MEMBERS-ONLY FACT SHEET
California Energy Commission’s Demand Side Grid Support Program
Last Updated May 5, 2026
PROGRAM STATUS
Demand Side Grid Support is a program developed by the California Energy Commission (CEC) that offers incentives to electric utility customers for providing load reduction and backup generation to support the state’s electrical grid during extreme events, reducing the risk of blackouts.
The Legislature created the Demand Side Grid Support (DSGS) program in summer 2022. In its first year, DSGS was only available to customers of publicly owned utilities. In 2023, the CEC expanded the program in several ways, including making it available to additional customers and developing two new pathways for participation. Each year from 2024 through 2026, the CEC made further changes to the program, incorporating lessons learned from prior seasons. In 2026, the CEC’s changes also address funding limitations for the program. The DSGS Program Guidelines, Fifth Edition, approved on April 27, 2026, are the currently operative guidelines.
As of the date of this fact sheet, DSGS funding is limited to about two-thirds of the estimated 2025 expenditures, and the current guidelines include changes to enable the program to operate in 2026 within the limits of the available funding.
DSGS began with $200 million in funding in 2022. With additions and reversions in 2023 and 2024, the total funding provided is $109.5 million. After subtracting expenditures, the CEC currently estimates remaining DSGS funding to be about $33.4 million for the 2026 season. The Governor’s 2026 budget proposal includes adding approximately $20–$30 million to the program, which would enable greater participation in 2026, but the budget proposal also proposes ending the DSGS program after the 2026 season. As of the date of this fact sheet, legislative advocacy to provide additional funding continues.
Given the lack of funding to support the program past the 2026 season and the pending proposal to end DSGS after this season, opportunities to join the program are currently limited.
This fact sheet gives information about DSGS program design, funding allocations and expected capacity in 2026, program availability, general eligibility and enrollment information, some information for each of the four program participation options with a primary focus on the participation option designed for energy storage aggregations—including new program changes that were made to allow the program to operate with limited funding—and links to resources from the CEC and the DSGS Program Administrator.
PROGRAM OVERVIEW
DSGS has four program participation options, providing flexibility and pathways for different kinds of customers and energy resources to contribute during emergency events. One participation option—called Option 3, the Market-Aware Storage Virtual Power Plant Pilot—provides an innovative pathway for behind-the-meter batteries to participate. This program option is specifically for batteries that are remotely dispatched as a fleet—a concept often called a virtual power plant, or VPP. VPPs allow distributed batteries to combine into a larger resource that can replace the need for a conventional power plant to fire up, or to avoid costly upgrades to the distribution grid, for example. In 2024, this DSGS program pathway expanded eligibility to battery electric vehicle supply equipment (EVSE) with bidirectional charging capability.
When participating in the DSGS Option 3 program pathway, a battery virtual power plant responds when wholesale energy market prices rise, signaling that energy supply is tight—as happens during a heat wave when demand for electricity spikes to keep air conditioners running. Bringing fleets of batteries online during these high-price events helps respond to grid emergencies, avoid power outages, and lower prices for all ratepayers, and can avoid grid emergencies in the first place. In 2025, the CEC changed the guidelines so that Option 3 resources also respond to CAISO Energy Emergency Alert (EEA) signals.
2026 Funding Allocations and Capacity
For 2026, the CEC suspended Option 1, because its design makes it challenging to estimate and allocate funding. The CEC has allocated about $26.5 million of the projected available funding (approximately $33.4 million) among Options 2, 3, and 4. In addition to allocating the currently available funding, the CEC has also stated what amounts could be allocated to Options 2, 3, and 4 if the 2026–27 budget process provides additional funding to DSGS.
Option 2: $1 million allocated (estimated 9 MW of incremental capacity); up to $3 million and 27 MW would be available if additional funding is provided.
Option 3: $19.5 million allocated (estimated 241 MW of incremental capacity); up to $42.5 million and 530 MW would be available if additional funding is provided.
Option 4: 75 MW of committed capacity allocated (estimated $5.45 million); up to 100 MW and about $7.27 million would be available if additional funding is provided.
PROGRAM AVAILABILITY
DSGS Program Year: May 1–October 31
DSGS Program Duration: The short answer as of the date of this fact sheet is that DSGS does not have funding to operate after the 2026 program season, and without new funding, it will end after October 2026.
