California has quietly built one of the largest examples of a new type of energy resource: a virtual power plant made up of thousands of customer-owned batteries. Instead of relying exclusively on traditional power plants when electricity demand surges, the system allows stored energy from homes and businesses to be coordinated and sent back to the grid when additional power is needed.
The effort is part of California’s Demand Side Grid Support program, which compensates participating customers for reducing electricity demand or supplying stored power during periods of grid stress. By connecting distributed batteries and other flexible energy resources, the program can effectively turn thousands of individual properties into a single large-scale grid resource.
The concept could become increasingly important as electricity demand grows. Artificial intelligence, data centers, electric vehicles, building electrification, and extreme temperatures are all placing additional pressure on the power system. Traditionally, utilities have prepared for periods of peak demand by building enough generation and infrastructure to handle the highest-demand hours of the year, even though some of that capacity may remain underused during normal conditions.
Virtual power plants offer another approach. Rather than immediately constructing additional generation to meet every increase in peak demand, utilities can use electricity that has already been generated and stored throughout the grid. Coordinating residential and commercial batteries can provide additional capacity during critical periods while potentially reducing the need for expensive infrastructure that may only be required for a limited number of hours each year.
California’s experience also demonstrates how distributed energy resources are beginning to change the relationship between customers and the electric grid. Homes and businesses equipped with batteries are no longer simply electricity consumers. When properly coordinated, they can become active energy resources capable of supporting reliability and helping manage periods of high demand.
Despite its potential, the future of California’s program remains uncertain as policymakers consider whether to continue funding it. That debate could have implications beyond California. As utilities across the country prepare for significant load growth, virtual power plants may become an increasingly important tool for balancing affordability, reliability, and the need for new grid investment.
The larger question is no longer whether batteries can help support the electric grid. California has already demonstrated that distributed resources can operate together at significant scale. The question now is how aggressively utilities and policymakers will incorporate these resources into the energy system of the future.
