California's DSGS Program Fights for Survival Amid Funding Shortfalls
California's Demand-Side Grid Support (DSGS) program, a key player in maintaining grid reliability, faces an uncertain future due to funding shortfalls. Established in response to the state's blackout events in 2020 and 2022, the DSGS program has proven its worth, stabilizing the grid during heatwaves and enrolling over 720 MW of customer battery capacity.
The DSGS program, which includes one of the world's largest virtual power plants (VPPs) with over 200 MW in capacity, offers four enrollment options for managing demand during peak electric demand periods. Despite its success, the program's funding was reduced by $18 million instead of being increased, putting it at risk of running out of funds by the end of the year.
A coalition led by Advanced Energy United has stepped in, requesting at least $75 million to keep the DSGS program operative in 2026. However, California's grid reliability and VPP program are currently in limbo due to a $12 billion budget shortfall. The Brattle Group estimates that with additional support, the DSGS program could grow to 1,300 MW in the next three years, providing up to $206 million in net cost savings to all Californians.
The DSGS program's future hangs in the balance, with its funding set to expire by the end of the year. While a coalition has requested additional funds to keep the program running in 2026, California's budget shortfall puts the program's fate in jeopardy. The DSGS program's proven track record in stabilizing the grid during heatwaves underscores the need for a solution to ensure its continued operation.
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