No program duration was specified in the legislation creating DSGS. Instead, the program was originally anticipated to run approximately five years from its inception in 2022. However, with compensation available on a first-come, first-served basis, that was only an estimate. As noted above, the funding will run out after 2026, the fifth program season.
If additional funding is provided that is authorized to be spent after 2027 (when 2026 program payments will likely be made), then the program could run longer.
GENERAL ELIGIBILITY, DUAL PARTICIPATION PROHIBITION, AND ENROLLMENT
Entities participate in DSGS as DSGS providers or as participants. In general, DSGS providers are utilities or aggregators, and participants are customers.
DSGS Providers:
Aggregators of customers
Aggregators of customers must notify publicly owned utilities (POUs), investor-owned utilities (IOUs), and community choice aggregators (CCAs) of their intent to enroll customers in their service territory. In POU territories, aggregators must get a written statement from the POU that it doesn’t object to the aggregator enrolling the POU’s customers, along with other acknowledgments.
Retail electricity suppliers, including IOUs, POUs, CCAs, and electric service providers
Federal power marketing administrations
➱ See DSGS Guidelines, Chapter 2, Section A.1.
Note: POUs outside the CAISO balancing authority area may develop alternative dispatch requirements and performance measurement criteria, with CEC approval. This means that in these POU territories, program rules may vary from what is described in this fact sheet.
➱ See DSGS Guidelines, Chapter 2, Section B.2.
DSGS Participants:
Participants are customers of utilities and other entities that provide electricity. The eligibility criteria vary for the DSGS program participation options; more information is given below for each participation option.
DSGS providers may include additional eligibility requirements.
➱ See DSGS Guidelines, Chapter 2, Sections A.2 and B.1.
Limitations on Customer Dual Compensation:
Participants are prohibited from receiving compensation through DSGS if the participant’s load reduction resource:
Is enrolled in the Emergency Load Reduction Program, Base Interruptible Program, or Agricultural Pump Interruptible Program
Receives compensation for the same incremental performance through another utility, CCA, LSE, or state demand-response, net-load-reduction, or grid-services program during an interval that coincides or overlaps with the DSGS event interval—except the utility, CCA, or LSE rate plan applicable to the customer’s load-reduction resource
Is a cogeneration facility with a power purchase agreement
➱ See DSGS Guidelines, Chapter 2, Section B.1.d.
Enrollment:
DSGS providers enroll in the program by submitting an application package to the CEC, using an application form available on the DSGS Program Administrator enrollment webpage and uploading it through the website. The CEC reviews the application, notifies the DSGS provider if more information is needed, and after approving an application, provides an enrollment letter to the DSGS provider.
In 2026, participation as DSGS Option 3 providers is limited to storage aggregators that participated in October 2025, except for aggregators of bidirectional EVSE fleets.
Participants generally enroll through a DSGS provider. CALSSA has member companies that are DSGS providers, and may be able to assist in connecting other members with DSGS providers. Contact kate@calssa.org for information. However, in 2026, with the eligibility limitations for DSGS Option 3 providers and the limited available funding meaning program activity will be lower than in 2025, opportunities for new companies to join the program are significantly limited.
➱ See DSGS Guidelines, Chapter 2, Section C.
Reporting:
All participation options require enrolled participation reports. These include initial reports due shortly after a DSGS provider enrolls in the program and ongoing reports to provide information about changes in enrolled participants over the course of the program season.
Required information in enrolled participation reports varies by participation option. The guidelines have complete information on what is required.
The guidelines also require reports on dispatch or performance for Options 2, 3, and 4.
➱ See DSGS Guidelines, Chapter 2, Section D.
PROGRAM PARTICIPATION OPTIONS (PARTICIPATION PATHWAYS)
DSGS Option 1 was available in 2022–2025 but is not in 2026. Options 2 and 3 were launched in 2023, and Option 4 was launched in 2025. The participation options are open to different sets of participants, as set out below. DSGS providers can limit the participation options available to their participants, so there may be additional limitations beyond what is described here.
This fact sheet provides basic overviews of the participation options, with a focus on the BTM battery VPP option, which is Option 3. More information is provided in the guidelines and at the Program Administrator’s website.
