California declines to fund its biggest virtual power plant

California's budget will not include new money for the Demand Side Grid Support program, a state effort that pays homeowners and businesses to cut power use or share stored solar energy during grid emergencies. Lawmakers had proposed shifting $70 million to keep the program funded into 2027, but Gov. Gavin Newsom's administration rejected that plan. At the same time, a separate proposal to move the program's oversight to a different state agency, which supporters worried could lead to it being shut down entirely, was also left out of the final budget. So the program survives on paper, but with no guaranteed money going forward.

Since 2022, the program has grown to include around 130,000 homes with batteries and nearly 75,000 homes with smart thermostats and similar devices, all of which get paid to help ease strain on the grid at peak times. In a test last year, batteries enrolled in the program delivered roughly 476 megawatts of capacity over two hours, described as the largest test of its kind in California. Supporters argue this kind of program can lower costs for all utility customers, since it reduces the need for utilities to build or run expensive power plants during high-demand periods.

For now, without secured funding, it's unclear how companies like Sunrun, Tesla, and others managing these home batteries and thermostats will keep paying participants. If you're already enrolled in this program through your battery or thermostat provider, payments could be at risk. Lawmakers say they may revisit funding next year, but advocates warn that a long delay could shrink the program before it can be revived.