session was a whirlwind: fast-moving, unpredictable, and full of breakthroughs and setbacks. The session revealed big ambition, but also left open future choices that will determine whether California will stick to the status quo, or embrace a wide range of tools and technologies to accelerate its clean energy future. 

Hard-Fought Progress on Big Energy Reforms 

California’s biggest policy developments this year came through especially challenging negotiations and last-minute deals.  

A key highlight was the passage of AB 825 by energy chairs Becker and Petrie-Norris, a landmark bill that enables California to participate in a regional energy market governed by an independent organization, as long as the organization maintains each participant state’s autonomy over its energy policy. This achievement, which will facilitate the next steps of the Pathways Initiative, was a decade in the making, and Advanced Energy United is proud to have been deeply involved since the beginning, from early groundwork in California to engagement in other Western states to active participation on the Pathways Launch Committee. 

But the journey wasn’t smooth. Earlier this year, SB 540 by Senator Becker, the bill that first carried the Pathways framework, became stuck after a series of harmful amendments, caught in power struggles and closed-door negotiations. However, the unprecedented coalition behind the bill, along with Governor Newsom’s support and the determination of key legislative leaders, brought a workable outcome over the finish line at the eleventh hour as part of a historic “energy package.” 

That end-of-session energy package also delivered several other major policy shifts: 

• AB 1207 (Irwin) extended and rebranded California’s Cap-and-Trade program into the new Cap-and-Invest framework. 

• SB 840 (Limon) updated the Greenhouse Gas Reduction Fund (GGRF) framework, reserving at least $750 million for future legislative appropriations. 
  
  
• SB 254 (Becker) reauthorized the state’s Wildfire Fund and launched a new Transmission Infrastructure Accelerator under GO-Biz to help publicly finance new transmission projects. 

These major policy reforms were reached through a process that left little room for transparency or public input. 

Other Meaningful Wins: Permitting, Tax Credits, and Local Electrification 

Other noteworthy accomplishments for clean energy include the enactment of SB 302, which aligns state and federal tax code for clean energy and storage projects, ensuring that these projects can better access the remaining federal credits; AB 531, which allows geothermal projects to use the CEC’s streamlined AB 205 permitting process; and the Governor’s August Executive Order directing agencies to expedite clean energy and storage projects at risk of losing federal tax credits as the IRA begins to wind down. 

The clean transportation space saw some mild investments this year. The final deal included $132 million for HVIP (via the Hino Motors settlement), $40 million in heavy-duty ZEV charging incentives, and $25 million for Clean Cars 4 All. Still, these investments were far from the $1.5 billion needed to meet the state’s goals, and most funding discussions were deferred to 2026. One bright spot was the enactment of AB 39 into law, which requires local governments to prepare electrification and decarbonization plans.  

Finally, the distributed energy space achieved a rare win this year with the appropriation of $46 million from Proposition 4 funds for the Distributed Electricity Backup Assets (DEBA) program, which funds new distributed energy resources (DERs) like batteries and microgrids. Still, this gain was among a challenging series of decisions striking down DER investment and policies that will set the state back in its affordability and clean energy goals. 

Missed Opportunities: DERs, VPPs, and Affordability 

For all the progress, 2025 also marked a year of missed opportunities to cut costs and enhance reliability through DERs and Virtual Power Plants (VPPs). 

Research continues to show that unlocking the full potential of DERs and load flexibility could save Californians $13.7 billion by 2030. Yet, the most promising bills to make that a reality – all backed by diverse coalitions and passed with broad support – were ultimately vetoed or gutted: 

• AB 44 (Schultz) would have required the CEC to make its load modification process transparent, helping load-serving entities integrate DERs and reduce costs. It passed unanimously but was vetoed. 

• AB 740 (Harabedian) would have required agencies to develop a comprehensive VPP deployment plan. It passed nearly unanimously but was vetoed. 
  
  
• SB 541 (Becker) would have required utilities and regulators to better quantify and value load shifting on the distribution grid. It was gutted in the final weeks, then vetoed. 

Meanwhile, the Demand Side Grid Support (DSGS) program – the nation’s premier VPP program that compensates Californians for providing grid support during emergencies using their DERs – faces an uncertain future. The June budget deal reversed $18 million of its existing funds, and no new allocation was included in the final energy package. Without action in early 2026, DSGS could wind down entirely, leaving California without a clean, low-cost emergency capacity alternative at the exact moment aging gas peaker plant contracts are set to expire.

Another key missed opportunity to maximize the use of the existing grid was the rejection of AB 1408 by Assemblymember Irwin. This bill would have required utilities to make better use of “surplus interconnection” points on the grid, allowing more clean projects to connect faster and cheaper. It also passed unanimously — and was vetoed. 

The Work Ahead 

California’s 2025 session marked a turning point. State leaders proved that bold clean energy progress is still possible, even amid complexity. But the results also show how easily ambition can stall without alignment on an approach that leverages all clean energy tools and technologies. 

In the coming months, United will focus on ensuring California corrects course on its missed opportunities – starting with early action in 2026 to secure funding for DSGS to keep it alive and ready for next summer. Californians can’t afford for the state’s most effective clean reliability program to stall out. 

We’ll also continue working to educate and engage policymakers on the cost-savings potential of DERs, VPPs, load shifting, and vehicle-grid integration (VGI). These are ready-to-deploy technologies that can drive down bills, strengthen the grid, and accelerate the clean energy transition. 

Finally, we’ll remain deeply engaged in the implementation of this year’s cornerstone policies, from shaping the new Transmission Infrastructure Accelerator to our ongoing role on the Pathways Initiative Launch Committee as the West builds a more connected energy market. 

A clean and affordable energy future is still within reach for California, but it will take consistent leadership, smart coordination, and the courage to back all types of proven solutions. United remains committed to ensuring the state turns its clean energy potential into real, tangible benefits for every Californian.