California, August 21, 2025
News Summary
California’s Demand Side Grid Support (DSGS) program, essential for managing energy costs amid rising challenges, faces possible funding cuts of $100 million. Supported by Tesla and Sunrun, this program has shown strong potential in stabilizing the energy grid. Recent data revealed significant contributions from residential batteries, and a report highlighted potential savings of up to $206 million through 2028. However, proposed budget cuts could hinder its viability, prompting a coalition of energy advocates to call for restoration of funding to ensure reliable energy solutions.
California is facing potential funding cuts to its taxpayer-funded Demand Side Grid Support (DSGS) program, which is considered vital for managing energy costs and the power grid amid rising challenges related to energy reliability. The program, significantly bolstered by contributions from Tesla and Sunrun, is in jeopardy just as it demonstrates its capacity to help stabilize the state’s energy grid.
On July 29, 2023, data showed that over 100,000 residential batteries produced an impressive 539 megawatts (MW) of output between 7 and 9 p.m. during a virtual power plant test. This event highlighted how aggregated home battery storage can mimic the functioning of traditional peak generation power plants, as noted by industry leaders.
According to a report from Brattle Group, the DSGS program could generate net savings ranging from $28 million to $206 million from 2023 to 2028. The same report suggested that battery capacity under DSGS could double over the next three years, potentially contributing more than 1 gigawatt (GW) of reliable and rapid energy performance to California’s grid. Additionally, there is currently more than 1.8 GW of unutilized residential battery capacity in the state, indicating significant potential for expansion.
However, recent proposals by California lawmakers could cut the DSGS program by $100 million as part of efforts to address a budget shortfall. This reduction would eliminate promised funding and restrict the budget available for the program, which requires at least $75 million for 2026 and ongoing multi-year funding to ensure investment confidence.
Criticism of these proposed cuts has led to a coalition of energy advocates, including Advanced Energy United, urging lawmakers to restore funding for both the DSGS and another initiative known as the Distributed Electricity Backup Assets program. The coalition argues that cutting funding would hinder cost-effective solutions at a time when energy affordability and reliability are becoming increasingly strained.
The DSGS program was initially launched as part of California’s Strategic Reliability Reserve—a response to grid reliability issues exacerbated by factors such as wildfires and heatwaves. The program compensates residential battery owners for supplying grid services during extreme demand periods. Recent testing indicated that approximately 88% of the megawatts produced during the July test were sourced from batteries enrolled in the DSGS program.
California utility PG&E is also exploring virtual power plant programs to meet evolving grid needs, including pilot projects designed to eliminate the need for costly infrastructure upgrades through resource aggregation. Despite recent successes and increased capabilities, the ongoing challenge remains regarding long-term funding and regulatory support for the DSGS program.
The call for a permanent funding pathway for the DSGS initiative is growing louder among energy organizations and companies, signaling an urgent need for clarity and commitment in supporting this vital program.
Key Features of the Demand Side Grid Support Program
- Enables residential battery owners to generate energy savings for California’s power grid.
- Participation from over 100,000 residential batteries contributing substantial output.
- Potential for significant net savings estimated at up to $206 million by 2028.
- Battery capacity forecasts indicate possible doubling over three years.
- Requires at least $75 million in funding by 2026 to maintain operations.
FAQ
What is the Demand Side Grid Support program?
The Demand Side Grid Support (DSGS) program is a California initiative aimed at managing energy demands by utilizing residential battery storage capabilities to support the state’s power grid.
Why is DSGS facing funding cuts?
California lawmakers proposed cuts as part of measures to address a budget shortfall, which could significantly impact the ongoing operations and stability of the DSGS program.
What were the results of the recent virtual power plant test?
During the test on July 29, 2023, over 100,000 residential batteries discharged a total output of 539 MW between 7 and 9 p.m., demonstrating the effectiveness of home battery systems in peak energy management.
How could the DSGS program impact energy costs for consumers?
According to forecasts, the program could lead to net savings for the energy system, potentially easing costs for consumers and improving energy reliability.
What is needed for the DSGS program to continue operating effectively?
The program requires a stable funding pathway of at least $75 million by 2026, along with supportive regulatory frameworks, to maintain investment confidence and operational efficacy.
Deeper Dive: News & Info About This Topic
- Canary Media: California Demand Side Grid Support Benefits
- Utility Dive: California’s Virtual Power Plant Could Save $206M by 2028
- RTO Insider: Budget Cuts Threaten California VPP Program
- Latitude Media: Running the Numbers on Tesla and Sunrun’s Massive California VPP Test
- AI News: Virtual Power Plants Pioneering Grid Resilience in California
- Wikipedia: Virtual Power Plant
- Google Search: California Demand Side Grid Support
- Encyclopedia Britannica: Virtual Power Plant
- Google News: California Energy Funding Cuts
Author: STAFF HERE MISSION VIEJO WRITER
MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, Orange 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 Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