Participation Option 1: Emergency Dispatch
Note: Option 1 is suspended in 2026. This fact sheet includes information about this participation option for general knowledge.
Participation Option 1 offers an energy-based incentive payment during CAISO emergency events. This program pathway is similar to the California Public Utilities Commission’s Emergency Load Reduction Program, which also provides energy-based payment for response during CAISO emergencies.
Eligible Customers:
Only non-residential customers are eligible to participate in Option 1.
POU customers
IOU, CCA, and energy service provider (ESP) customers using backup generators
Customers of tribal utilities
Customers of federal power marketing administrations
Water agencies
➱ See DSGS Guidelines, Chapter 2, Section A.2, and Chapter 3, Section A.
Eligible Resources:
Behind-the-meter combustion or non-combustion resources may participate in Option 1.
➱ See DSGS Guidelines, Chapter 3, Section A.
Program Hours: Any hour, 7 days per week
Dispatch Rules:
Resources dispatch in response to Energy Emergency Alert (EEA) events issued by the CAISO, or by a non-CAISO host balancing authority under specified rules.
Resources are dispatched in a defined loading order, with demand response and batteries dispatched first.
Combustion and non-combustion resources are dispatched at different EEA levels, with non-combustion resources generally dispatched at lower EEA levels.
➱ See DSGS Guidelines, Chapter 3, Sections C–F.
Compensation Structure and Level:
Energy payments are $2/kWh for verified incremental load reduction.
Standby payments are $0.25/kWh for combustion resources that make a standby commitment during an EEA Watch or EEA 1, for any hour or portion of an hour when the combustion resource is not dispatched.
➱ See DSGS Guidelines, Chapter 3, Sections B and F.
Participation Option 2: Market-Integrated Demand Response Incremental Capacity Pilot
Participation Option 2 is for demand response resources enrolled and participating in the CAISO energy market. The DSGS guidelines describe Option 2 as a pilot intended to test a new program design. It compensates for demonstrated demand response capacity provided in excess of the resource’s existing resource adequacy capacity commitments.
Eligible DSGS Providers (called DR Providers):
Third-party demand response (DR) aggregators with at least one registered CAISO Proxy Demand Resource (PDR)
POUs operating in the CAISO balancing authority with at least one registered CAISO PDR
➱ See DSGS Guidelines, Chapter 4, Section A.
Eligible Customers:
POU customers
IOU, CCA, and ESP customers
Customers of tribal utilities
Customers of federal power marketing administrations
Water agencies
All Option 2 participants must be enrolled in a CAISO PDR.
➱ See DSGS Guidelines, Chapter 2, Section A.2, and Chapter 4, Section B.
Program Hours: DR aggregators can choose whether to participate 7 days per week or only on non-holiday weekdays. The daily availability requirements vary depending on the RA resource’s obligations.
➱ See DSGS Guidelines, Chapter 4, Section D.
Dispatch Rules: Resources dispatch in market-integrated DR programs, according to their rules.
➱ See DSGS Guidelines, Chapter 4, Section D.
Compensation Structure and Level:
Incentive payments are made to DR providers, which allocate the payments between themselves and customers according to the terms and conditions agreed between them.
The general structure of Option 2 compensation is as follows:
Payment is in terms of $/MW based on demonstrated capacity—i.e., capacity actually provided—above and beyond the highest monthly shown resource adequacy capacity.
Capacity prices vary by month, with a season total of $82,800/MW for resources available every day and $66,240 for resources available on non-holiday weekdays.
For 2023–2026, an additional 30% bonus is provided, for a season total of $107,640/MW for resources available every day or $86,112/MW for resources available on non-holiday weekdays.
In 2026, $1 million has been allocated for Option 2 performance-based capacity payments across all participating providers, or up to $3 million if additional funding becomes available through the 2026–27 budget process. The “total uncapped compensation” for all providers will be calculated as set out in the guidelines following the general structure above, and then each provider will be allocated a portion of the available compensation based on its pro rata share of the total uncapped compensation.
➱ See DSGS Guidelines, Chapter 4, Section C, and Appendix A, Section A.
