California’s Demand Side Grid Support Program Surpasses 500 Megawatts in Capacity

The California Energy Commission on Oct. 15 announced that its Demand Side Grid Support Program, or DSGS, has reached 515 megawatts (MW). The program helps to maintain a more reliable power supply by reducing load during times of high demand, such as during heatwaves.The initiative incentivizes customers for providing load reduction or backup power during extreme events to support the power grid.

The grid support program, which runs May through October, was successful from the first year of operation itself. During the 10-day heatwave in September 2022, DSGS helped to reduce over 3,000 megawatt-hours (MWh) of electricity demand.

DSGS includes one of the world’s largest storage virtual power plants having a capacity of over 200 MW. This virtual power plant operates by utilizing a network of battery storage systems, often combined with solar installations. These networks, owned by residential and commercial participants of the program, feed excess power back into the grid at times when the grid is overloaded.

To date, DSGS has over 265,000 participants contributing to the Californian power grid. The program compensates participants based on the net load reduction they provide. Some participants earn up to $2 per kilowatt-hour of energy contributed to the grid.

The grid support program offers three options for consumers to enroll in: non-combustion resources, demand response aggregators participating in the wholesale electricity market, and storage virtual power plant. In 2024, the virtual power plant was activated 16 times, and the non-combustion resources option was activated once. For the past three months, DSGS has helped to avert a power crisis during four heatwaves.

The initiative is a part of the Strategic Reliability Reserve, which supports California’s electricity grid when it is strained and prone to power outages. DSGS has an overall program budget of over $200 million, with $127.5 million appropriated to date.

The other two initiatives in the Strategic Reliability Reserve include the Distributed Electricity Backup Assets Program and the Electricity Supply Strategic Reliability Reserve Program which is overseen by the Department of Water Resources. These programs offer additional electricity generation capacity during emergencies, extreme weather, and peak demand.