Two people walking in front of California's senate building, discussing the electric grid.
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The future is here

California’s Electric Grid is Teetering. The State Just Took a Big Step to Fix It.

Cisco DeVries
September 1, 2022

California’s electric grid is teetering as an unprecedented heat wave settles over the state. While we at OhmConnect are doing everything we can to keep the lights (and the A/C!) on during the Flex Alerts being called for the Labor Day weekend, finally the cavalry is coming!

Tucked into a bill the California Legislature passed last night to authorize the extension of the Diablo Canyon plant (SB 846) are a set of provisions designed to propel the immediate growth and long-term viability of the flexible demand industry (also known as demand response) and help strengthen grid reliability. While debate has centered on the decision to extend the operating life of the State’s only nuclear plant, these other provisions actually will have far greater impact on the future of the grid. 

For the first time, the State may truly enable a megawatt of electricity saved to be treated the same as a megawatt of electricity generated. It’s no exaggeration to compare SB 846 to the passage of California’s landmark original Renewable Portfolio Standard (RPS) law in 2002, which was instrumental in the rapid and hugely successful growth and development of the renewable energy industry in the state.

For years, “demand response” – which refers to actions that energy customers take to reduce their energy use when the grid is stressed – has been treated like the poor stepchild of the clean energy sector. 

Challenges and solutions for a more resilient electric grid.

Clean energy resource unlocked in the nick of time

But recently, a number of things have converged that could unlock this massive, but mostly untapped, clean energy resource – and just in the nick of time. Many more homes than ever before have smart devices and appliances that allow for simple, automated adjustments to the amount of electricity being used. New “time of use” electricity rates for residential customers make it possible to save more money on your monthly energy bills by reducing use during peak times. And software platforms, like OhmConnect’s, have made it possible to engage customers in real time to respond to extreme heat by reducing their usage - and reward customers for saving energy.

While smart home technology has been advancing, the regulatory environment has made it extremely difficult for flexible demand companies like OhmConnect to operate on a level playing field.

But this new bill changes that in the world’s sixth largest economy – it sets statewide goals for flexible demand, provides funding to meet them, and takes a big whack at regulatory barriers that have hampered the sector.

So what does this bill include?

Here are the particulars:

  • The bill defines demand response and energy efficiency as “preferred resources” for the first time. It requires the California Energy Commission (CEC) to identify any regulatory barriers for the preferred resources on a quarterly basis – and to recommend solutions to eliminate those barriers. 
  • It requires the CEC to set a “load shift” goal – a target of the amount of energy demand that can be shifted from peak times to off-peak times – and to update that target every two years. This is huge – potentially as critical as the RPS was for the utility scale solar industry. 
  • It allocates $1 billion over the next 3 years to support a Clean Energy Reliability Investment Plan that funds programs and projects to accelerate the deployment of clean energy resources, support demand flexibility, assist ratepayers, and increase reliability. The CEC must deliver the plan to the Legislature by March 1, 2023.

This represents not only big thinking, but bold action. In just a few years, we can add gigawatts of flexible demand to California’s grid, reduce customers’ energy bills and our reliance on dirty “peaker plants”, and prevent the type of emergency grid conditions we are seeing this weekend.

We applaud the timely leadership on this issue by Governor Newsom; CEC Commissioners David Hochschild and Siva Gunda; State Senators Nancy Skinner, Josh Becker, Henry Stern, Bob Wieckowski, President ProTem Toni Atkins; Assembly members Phil Ting, Richard Bloom, Rudy Salas, Eduardo Garcia, Robert Rivas, Luz Rivas; James Ramos, Wendy Carillo, Speaker Anthony Rendon; CPUC, CEDMC, NRDC, AEE, EDF, CEERT, TURN, CalCCA, Environment California, CESA, AEMA. We look forward to working with policymakers to turn this opportunity into a future of clean, affordable and reliable energy for all Californians.

Photo credit: The LA Times

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