California late last month followed Virginia in passing laws aimed at getting utilities to maximize their existing grids before building new poles, wires, and power plants.
In the push for grid utilization, it was evidence of traction. Like Virginia, California’s goal is to limit rising utility spending, which customers ultimately pay for on their monthly bills and has fueled outrage across the country. They also show how clean energy advocates are using the affordability push to get policy passed that boosts distributed energy and a more flexible grid.
Both California and Virginia directed utilities to measure and publicly report how their grids are being used as a first step toward identifying where solutions like battery storage and load flexibility could be deployed — instead of more costly infrastructure projects. California also gave a boost to DERs and virtual power plants by opening them up to a new way to get paid for their grid services.
California’s grid utilization approach (SB905) is less prescriptive than Virginia’s, leaving it up to state energy regulators to decide how to hold utilities accountable with no firm deadline. The state’s Public Utilities Commission has until January 2028 to start developing performance metrics, and isn’t required to enforce them. By contrast, Virginia utilities have to propose grid utilization metrics that will then be folded into state regulators’ reviews of their capital spending plans; the deadline is today.
Brandon Garcia, California director at Advanced Energy United, told Latitude Media that there is the risk that CPUC and utilities drag their feet, but he expects state lawmakers to keep the pressure on. “I’m speaking as a former staffer,” he said. “People call offices to ask why their energy bills are so high and what’s being done about it.”
Fred Han, a spokesman for Pacific Gas and Electric, said in an email that utilization metrics can be a useful tool for transparency and analysis, but can’t be viewed in isolation. Grid planning also must consider reliability, load growth, and wildfire and resiliency needs. The next step is for regulators to determine how a new utilization framework will be applied.
The push for DERs and data center flexibility
Beyond grid utilization, another California law (SB913) is expected to open up a major revenue stream for battery storage developers and VPP aggregators by creating a pathway for them to qualify for the state’s Resource Adequacy market. That program ensures the grid has enough power at all times, even during extreme weather or unexpected outages — and the change is expected to make DERs more competitive with peaker gas plants.
There isn’t an equivalent state-level pathway in Virginia, however, where VPPs are deployed either through monopoly utilities’ own programs or PJM’s wholesale capacity market. That said, earlier this year the state’s lawmakers raised storage targets for utilities: Dominion Energy must petition for 4 GW of short-duration storage by 2030 and 16 GW by 2045, and procure or construct 4 GW of long-duration storage by 2045. APCo must petition for 780 MW of short-duration storage by 2040 and procure or construct 520 MW of long-duration storage by 2045.
But there is one area where California fell short, according to Arnab Pal, executive director of Deploy Action, a group that advocates for clean energy as an affordability solution and worked on the laws passed in both states.
California didn’t force data centers to be flexible either by curtailing energy use or switching to on-site power — a policy Virginia plans to implement. The state’s two major utilities have until January 2027 to submit programs to regulators.
To be sure, Virginia — the world’s largest data center market — is seeing more explosive demand from the industry than California, where transportation is driving more load growth. But both sectors are ripe for more flexibility, Pal said, and California still ranks third (behind Virginia and Texas) for total data centers, many near Silicon Valley.
“You need a large load tariff that requires data centers to first consider flexibility before asking for new generation or transmission upgrades,” Pal told Latitude Media. “Ultimately, you might have to build new infrastructure — which we support — but let’s look at efficiency first.”
“When it comes to the new load coming online in California, that isn’t the principle just yet,” he added.
A template for affordability?
Whether grid utilization and DER policies help drive down costs won’t be clear for years to come. But on that front, California’s law may do more for ratepayers than Virginia’s, according to Oliver Kerr, managing director, North America at Aurora Energy Research.
That’s because California also tried to rein in utilities’ guaranteed profits by directing the CPUC to consider lower returns on certain capital spending, such as undergrounding distribution lines, as well as to evaluate cheaper ways to finance utilities’ infrastructure projects than shareholder equity. That might include state-backed bonds or federal loans.
(Virginia Gov. Spanberger wants to target utility profits, too. She outlined her policy proposals earlier this month, but state lawmakers haven’t taken them up yet.)
Han, the PG&E spokesperson, said that the utility is concerned those provisions will increase financing uncertainty by directing the CPUC to consider “prescriptive approaches to grid investments.” That could undermine the investments and load growth needed to improve affordability and support California’s clean energy future, he added.
That said, utilities have less political heft than even a year or two ago amid rising rates. And that gives advocates an opening.
“There’s an electricity affordability crisis in California and other states, and we’re spending a lot of money on infrastructure investments,” Garcia said. “So how do we wield this political and energy environment we’re in to find ways to make it less expensive? One of our pitches is: Let’s get more out of the grid we currently have.”