Participation Option 3: Market-Aware Storage Virtual Power Plant Pilot
Participation Option 3 is the pathway for BTM battery virtual power plants. The DSGS guidelines describe Option 3 as a pilot intended to test a new program design Compensation is primarily based on capacity delivered during events that are determined by wholesale market prices, but this pathway is for resources that are not participating in the CAISO market, and market prices don’t determine the compensation. For this reason, the pathway is called “market aware.”
Since 2024, Option 3 has also been open to battery EVs with bidirectional charging. A VPP aggregation can consist of stationary batteries or EV batteries, but starting in 2026, batteries and EV chargers cannot both be in the same aggregation.
Eligible DSGS Providers (called storage VPP aggregators):
Third-party battery providers
POUs
CCAs
Except for bidirectional EVSE aggregators, only storage VPP aggregators that participated in Option 3 in October 2025 are eligible to participate as storage VPP aggregators in 2026.
Providers may have partner companies, whose aggregations are considered separate VPPs that will be measured and compensated independently, and which must meet all the aggregator requirements in the guidelines.
➱ See DSGS Guidelines, Chapter 5, Sections A and C.
Eligible Storage VPP Resources:
Option 3 VPPs consist of BTM battery storage, including:
Residential (bundled or unbundled) customers
Nonresidential (bundled or unbundled) customers
Both solar-paired and stand-alone stationary storage
EVs with bidirectional-capable EV supply equipment (EVSE)
Each specific aggregation may only include resources in the same customer class, in the same utility distribution company (UDC) territory, and of the same device type (stationary storage or EVSE).
Every VPP resource participates as a 2-hour, 3-hour, or 4-hour resource. The DSGS provider nominates the duration. Each VPP aggregation must include customer sites of a single duration.
➱ See DSGS Guidelines, Chapter 5, Sections A and C.
Storage VPP Aggregator Minimum Size Thresholds:
To participate as a DSGS Provider, an Option 3 storage VPP aggregator must aggregate a total minimum nameplate power rating per aggregation as follows:
300 kW for stationary storage assets
50 kW for EVSE
➱ See DSGS Guidelines, Chapter 5, Section A.
Eligible Customers:
POU customers
IOU, CCA, and ESP customers
Customers of tribal utilities
Customers of federal power marketing administrations
Water agencies
Customers are not eligible if the customer site is participating in a CAISO PDR or Reliability Demand Response Resource (RDRR), except in two circumstances:
The storage resource’s energy charge and discharge behavior is removed from the customer’s energy baseline following a CAISO methodology.
The participant is enrolled in DSGS with a stationary export-only resource, as described in the DSGS guidelines, Chapter 5, Section E.
➱ See DSGS Guidelines, Chapter 2, Section A.2. and Chapter 5, Section A.
There are additional requirements and obligations for storage VPP aggregators, aggregations, and customer sites, as described in the DSGS guidelines, Chapter 5, Section A.
Program Hours: 7 days per week, 4:00 pm to 9:00 pm.
➱ See DSGS Guidelines, Chapter 5, Section D.
Dispatch Rules:
Option 3 has two sets of dispatch triggers: price-based and EEA-based. Price-based events are only day-ahead events. EEA-based events may be day-ahead or day-of events.
Day-Ahead Events:
Price-Based Events:
Resources dispatch in response to CAISO day-ahead locational marginal prices (LMP) for the appropriate CAISO default load aggregation point or Path 15 zone.
Events occur on days when the applicable LMP is at least $200/MWh for one or more program hours (4:00 pm–9:00 pm). See the guidelines for more information on how events are triggered and in which hours resources must respond.
In non-CAISO POU territories, other dispatch signals may apply.
EEA-Based Events:
If an EEA Watch or above is called by the host balancing authority (BA) for the following day, the emergency trigger takes effect for the entire 4:00 pm–9:00 pm program period.
The specific hours that resources must respond during these events are determined by the nominated duration (2, 3, or 4 hours) and the applicable day-ahead LMP. See the guidelines for more information about how the specific hours for dispatch are determined.
There is a requirement that all resources respond to at least one day-ahead event for the resource’s full nominated duration every month. If no day-ahead price-based or EEA-based event dispatches an Option 3 resource for its full duration, the storage VPP aggregator must conduct a test event by the end of that month. Additionally, in August only, if there is no consecutive three-day period in which an aggregation responds for its full duration every day, the aggregator must conduct a full-duration test event on three consecutive days. See the guidelines for more information on test event rules.
