The following is a contributed article by Lillian Mirviss, Senior Manager, Government Affairs at the Center for Sustainable Energy.
A lot went wrong during California’s rolling blackouts in early August. Wind unexpectedly stopped blowing, gas generators couldn’t start up, and crucial out-of-state power supplies didn’t deliver. Speculations about market manipulation came out and flashbacks to rolling blackouts in 2001 became rampant.
A plethora of op-eds came out on the who, what and why, and finger pointing from policymakers was abundant. Even worse, old gas generators came back online to preempt the problem going forward, exacerbating California’s efforts to reach its climate change goals.
But it wasn’t all terrible. In fact, there was a ray of hope: after day one of the blackouts, consumers stepped up to the state’s call to reduce energy consumption in the afternoon. "Set #airconditioning thermostats to 78 degrees" tweeted the California Independent System Operator. "Action Alert: Conserve energy starting at 2:00 pm today. We can do this!" the California Community Choice Association emailed its customers. The oft-forgotten Demand Response (DR) heard its cry and lept at the opportunity to become relevant.
And become relevant it did. DR flattened the demand curve, not only back in August but again during the Labor Day weekend heatwave. The cumulative impact of energy curtailment (predominantly by commercial and industrial facilities) mitigated the risk of blackouts across California.
This level of DR, however, isn’t enough.
The 4 S’s of demand response
DR is evolving. Some now call it load management, others prefer the term demand or load flexibility. Regardless of the name, the goal is to move beyond DR as a function of simply reducing load at one single point in time. Lawrence Berkeley National Laboratory’s (LBNL’s) 2025 California Demand Response Potential Study addresses this goal by giving DR the catchiest of rebrands in the four S’s: Shape, Shift, Shed and Shimmy.
Using this framework, Shed is what occurred during the August and September heatwaves. California asked energy consumers to use less energy from 3 to 9 p.m., and consumers responded by lowering their energy demand. Load shedding is thus the curtailment of energy usage during times of peak demand to reduce stress on the system.
If Shed is the DR of today, Shift is the next evolution. Shift reduces demand during the peak by shifting load to a time when energy supply is abundant, made possible via flexible units of energy, or Flexiwatts. In California, that supply typically falls midday when clean, renewable energy is the most dominant source (i.e., the sun is shining and solar is at its most powerful). Shift therefore has the potential to encourage consumers to intelligently use clean energy more frequently. Even though Shift promises to better integrate renewables onto California’s grid, it is not enough to alleviate the unanticipated immediate drop in supply California experienced during the blackouts.
Shimmy to the left for Flexiwatts
Flexiwatts have more potential than just the Shift model. In fact, they can and should serve as the DR California needs to respond in real time to extreme events like blackouts. The solution? Shimmy.
Shimmy is fast-responding DR that dynamically adjusts load at timescales of seconds to an hour. Shimmy can stabilize the grid by minimizing the gap between predicted and real-time demand of energy. Because demand can be both higher and lower than predicted load, Shimmy (like Shift) involves both shedding, or reducing, energy when demand is too high and taking, or using, energy when supply is high. According to LBNL’s Study, Shimmy eases grid disturbances by manipulating load at short timescales.
The California Energy Commission’s 2020 Load Management Rulemaking explores the real-world applicability of Shimmy through the lens of a load management tariff. Texas already allows for programs that trend toward a Shimmy-based Flexiwatt rate by charging customers wholesale prices, but that does not come without the risk inherent in volatile real-time energy pricing. While price-responsive Flexiwatts are an innovative way to reduce a real-time spike in demand during heatwaves, consumers struggle to mitigate the associated risk of high energy prices.
Grid-connected automated devices, such as thermostats, heat pump water heaters and even electric vehicles, are another option for implementing Shimmy during rolling blackouts. Moreover, programs already exist that incentivize customers to allow their load-serving entities (LSEs) to run these devices to reduce load during peak demand.
Southern California Edison’s Smart Energy Program, for example, credits customers $75 on their bill upon enrollment and $10 per month for allowing the utility to control their smart thermostat during periods of peak demand. Similarly, the Sacramento Municipal Utility District’s PowerMinder Pilot controls customers’ internet-connected heat pump water heaters for a $150 one-time incentive and $2 per month bill credit. For both of these programs, smart devices come with a rebate to reduce the upfront cost.
Pulling together the whole Internet-of-Things ecosystem, Sonoma Clean Power’s GridSavvy Program controls connected smart thermostats, residential EV charging stations, and heat pump water heaters for a recurring $5 monthly bill credit. Sonoma Clean Power successfully dispatched its GridSavvy participants during the rolling blackouts to help reduce stress on the grid, proving that this approach to Flexiwatts is successful and should be replicated.
Increasing the number of available LSE DR programs is a strong first step in leveraging the power of Flexiwatts, but utility-based DR programs currently dominate the market and several regulations do not encourage additional market participants needed for DR to reach its full potential of scaled adoption. Third-party DR providers in California struggle to work through the regulatory mire of resource adequacy, preventing a lucrative value stream for DR resources. This limits the volume of programs available to customers, preventing Shimmy-centric programs from proliferating.
If Flexiwatts are the key to unlocking the needed flexible load benefits of Shimmy, especially considering extreme demand from heatwaves is only expected to get worse, California should not only allow but require its electricity consumers to participate in a smart device DR program. Implementing such public policy, however, is unfortunately extremely complex.
Scaling Flexiwatts: what’s even possible?
Rolling blackouts are not a reasonable solution for California going forward, especially since the tools that can prevent these events do indeed exist. In California, the home state of smart technology, programs that support Flexiwatts via grid-connected devices need to take precedence. The small pool of examples described above are only the beginning of what’s possible for increasing Shimmy on California’s grid.
To make Flexiwatts possible, first and foremost the regulatory red tape needs to be addressed. This includes appropriately valuing DR and compensating third parties for it accordingly, lifting procurement limits, and improving transparency and standards for sharing data (both from the utility — in terms of energy consumption data — and from the third party — in terms of quantified smart device energy reduction during the DR event).
The success of pilot programs at investor-owned utilities, publicly-owned utilities, Community Choice Aggregators, and those by third-party DR providers and aggregators proves the potential scalability of these programs. But the ability for Flexiwatts to reach their full potential will continue to be hampered until regulatory barriers are removed.
For these programs to guarantee Shimmy, smart devices are needed to respond to grid conditions. These devices are not only reliable, but they also improve user satisfaction with Flexiwatts. What’s easier than a smart plug that automatically turns off home appliances during periods of peak demand? Even better, it’s up to the electricity customer to decide which devices undergo these periods of on and off, reducing frustration with the program.
To ensure these devices are available to all California residents, the state should create a statewide smart device program. This will incentivize electricity customers to purchase anything from a smart plug to a heat pump water heater at a discounted rate. And the diversity of these devices will grow under Senate Bill 49, which requires appliance standards to include flexible demand technologies.
The value of DR was made clear this summer, and addressing uncertainties with DR is more important now than ever to keep the lights on. As California strives to meet its climate goals, Flexiwatts bolster the state in mitigating blackouts by reducing energy consumption rather than relying on dirty fossil fuel plants during inevitable summer heatwaves.
The state needs to focus on implementing policies that will unlock innovation in the market as well as provide financial incentives to deploy flexible devices equitably and at scale to enable the future of load management. By revisiting the first resource in its Loading Order, Flexiwatts have the power to activate the Shimmy capabilities of California’s residential customers.