The California State Assembly's Appropriations Committee approved two bills yesterday that could build out the state's virtual power plant (VPP) program.

Senate Bill 905 and Senate Bill 913 address separate but complementary facets of using distributed energy resources — such as smaller-scale solar and energy storage systems — to curb energy demand when it is most costly. Virtual power plants work by networking many of those individually small devices — home batteries, rooftop solar arrays, and controllable appliances — so they can be dispatched together as a single resource when the grid is under strain.

SB 905 focuses on determining which circuits on the grid can handle additional electrical load. According to the bill's text, it would use "performance-based metrics" to see where circuits may need more energy buildout, relying on distributed energy resource deployment. The measure could create a roadmap for expanding California's grid with distributed energy sources. Circuit-level planning has grown more consequential as California's net demand — total demand minus wind and solar generation — climbs steeply in the evening hours when solar output fades.

"Expanding the size of grid equipment to serve a small number of hours of higher usage wastes ratepayer dollars," said Brad Heavner, executive director of the California Solar and Storage Association (CALSSA). "Instead, we can get more out of the grid we already paid for by harnessing batteries and appliance controls in the hours when usage peaks." The ratepayer stakes are notable in a state where residential electricity rates rank among the highest in the continental United States, according to U.S. Energy Information Administration data.

SB 913 would establish a rate of compensation for when the grid exports a utility customer's stored energy during periods of higher demand. CALSSA noted that the state currently does not compensate customers for these types of energy exports.

The RA market Heavner references is California's resource adequacy program, which requires utilities and other load-serving entities to secure enough generating capacity to reliably meet forecast demand. "SB 913 is an important step because fleets of customer devices are currently only allowed to participate in the RA market to the extent those devices reduce the consumption of each individual customer," Heavner said. "By design, the change will ensure rate reduction because these resources would only be chosen in the market when they are available at lower cost than competing resources," Heavner continued.

California's Demand Side Grid Support program — the state's VPP program, administered by the California Energy Commission, which pays participating customers to reduce electricity use or send power to the grid during extreme events — was recently extended through the end of 2026 and is currently under consideration for extension through 2027. CALSSA reported that the program drew participation from more than 1 GW of distributed batteries, a scale in line with the technology's national trajectory: the U.S. Department of Energy estimated in 2023 that virtual power plants could grow from roughly 30–40 GW of capacity to between 80 and 160 GW by 2030. According to the organization, passing SB 913 would create a permanent VPP program that does not require routine funding from the state's budget.

The bills now head to the full California State Assembly, where they face the Legislature's August 31 deadline for passing bills in the second year of a two-year session. If passed, they will then go to the desk of Gov. Gavin Newsom.

Source: Solar Power World