California could reduce electricity costs and strengthen grid reliability by making better use of electric vehicles, home batteries, smart buildings and other customer-owned energy resources, according to a new report from GridLab, Kevala and E3.
The report, Unlocking California’s Flexible Load: A Durable Blueprint for Affordability and Reliability, sets out policy recommendations for modernising demand flexibility programmes as the state faces rising electricity costs, electrification and growing pressure on the grid.
Flexible load refers to electricity demand that can be shifted, reduced or coordinated to better match grid conditions. This can include managed EV charging, vehicle-to-grid services, smart thermostats, batteries, water heating, commercial buildings and other distributed energy resources.
Flexible load could become a major grid resource
The report argues that California already has a growing base of controllable energy resources in homes, businesses and vehicles, but current programmes are fragmented and vary across utilities. That creates a more complex customer experience and limits participation.
“The next generation of grid infrastructure is already sitting in our driveways, homes, and businesses,” said Ric O’Connell, Executive Director of GridLab. “The question isn’t whether California has the resources, it’s whether our programmes are designed to unlock their full value.”
The report says standardised programme frameworks, consistent market signals and incentives based on verified grid performance could help California scale flexible load more efficiently.
It builds on a 2024 GridLab and Brattle Group study, which found that virtual power plants could save California utilities and consumers $550 million a year while meeting more than 15% of the state’s peak electricity demand by using commercially available technologies.
EVs could provide long-duration storage
Electric vehicles are a central part of the opportunity identified in the new report. It estimates that enrolling just 10% of California’s projected EVs in vehicle-to-grid programmes by 2036 could provide approximately 9GW of 12-hour storage.
The report says this would represent more than one-third of California’s 2036 long-duration storage procurement target, if those resources were properly accredited and operated in ways comparable to grid-scale storage.
“Customers are investing in electric vehicles, batteries and smart technologies at an unprecedented pace,” said Ben Finkelor, Executive Director of the UC Davis Energy and Efficiency Institute. “Making it easier for those resources to participate in demand flexibility programmes will help customers realise more value from those investments while supporting a cleaner, more reliable electric grid.”
Report calls for standardised programmes
The report recommends a series of reforms to California’s demand flexibility programmes, including standardised programme design, performance-based incentives, wider participation from EVs and batteries, improved interoperability and better market coordination.
It also warns that incentives should be tied to measurable grid value rather than simple enrolment, so that flexible load reduces costs for all ratepayers rather than shifting costs between customer groups.
“Affordability is central to the report’s recommendations,” said Eric Cutter, Partner at E3. “The next generation of demand flexibility programmes must reward participating customers for the measurable value they deliver to the grid and not increase bills for others.”
Ed Randolph, former Director of the Energy Division at the California Public Utilities Commission and now with Caliber Strategies, said scaling demand flexibility is less about creating new programmes and more about making existing programmes work better together.
“Customers shouldn’t have to navigate different rules depending on where they live,” Randolph said. “Standardising programme design and rewarding verified performance will help California scale demand flexibility more efficiently while improving affordability and reliability.”
Demand flexibility and clean energy affordability
As California electrifies transport, buildings and industry, the report says demand flexibility could become a foundational grid resource alongside renewable generation and energy storage.
The full report, Unlocking California’s Flexible Load: A Durable Blueprint for Affordability and Reliability, is available via E3.
FAQs
What is flexible load?
Flexible load is electricity demand that can be shifted, reduced or coordinated to support the grid. Examples include managed EV charging, home batteries, smart buildings and grid-interactive appliances.
How could flexible load lower electricity costs?
Flexible load can reduce demand during expensive or constrained grid periods, helping avoid some infrastructure and generation costs while improving the use of existing assets.
What is vehicle-to-grid technology?
Vehicle-to-grid technology allows electric vehicles to send power back to the grid or a building, turning parked EVs into distributed energy storage resources.
What did the report find about EVs in California?
The report found that enrolling 10% of California’s projected EVs in vehicle-to-grid programmes by 2036 could provide approximately 9GW of 12-hour storage.
Who produced the report?
The report was produced by GridLab, Kevala and E3, informed by roundtable discussions facilitated by the Energy and Efficiency Institute at the University of California, Davis.
