A new report from GridLab, Kevala and E3 outlines policy and program changes to expand the use of customer-owned energy resources to reduce electricity costs and support grid reliability in California.

The report, Unlocking California’s Flexible Load: A Durable Blueprint for Affordability and Reliability, examines how electric vehicles (EVs), home batteries, smart buildings and other flexible loads could be more broadly integrated into grid operations. The report was informed by a series of roundtable discussions facilitated by the Energy & Efficiency Institute at the University of California Davis.

A 2024 study by GridLab and The Brattle Group found that virtual power plants (VPPs) could save California utilities and consumers $550 million annually while meeting more than 15% of the state’s peak electricity demand using commercially available technologies. The new report builds on those findings by identifying policy and program changes intended to expand those benefits.

“The next generation of grid infrastructure is already sitting in our driveways, homes, and businesses,” said Ric O’Connell, executive director of GridLab. “The question isn’t whether California has the resources, —it’s whether our programs are designed to unlock their full value. This report provides a roadmap to modernize demand flexibility so customers, utilities and the grid all benefit.”

EVs represent one potential source of flexible load. According to the report, enrolling 10% of California’s projected EVs in vehicle-to-grid (V2G) programs by 2036 could provide approximately 9 GW of 12-hour storage. That would represent more than one-third of the state’s 2036 long-duration storage procurement target.

“Customers are investing in electric vehicles, batteries and smart technologies at an unprecedented pace,” said Ben Finkelor, executive director of the UC Davis Energy and Efficiency Institute. “Making it easier for those resources to participate in demand flexibility programs will help customers realize more value from those investments while supporting a cleaner, more reliable electric grid.”

The report says California’s demand flexibility programs currently vary among utilities, creating differences in the customer experience that can limit participation and prevent the state from capturing the full value of flexible energy resources.

To modernize demand flexibility programs, the report recommends:

• Standardizing program design to create a consistent customer experience across California.
• Implementing performance-based incentives that reward verified grid services.
• Expanding participation from EVs, batteries, smart buildings and other distributed energy resources.
• Improving interoperability and market coordination through consistent program frameworks and market signals.
• Paying below avoided costs for robustly measured incremental grid impacts to lower costs for all ratepayers.

“Affordability is central to the report’s recommendations,” said Eric Cutter, partner at E3. “Drawing on lessons from California’s experience with Net Energy Metering (NEM), the report argues that the next generation of demand flexibility programs must reward participating customers for the measurable value they deliver to the grid and not increase bills for others.”

Cutter said aligning incentives with grid value and verified performance, rather than simply participation, would allow demand flexibility to help lower system costs and strengthen grid reliability.

“Scaling demand flexibility is less about creating new programs and more about making existing programs work better together,” said Ed Randolph, former director of the Energy Division at the California Public Utilities Commission and now with Caliber Strategies. “Customers shouldn’t have to navigate different rules depending on where they live. Standardizing program design and rewarding verified performance will help California scale demand flexibility more efficiently while improving affordability and reliability.”

The report concludes that as transportation, buildings and industry continue to electrify, demand flexibility could become a grid resource alongside renewable generation and energy storage.

The full report, Unlocking California’s Flexible Load: A Durable Blueprint for Affordability and Reliability, is available from GridLab, Kevala and E3.