California, August 21, 2025
News Summary
California’s Demand Side Grid Support (DSGS) program, vital for reducing energy costs and enhancing grid reliability, may face budget cuts of $100 million. This reduction raises concerns among advocates, especially after recent tests showed the program’s success in utilizing residential batteries to produce energy during peak demand. Despite potential savings of up to $206 million by 2028, the program requires sustained funding to maintain growth and reliability. Calls are growing from energy organizations for lawmakers to preserve the program amidst fiscal pressures.
California is facing potential cuts to its Demand Side Grid Support (DSGS) program, a taxpayer-funded initiative that plays a crucial role in reducing energy costs and enhancing the reliability of the state’s power grid. These proposed budget reductions come amid rising energy costs and ongoing reliability challenges, raising concerns among advocates and lawmakers about the program’s uncertain future.
On July 29, 2023, the effectiveness of the DSGS program was showcased when over 100,000 residential batteries discharged a combined average output of 539 MW between 7 p.m. and 9 p.m. as part of a virtual power plant test. This test demonstrated that residential battery systems can function similarly to traditional power plants during peak demand hours.
The DSGS program, which started in 2022, has shown significant growth in a short time frame, transitioning from an experimental status to a fully operational program. Data reveals that more than 88% of the output generated during the July test came from batteries enrolled in the DSGS program. Companies like Tesla and Sunrun dominate the program’s capacity, contributing significantly to its operations.
A recent report from the Brattle Group estimates that the DSGS program could generate net savings of between $28 million and $206 million from 2023 to 2028. Furthermore, it forecasts that DSGS battery capacity could double over the next three years, which would provide over 1 GW of rapid and reliable support for California’s energy grid.
Despite these promising figures, California lawmakers have proposed budget cuts that include $100 million in funding reductions for the DSGS program. If implemented, these cuts would eliminate previously promised funding and significantly impair the program’s ability to operate, as it requires at least $75 million in funding for 2026 alone, along with sustained funding commitments over multiple years to ensure confidence in investments.
Critics and advocates, including a coalition led by Advanced Energy United, are urging lawmakers to maintain funding levels for the DSGS as well as the Distributed Electricity Backup Assets program. They argue that cutting these resources would eliminate proven, cost-effective solutions at a time when California is grappling with pressing issues of energy affordability and grid reliability.
California utility PG&E is currently involved in testing virtual power plant programs to meet various grid demands. These programs aim to circumvent costly infrastructure upgrades by using aggregated resources effectively. The pilot projects associated with these tests demonstrate the viability of decentralized energy generation and management, a significant factor in addressing power demand peaks.
The DSGS program was initiated as part of California’s Strategic Reliability Reserve, established due to reliability problems exacerbated by wildfires and heatwaves. The program compensates residential battery owners for providing essential grid services during high-demand events.
In summary, as California contemplates budget cuts, there is a clarion call from energy organizations and companies for a permanent funding solution to ensure the success and growth of the Demand Side Grid Support program. With the potential for substantial cost savings and enhanced energy reliability on the line, the outcome of these funding discussions will be critical for the state’s energy future.
FAQ
What is the Demand Side Grid Support program?
The Demand Side Grid Support (DSGS) program is an initiative designed to support California’s power grid through residential battery systems that can produce energy during peak demand hours.
Why is the DSGS program facing funding cuts?
The proposed cuts are part of broader budget reductions aimed at addressing a fiscal shortfall within California’s state budget.
What impact would funding cuts have on the DSGS?
Funding cuts could significantly undermine the program’s operations and limit its capacity to deliver reliable energy during peak demand, potentially reversing progress made since its launch.
How significant has the DSGS program been so far?
Since its launch in 2022, the DSGS program has rapidly expanded, showcasing its ability to generate significant amounts of energy during critical times, as seen in the July battery dispatch test.
What is required for the DSGS program to remain viable?
The program requires at least $75 million in funding for 2026 and a commitment to sustained multi-year funding to secure investments and maintain its effectiveness.
Key Features of the Demand Side Grid Support Program
| Feature | Description |
|---|---|
| Funding | Requires a minimum of $75 million for 2026; facing proposed cuts of $100 million |
| Capacity | Current battery capacity exceeds 1.8 GW, with potential to double in three years |
| Output During Tests | Produced an average of 539 MW during peak demand hours in a recent test |
| Cost Savings | Estimated net savings of $28 million to $206 million from 2023 to 2028 |
| Program Launch | Initiated in 2022 as part of California’s Strategic Reliability Reserve |
Deeper Dive: News & Info About This Topic
- Canary Media: California Demand Side Grid Support Benefits
- Google Search: Demand Side Grid Support California
- Utility Dive: California’s Virtual Power Plant Could Save $206M by 2028
- Wikipedia: Virtual Power Plant
- RTO Insider: Budget Cuts Threaten California VPP Program
- Encyclopedia Britannica: Energy Industry
- TDWorld: California Demand Side Grid Support Quadruples Capacity
- Morningstar: Brattle Report on California’s Distributed Power Plant Program
Author: STAFF HERE CORONADO
The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