Day-Of Events:
If an EEA Watch or above is called by the host BA for the same day, the emergency trigger takes effect at the later of
the notice issued time, rounded to the nearest hour (even if the nearest hour is before the notice was issued),
the EEA start time listed on the event notice, rounded to the nearest hour (again, even if before the notice was issued), or
4:00 pm.
Events last no later than 9:00 pm.
It is possible for there to be day-ahead and day-of event hours on the same day. Day-of hours are treated separately from day-ahead event hours for purposes of compensation.
➱ See DSGS Guidelines, Chapter 5, Section D, and Chapter 2, Section B.2.
Compensation Structure and Level:
DSGS performance payments are made to storage VPP aggregators, which allocate the payments between themselves and customers according to the terms and conditions agreed between the provider and participants.
There are two structures for compensation in Option 3, one applicable to day-ahead event hours, and one for day-of event hours. The first is a capacity-based payment, and the second is an energy-based payment.
Day-Ahead Event Hours (Capacity-Based Payment):
In 2026, $19.5 million has been allocated for Option 3 performance-based capacity payments across all participating providers, or up to $42.7 million if additional funding becomes available through the 2026–27 budget process. Of these available funds, $250,000 will be reserved for EVSE aggregations.
The CEC has developed a multi-step process for determining the level of compensation for each aggregator. The process is summarized below. See guidelines Chapter 5, Section C, and Appendix A, Section B, for more information about compensation allocation for Option 3 in 2026.
A. The “total uncapped compensation” for all providers will be calculated using the method below, and then each provider will be allocated a portion of the available compensation based on its pro rata share as described in Section B below.
Compensation is in terms of $/kW based on demonstrated capacity (capacity actually provided) during day-ahead event hours. In 2026, demonstrated capacity will be measured compared to a measured baseline, as set forth in guidelines Chapter 5, Section E.
Capacity prices vary for VPP resources of 2-hour, 3-hour, and 4-hour duration. Storage VPP aggregators state in advance the duration for which they will operate each of their VPP aggregations, and the relevant capacity price applies.
Capacity prices vary from month to month.
The total base capacity prices for a program year are as follows.
$82.80/kW for 4-hour resources
$74.52/kW for 3-hour resources
$62.10/kW for 2-hour resources
For 2023 through 2026, the CEC provides an additional 30% bonus, so that the total program year capacity prices are as follows.
$107.64/kW for 4-hour resources
$96.88/kW for 3-hour resources
$80.73/kW for 2-hour resources
B. Because there is a limited amount of funding for capacity payments in 2026, compensation will be allocated as follows.
Funding is allocated between residential and nonresidential customer classes based on the CEC’s calculation of what each aggregator’s “October 2025 total compensation” would have been if its aggregations’ delivered capacity had been determined relative to a measured baseline—based on averaging the hourly aggregated discharge of the aggregation across all non-event days in the month for a given event hour and day type (weekday non-holiday, or weekend or holiday).
After allocating funds to the two classes of aggregations, funding will be allocated to Option 3 providers for their aggregations in that class using the same method of determining “October 2025 total compensation”—relative to the same measured baseline as above.
Each Option 3 provider’s uncapped compensation, as calculated in Section A above, will be compared with the pro rata share determined in the allocation in the previous step. The provider will be provided the lower of the uncapped 2026 compensation and the pro rata share based on “October 2025 total compensation.”
If there are remaining funds (as a result of providers having 2026 performance and uncapped compensation that is lower than their pro rata share of “October 2025 total compensation,” or if the entire $250,000 reserved for EVSE aggregations is not used), in a second round of allocations, any providers whose uncapped 2026 compensation exceeds its pro rata share will receive further compensation after another calculation of pro rata allocations including only this set of providers.
➱ See DSGS Guidelines, Chapter 5, Sections C and E, and Appendix A, Section B.
Day-Of Event Hours (Energy-Based Payment):
For any hours that are triggered on a day-of basis, payment is $1/kWh of net discharge.
If an hour was already triggered on a day-ahead basis, it is treated as a day-ahead event hour, not a day-of event hour.
See below under Performance Measurement for more information about the calculation of net discharge.
➱ See DSGS Guidelines, Chapter 5, Sections C and E.
