California, August 21, 2025
News Summary
California’s Demand Side Grid Support (DSGS) program, crucial for managing the power grid and reducing energy costs, is under threat with proposed funding cuts of $100 million. This program has demonstrated its significance, successfully generating 539 megawatts during peak hours in a recent test. Leading companies like Tesla and Sunrun are involved, but critics warn that budget cuts could undermine efforts to maintain affordable and reliable energy solutions amid rising costs. The DSGS program requires stable funding to continue providing essential grid services.
California’s Demand Side Grid Support (DSGS) program is facing potential funding cuts that threaten its future amidst rising energy costs and ongoing challenges with grid reliability. Lawmakers have proposed cuts totaling $100 million from the program, which is designed to help manage challenges in California’s power grid and reduce energy costs for consumers.
On July 29, 2023, the DSGS program demonstrated its value when over 100,000 residential batteries discharged to produce an impressive 539 megawatts (MW) of average output during peak demand hours between 7 p.m. and 9 p.m. This virtual power plant test showcased the potential of aggregated home generation and storage capabilities similar to multiple traditional peak generation plants.
Leading the DSGS operational capacity are companies like Tesla and Sunrun. According to reports, the DSGS program could generate net system cost savings ranging from $28 million to $206 million from 2023 to 2028. It’s also suggested that the capacity of DSGS batteries may double within the next three years, potentially offering over 1 gigawatt (GW) of reliable performance for California’s electrical grid.
Colby Hastings, senior director at Tesla Energy, reported that California’s residential battery capacity, which stands at over 1.8 GW, has significant untapped potential. However, critics, including those from the organization Advanced Energy United, are expressing concerns on the proposed budget cuts, insisting that such reductions would eliminate affordable and reliable solutions during challenging times for energy prices and reliability.
The DSGS program, initiated as part of California’s Strategic Reliability Reserve, was developed in response to grid reliability issues exacerbated by wildfires and heat waves. The program compensates residential battery owners providing grid services during extreme conditions, proving essential in maintaining energy supplies and minimizing disruptions.
California utility PG&E is actively testing virtual power plant initiatives to address grid needs without needing extensive infrastructure upgrades. The success of the July battery dispatch test, which resulted in over 88% of the megawatts drawn from the DSGS program, indicates its effectiveness and the viability of residential energy resources during critical demand periods.
Advocates assert that cutting funding to the DSGS program and other initiatives like the Distributed Electricity Backup Assets program would undermine California’s progress in establishing a reliable network of distributed energy resources. The DSGS program requires at least $75 million in funding for 2026 and a stable, multi-year funding solution to bolster investment confidence in its operations.
Although the program has shown considerable success since its launch in 2022, securing long-term funding and regulatory support remains a challenge. The coalition of renewable energy advocates is urging California lawmakers to honor previously promised funding commitments to ensure these emerging solutions can continue contributing to the state’s energy landscape.
Conclusion
With California poised on the brink of significant budget cuts affecting key programs like the DSGS, the future of affordable and reliable energy management remains uncertain. Stakeholders continue to call for dedicated support to maintain essential grid services during times of rising demand and increasing energy costs.
FAQ
What is the Demand Side Grid Support (DSGS) program?
The DSGS program is designed to help manage the California power grid by utilizing residential battery storage to provide energy during peak demand periods. It aims to reduce energy costs and improve grid reliability.
Why is the DSGS program facing funding cuts?
California lawmakers are proposing budget cuts totaling $100 million to various programs, including DSGS, to address a budget shortfall. These cuts jeopardize the funding previously allocated to support the program and its objectives.
How does the DSGS program impact energy costs?
The DSGS program is expected to generate net cost savings for the energy system, potentially lowering expenses for consumers while improving the efficiency of the power grid during peak usage times.
What are the potential benefits of maintaining funding for DSGS?
Continued funding for DSGS could allow for enhanced battery capacity, improved grid reliability, better energy cost management, and the expansion of renewable energy resources in California.
Key Features of the DSGS Program
| Feature | Details |
|---|---|
| Purpose | Management of California’s power grid and reduction of energy costs |
| Funding Requirement | At least $75 million for 2026 with a call for multi-year funding |
| Recent Performance | In July 2023, produced 539 MW during peak hours, over 88% from DSGS |
| Capacity Growth | Potential to double over the next three years, reaching over 1 GW |
| Financial Savings | Estimated net savings of $28 million to $206 million from 2023-2028 |
| Stakeholders | Tesla, Sunrun, PG&E, Advanced Energy United |
| Program Launch | Initiated in 2022 as part of the Strategic Reliability Reserve |
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
- Morningstar: Brattle Report on California’s Distributed Power Plant Program
- Wikipedia: Virtual Power Plant
- Google Search: California Demand Side Grid Support
- Google Scholar: California Demand Side Grid Support
- Encyclopedia Britannica: California Energy Programs
- Google News: California Virtual Power Plant
Author: STAFF HERE COSTA MESA WRITER
COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, 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 the OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
