\u201cOur sense has been a lot of the activity that happens in legislatures and with the governors and with elected officials doesn\u2019t always line up with where people are at in terms of what their thinking is and what their opinions are. We wanted to see if that\u2019s the case,\u201d Pal says.<\/p>\n
The results indicated strong voter support for using existing grid resources more efficiently as a way to manage electricity costs. \u201cFrom a technical standpoint, it\u2019s super interesting because I think the first way to bring down costs is to use more of your existing resources,\u201d Pal says.<\/p>\n
\u201cWe just wanted to see: \u2018Does everyone agree with us?\u2019 And the answer, overwhelmingly, is yes.\u201d<\/p>\n
Deploy Action\u2019s approach includes both improved grid utilisation and strategic load growth. Pal describes this as a \u201ctwo-part equation.\u201d<\/p>\n
\u201cPart one is we make sure the utilities change the way they plan, and that their priority is to maximise their asset utilisation to bring down costs. Then we couple that with increases in demand, meaning being able to connect electric vehicles (EVs), and certain data centres\u2014not necessarily all of them,\u201d Pal says.<\/p>\n
The strategy includes creating frameworks where large energy users like data centres could access power continuously except during the most expensive hours of the year, when they would rely on demand-side resources like battery energy storage systems (BESS) and demand response.<\/p>\n
\u201cWhat that would do is make infrastructure cheaper per person, and you\u2019re adding more people to the rate base, and then each person ends up paying less,\u201d Pal explains. \u201cBut you have to do both of those things. Additionally, virtual power plants (VPPs) are like a tool to achieve what we\u2019re trying to do.\u201d<\/p>\n
Current regulatory structure<\/p>\n
Pal identifies several barriers that currently prevent battery storage and other DERs from competing more effectively with traditional utility investments.<\/p>\n
The main issue, he said, is that utilities operate within a rate-basing structure that makes it straightforward to get approval for traditional infrastructure investments like new transmission lines, while DERs are typically categorised as \u201cprogrammes\u201d rather than investments.<\/p>\n
\u201cThese aren\u2019t really considered investments, these are more considered quote-unquote programmes, so they\u2019re not really incentivised, both structurally and financially, to pursue these opportunities, which is part of the reason why they get held up and they get stuck in sort of program land,\u201d he highlights.<\/p>\n
At the same time, utilities are increasingly interested in flexible resources that can be deployed quickly, particularly in areas expecting significant load growth. \u201cTheir whole thing is speed to power and load flexibility, and demand response and batteries are all speed-to-power plays, and you can bring on capacity, both distribution generation capacity, quickly,\u201d Pal says. \u201cYou can\u2019t do that when you build a new set of lines.\u201d<\/p>\n
Deploy Action\u2019s position is that utilities should pursue both traditional infrastructure and DERs. \u201cWe\u2019re saying do this fast stuff that\u2019s easier first. And I truly believe that there is no incentive structure in place for them to do that. And on the Public Utility Commission (PUC) side, there isn\u2019t a clean regulatory structure for them to procure those resources, and we\u2019re trying to fix that.\u201d<\/p>\n
Last month, ESN Premium spoke with Pat Wood III, co-chair at Pew Charitable Trusts, about the non-profit\u2019s DER Policy Playbook<\/a>, which covered some of the same pathways to incentivising DERs in the US, as Deploy Action notes.<\/p>\n To reduce barriers to entry, for example, Pew is calling for an automated permitting process for residential installations and to streamline interconnection procedures for commercial providers. These administrative improvements are aimed at reducing costs and delays that slow deployment.<\/p>\n For implementation, the report emphasised the need to aggregate DERs into VPPs. This would allow individual residential and commercial systems to be pooled together and managed as a single resource that can respond to grid needs.<\/p>\n Legislative efforts<\/p>\n Deploy Action is supporting several bills aimed at addressing these issues, including California\u2019s SB 1295.<\/p>\n SB 1295 would create a third-party procurement programme at the distribution level, allowing BESS to be deployed as an alternative to distribution line upgrades in certain situations. The bill would establish mechanisms for utilities to procure BESS from third parties while receiving compensation through shared savings models.<\/p>\n \u201cWe need to create a mechanism so they can actually select procuring those batteries from third parties over building another line,\u201d Pal says. \u201cWe\u2019re not going to fix it all with this one bill, but that\u2019s what we\u2019re starting to try to do here.\u201d<\/p>\n The legislation also addresses utility ownership of batteries at substations, where utilities control the land. \u201cMy whole thing is, if they can build those batteries for cheaper than building a new line, then we should let them build those batteries. Are they going to profit off it? Sure, but that\u2019s a different conversation\u2014figuring out what their rate of return should be, should we be changing that, should they be using more debt, etc.,\u201d Pal notes.<\/p>\n Shortly after Pal\u2019s conversation with ESN, SB 1295 passed the California Senate, along with SB 905, a bill holding utilities accountable for making the grid \u201csmarter and more efficient\u201d.<\/p>\n Of course, implementation is only part of the battle. Further issues can arise afterward. For instance, California\u2019s Demand Side Grid Support (DSGS) distributed storage programme helped lower the net load on the state\u2019s grid during a 29 July 2025 test.<\/p>\n DSGS was introduced in 2022 by the California Energy Commission (CEC). It compensates customers for discharging stored energy from residential and commercial BESS during peak demand or grid stress.<\/p>\n In 2025, the DSGS programme faced cuts to its budget that would significantly reduce its operating time<\/a>.<\/p>\n California Governor Gavin Newsom then proposed using funds from a different expiring programme to keep DSGS operating until the end of 2026. Participants will be shifted to the California PUC\u2019s Emergency Load Reduction Programme (ELRP)<\/a>, \u201ca 5-year pilot programme designed to pay electricity consumers for reducing energy consumption or increasing electricity supply during periods of electrical grid emergencies\u201d<\/p>\n Deploy Action opposes the move, arguing that the programme has been effective at the California Energy Commission (CEC), and that transferring it would create unnecessary delays.<\/p>\n \u201cDSGS is not meant to be a permanent solution. It\u2019s an inelegant but effective way of being able to pull these demand-side resources in situations where otherwise there might be blackouts. We need a bridge for the next two to three years, and this program has worked really well at the CEC. Why would we change something that\u2019s working really well?,\u201d Pal asks.<\/p>\n Pal also notes concerns about implementation timelines at the PUC. \u201cThe PUC, for all of its strengths, speed is not one of them,\u201d he says. \u201cSo, our whole thing is let\u2019s keep it here for two or three years, and then let\u2019s develop the appropriate marketplace so these resources can be used most cost-efficiently.\u201d<\/p>\n Comparisons to other states<\/p>\n