Performance Measurement:
Performance is measured at the submeter, inverter, or EVSE. For most Option 3 resources, performance includes all battery discharge, whether to serve load or for export to the grid. Stationary batteries may participate in Option 3 as export-only resources. For those resources, only the portion of discharge that is exported to the grid will be counted toward DSGS performance.
Steps 1 through 6 below describe the determination of performance and compensation for day-ahead, capacity-based performance. In 2026, the measurement of performance has changed to be relative to a measured baseline for the aggregation.
For day-of, energy-based performance and compensation, the net discharge determined in step 4 is multiplied by $1/kWh.
Step 1: If the resource is export only, determine the discharge value for purposes of performance measurement.
For resources that are enrolled in a supply-side demand response program and participate in the CAISO market as part of a PDR or RDRR, the discharge value is the absolute value of any negative load during a DSGS event hour. If there was no export (i.e., negative load) during the hour, there is no discharge for DSGS purposes in that hour.
Step 2: If the resource is not export only, determine the hourly discharge.
Hourly discharge is determined for the aggregation. It is the total discharge across all resources in the aggregation during the specific hour for which performance is being measured. Charging is considered the negative of discharge.
Step 3: Determine the measured baseline.
In 2026, DSGS Option 3 uses a 10-in-10 (weekday, non-holiday) or 5-in-5 (weekend/holiday) day-matching baseline.
First, identify the preceding days that will constitute the baseline. A day is eligible for baseline selection if it meets the following conditions:
It is the same day type (weekday non-holiday, or weekend/holiday).
There was no Option 3 event on that day for the aggregation.
There was no power loss between 4:00 pm and 9:00 pm that day that affected customers representing 10% or more of the aggregation’s nameplate power rating.
The day is 30 calendar days or less before the event date.
Second, calculate the average hourly discharge for the hour across the selected baseline days to determine the hourly baseline.
Notes regarding determination of the baseline:
There is no day-of adjustment.
For EVSE, the measured baseline is defined as 0 kWh per hour, meaning there will be no baseline deduction from hourly discharge in the next step.
The CEC may audit the baseline for an aggregation by comparing with an alternative baseline constructed from other similar days in the month. If there is a difference of at least 10% between the measured baseline and the alternative baseline, after accounting for other potential reasons for differences in performance, the CEC will reduce the aggregation’s compensation by 25% for that month.
Step 4: Determine the net discharge.
Net discharge is determined for an aggregation. It is the discharge minus the baseline in each event hour, as determined in the prior step. See the formula in the guidelines, Chapter 5, Section E.2.
Net discharge is used to calculate both the capacity-based compensation and performance for energy-based payments for day-of events.
Step 5: For each month of participation, determine the demonstrated capacity.
Demonstrated capacity over a participation month is a weighted average net discharge during day-ahead program and applicable test event hours in that month, with weighting by the relevant locational marginal prices (LMP).
The formula for the capacity in a given month is shown in the guidelines, Chapter 5, Section E.4. In summary, the calculation is the sum of (net discharge for all day-ahead event or counted test hours times the LMP for all those hours) over the sum of the LMPs for all those hours.
Step 6: Determine the total uncapped compensation for that month.
The demonstrated capacity in kW is multiplied by the applicable month’s BTM storage capacity price for a resource of the relevant duration. The prices are shown in Table 2 in Chapter 5, Section C, of the DSGS guidelines. A 30% bonus is applied to the total calculated incentive. The approximate annual values are as follows: $107.64/kW for 4-hour resources, $96.88/kW for 3-hour resources, and $80.74/kW for 2-hour resources.
After the uncapped compensation is determined, the allocation methodology described in DSGS guidelines Appendix A, Section B, and summarized above under “Compensation Structure and Level” for day-ahead event hours, Section B, will be applied.
➱ See DSGS Guidelines, Chapter 5, Sections C and E, and Appendix A, Section B.
Participation Option 4: Emergency Load Flexibility Virtual Power Plant Pilot
Participation Option 4 offers capacity-based compensation for load reduction capacity committed by VPPs composed of load flexibility resources. The DSGS guidelines describe Option 4 as a pilot intended to test a new program design. It is similar to Option 3 in its capacity-based structure, but it is only dispatched based on EEAs. Also, providers make monthly committed capacity nominations of per-device average load reductions and device enrollments. Capacity commitments are considered in calculating compensation.
