In a little more than two years, the California Energy Commission’s Demand Side Grid Support, or DSGS program, has enrolled 515 MW of capacity across more than 265,000 participants, the state agency said Tuesday.
The program provides incentives for electricity customers to reduce usage or send energy back to the grid when supply-demand conditions are tight. DSGS participants are paid based on the net load reductions they provide, with some earning $2/kWh, the commission said.
“As the effects of climate change become more pronounced, innovative programs like DSGS provide a critical buffer for ensuring the reliability of California’s electrical grid, while reducing emissions,” CEC Vice Chair Siva Gunda said in a statement.
The DSGS program was launched in August 2022 as part of California’s Strategic Reliability Reserve, which is called on when the power grid is under strain. The reserve also contains a program to encourage the construction of distributed energy assets provide load reduction and another to provide additional generation capacity to support reliability.
DSGS resources include traditional demand response participants, DR aggregators participating in the California Independent System Operator market, and a 200 MW virtual power plant managed by Olivine and enabled by customer-owned storage.
Virtual power plants could play an increasing role in meeting California’s electricity demand. An April study from The Brattle Group found that VPPs could meet 15% of the state’s projected peak load in 2035, up from 3% today, while helping to avoid $755 million in traditional power system costs and reduce consumers’ annual electricity bills by $550 million.
“So far in the 2024 program season, the virtual power plant ... has been activated 16 times,” the CEC said, and traditional demand response has been called on once, “helping to avoid a grid crisis during four separate heatwaves from July through the beginning of October.”
