California's Grid-Support Program Facing Uncertain Future Amid Budget Cuts
California's Demand-Side, Grid-Support (DSGS) program, launched to bolster grid reliability following blackouts in 2020 and 2022, is facing an uncertain future due to budget cuts and funding shortfalls. The program, which includes one of the world's largest virtual power plants (VPPs), has proven its worth by stabilizing the national grid during heatwaves and offers significant potential savings for consumers.
The DSGS program, offering four enrollment options, has demonstrated its value. It successfully navigated California through four heatwaves in the summer of 2024, with its VPP component boasting an impressive 3.2 gigawatts of capacity. This includes a 200 MW VPP with over 720 MW of customer battery capacity. However, the program's future is now at risk due to a $12 billion budget shortfall.
Estimates suggest that the DSGS program needs at least $75 million to continue operating in 2026. Despite its potential to provide up to $206 million in net cost savings and reduce customer rates by up to $2 for every dollar invested, the program's funding was cut by $18 million. Without additional allocation, the DSGS program is set to run out of funds by the end of the year.
The DSGS program's virtual power plant option could grow to 1,300 MW in the next three years if funded, further enhancing California's grid reliability. However, the program's future hangs in the balance due to funding uncertainties, putting at risk the state's grid reliability and the potential savings it offers to consumers.
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