Eligible DSGS Providers (called load flexibility VPP aggregators):
Third-party load flexibility providers
POUs
CCAs
➱ See DSGS Guidelines, Chapter 6, Section A.
Eligible Load Flexibility VPP Resources:
Dispatchable devices located at residential (bundled or unbundled) customer sites, nonresidential (bundled or unbundled) customer sites, or both are eligible. The following weather-sensitive and non-weather-sensitive equipment types may participate.
Smart thermostats with runtime monitoring capability that control air conditioning units, including heat pumps, without load monitoring capability
Smart thermostats with load-monitoring capability controlling air conditioning units, including heat pumps
Heat pump water heaters and electric resistance water heaters
Electric vehicle supply equipment (EVSE)
Stationary BTM batteries
Residential smart electric panels.
VPP aggregators may propose other load flexibility resources for Option 4 participation, for CEC consideration and approval.
➱ See DSGS Guidelines, Chapter 6, Section A.
Load Flexibility VPP Aggregator Minimum Size Thresholds:
To participate as a DSGS Provider, an Option 4 load flexibility VPP aggregator must aggregate a total minimum load reduction per aggregation as follows:
100 kW for all aggregations other than EVSE
50 kW for EVSE
➱ See DSGS Guidelines, Chapter 6, Section A.
Eligible Customers:
POU customers
Customers of IOUs other than PG&E
CCA and ESP customers
Customers of tribal utilities
Customers of federal power marketing administrations
Water agencies
Customers are not eligible if the customer site is participating in a CAISO PDR or RDRR, or is registered in the CAISO Demand Response Registration System (DRRS).
➱ See DSGS Guidelines, Chapter 2, Section A.2, and Chapter 6, Section A.
There are additional requirements and obligations for Option 4 aggregators and participants, as described in the DSGS guidelines, Chapter 6, Section A.
Program Hours: 7 days per week, 4:00 pm to 10:00 pm.
➱ See DSGS Guidelines, Chapter 6, Section E.
Dispatch Rules:
Events occur on every day that the host balancing authority issues an EEA Watch or EEA event.
There is a maximum of 60 hours per season, with participation above that maximum voluntary to increase demonstrated capacity.
There is a cap of 3 events in any 7-day period.
There is a minimum of 1 event per program quarter (May–July and August–October). The CEC will initiate a test event in a quarter (3-month period) that has no EEA-triggered events.
During events, event hours are determined based on mean CAISO locational marginal prices. For more information on event hour selection, see the DSGS guidelines, Chapter 6, Section E.
➱ See DSGS Guidelines, Chapter 6, Section E.
Compensation Structure and Level:
Program payments are made to load flexibility VPP aggregators, which allocate the payments between themselves and customers according to the terms and conditions agreed between them.
In 2026, because of funding limitations, the CEC has set a maximum amount of committed capacity for Option 4. The total committed capacity is limited to 75 MW each month, or up 100 MW if additional funding becomes available through the 2026–27 budget process.
If the total committed capacity nominated by providers is greater than the applicable maximum above, the compensation will be determined based on an allocation methodology set out in DSGS guidelines Appendix A, Section C. If the total committed capacity nominated is less than the applicable minimum, then the method for determining compensation set out in guidelines Chapter 6 will apply, and any additional funding available after the first quarter (May–July) will be available for the second quarter (August–October), with the maximum total committed capacity for the second-quarter months increased commensurately.
A summary of the compensation structure is below. Refer to the DSGS guidelines for more complete information.
Payment is in terms of $/kW and is based on the performance of each aggregation relative to its committed capacity.
Capacity prices vary by month, with a season total of $60.58/kW.
The final payment is adjusted relative to the total compensation associated with the minimum capacity nomination based on performance of the VPP during program events.
Load flexibility VPP aggregators nominate per-device average load reduction for each month. The nomination for weather-sensitive resource aggregations should reflect the weather-normalized capability.
Energy-based payments are available for performance in events triggered above the cap of 3 events in 7 days.
➱ See DSGS Guidelines, Chapter 6, Sections C, D, and E, and Appendix A, Section C.
ADDITIONAL RESOURCES
Prior versions of DSGS guidelines: