Dive Brief:
- Two new state laws will significantly expand distributed energy resources’ wholesale market participation and virtual power plant opportunities in California, benefiting utilities, ratepayer and the state’s electric grid, energy system experts and company representatives told a webinar audience Friday.
- Growing public and policymaker attention on California’s energy “affordability crisis” helped SB 905 and SB 913 pass where previous legislative efforts to boost DERs failed, said Brandon García, California director for Advanced Energy United, the clean energy trade group that convened the webinar.
- SB 913 could be particularly beneficial for California’s growing fleet of batteries, electric vehicles and other grid-interactive energy equipment. SB 905, among other things, requires regulated California utilities to gather and report data that could help increase grid utilization.
Dive Insight:
The two laws push California regulators and utilities to get more out of the state’s existing grid, in part by expanding DERs’ role.
SB 913 gives the CPUC a June 2028 deadline to lay the groundwork for DER aggregations to qualify as resource adequacy capacity in utility resource plans and state procurements. It also ensures DER owners or hosts enrolled in existing net energy metering or net billing tariff schemes do not receive duplicate compensation for wholesale market participation.
The law is a welcome shift for a state that has spent years incentivizing DER adoption while maintaining “policies [that] undervalue how these resources can be part of the solution to the energy affordability crisis,” García told Utility Dive in April.
However, its actual impact will depend on proceedings before California utility regulators and the state’s grid operator in the months ahead, said Brian Turner, AEU’s regulatory engagement lead for the western United States.
In addition to grid utilization reporting, SB 905 requires the CPUC to initiate proceedings to develop performance-based metrics for major California utilities and to investigate opportunities for “alternative financing” of utilities’ capital investments in generation, transmission and distribution.
Outgoing California Gov. Gavin Newsom, D, signed both bills on Sept. 30. Last year, citing a state budget shortfall and the potential for unintended consequences for the energy system, Newsom vetoed multiple bills that advocates said would have increased DER adoption and VPP capacity in California.
This year, public concern around energy affordability combined with a broader, vocal coalition of pro-DER stakeholders — including environmental groups and ratepayer advocates — working with “more loud” legislative allies to push SB 913 through the state legislature and secure Newsom’s signature, García said.
To make its case, AEU hosted a “DERs 101” briefing for legislative staff to increase awareness of the technology and quell lingering skepticism about aggregated DER portfolios’ usefulness as a resource adequacy tool, García added.
“We really just had to educate and explain, like, hey, if we say we’re going to get a gigawatt of power and we only come up with 800 [MW], that is actually not a bad outcome if the state is only asking for 500 [MW],” he said. “Once you do understand it better, you can see why it needs to be part of this resource adequacy program.”
CAISO’s Demand and Distributed Energy Market Integration initiative, which began in 2025, was another enabler, Turner said. As part of the proceeding, CAISO has proposed a wholesale market “accounting change” that AEU says could boost California DERs’ wholesale market participation by more than 2 GW.
“The fact that they were … trying to find a way to have this tremendous, sizable resource that is existing on the California grid actually start to participate in a useful way, showed legislators and other agencies that there actually is a constructive path forward,” Turner said.
SB 913 could have outsized impacts for DER hosts and aggregators, said Erik Lyon, western DER and VPP lead for Everyday Electric, the aggregator formerly known as Renew Home.
The new law enables customers to enroll multiple DERs behind a single meter, expanding earning potential and allowing multiple aggregators to manage different resources for the same customer. Under that framework, for example, Everyday Electric could manage a smart thermostat for a customer while another aggregator manages their home battery or electric vehicle, Lyon said.
The law also enables telemetry at the device level rather than enrolling the entire home in a VPP program that collects data from its smart meter, further reducing barriers to multi-resource enrollment behind the same meter, Lyon said.
“I don’t think we can meaningfully reduce barriers to participation as required by this law, or allow multi-device enrollments, without shifting to device-level data as really the primary source … for measuring and compensating DERs,” he said. “That’s the keystone that unlocks the rest of this bill’s opportunities.
