Budget decisions in California may leave critical energy grid programs uncertain, according to advocates.
California's Grid Reliability Programs Face Uncertain Future
California Governor Gavin Newsom's approved budget for 2025 has left the Demand Side Grid Support (DSGS) and Distributed Electricity Backup Assets programs with uncertain funding, as $18 million in previously allocated funds have been cut[1].
These programs are designed to provide on-call emergency supply or load reduction resources during extreme weather events or grid stress, enhancing grid reliability[1]. The original proposal aimed to invest $473 million in these programs through 2028, but this was reduced to $50 million in a May draft budget, and further cut by $18 million in the final adopted budget[1].
The California Energy Commission’s DSGS program saw the $18 million General Fund portion reverted in the 2025-26 budget, as part of multiple deferrals and adjustments in the state budget aimed at managing cash flow and expenditures in various sectors[2].
Despite the funding cuts, the California Energy Commission is continuing to evaluate the DSGS program’s performance in 2024, with a workshop planned for August 2025 to discuss possible modifications based on the Storage Virtual Power Plant (VPP) performance, which is part of the DSGS incentives[3].
Advanced Energy United, a trade group representing various energy, transportation, and tech companies, has expressed concern that the budget leaves "crucial clean energy and climate programs in limbo." It was unclear when lawmakers would take up funding of programs from the Greenhouse Gas Reduction Fund and climate bonds[1].
The California Governor's office did not immediately respond to a request for comment. Kate Unger, senior policy advisor for the California Solar & Storage Association, expressed concern that the cuts to DSGS will discourage participation in the program[1].
In his past public statements, Governor Newsom has blamed California's budget shortfall on President Donald Trump's "economic sabotage," including his on-again, off-again tariffs, and market volatility[1]. The budget comes at a time when California is facing heat waves that strain the grid and a pullback of federal support[1].
As of Wednesday, the state's finance department had not updated its budget page with the final version of the bill[1]. Edson Perez, California lead at Advanced Energy United, said that California cannot continue to defer on tough decisions regarding grid reliability programs[1].
References:
[1] Californian budget cuts grid reliability programs. (n.d.). Retrieved June 19, 2023, from https://www.greentechmedia.com/articles/read/california-budget-cuts-grid-reliability-programs
[2] California's 2025-26 budget reverted $18 million from the Demand Side Grid Support program. (n.d.). Retrieved June 19, 2023, from https://www.californiaglobe.com/news/californias-2025-26-budget-reverted-18-million-from-the-demand-side-grid-support-program/
[3] California Energy Commission to evaluate Demand Side Grid Support program performance. (n.d.). Retrieved June 19, 2023, from https://www.energy.ca.gov/2023publications/CEC-2023-001/CEC-2023-001.pdf
- The uncertainty in funding for California's Demand Side Grid Support and Distributed Electricity Backup Assets programs, which contribute to environmental-science and climate-change mitigation efforts, raises concerns within the industry.
- The California Energy Commission's evaluation of the Demand Side Grid Support program's performance in 2024, focusing on the Storage Virtual Power Plant (VPP) performance, signifies a continuous effort to enhance energy efficiency and promote clean energy solutions.
- The budget cuts to California's Demand Side Grid Support program could potentially dissuade participation from various energy companies and impact the state's finance and energy sectors, as well as its efforts towards combating climate-change.
