California’s May Budget Still Proposing to End the Nation’s Largest Virtual Power Plant Program

The Governor’s May revision excludes critical funding for the Demand Side Grid Support (DSGS) program and transportation electrification funding at a time of rising demand and affordability concerns

SACRAMENTO, CA—At a moment when California should be using every tool available to keep energy affordable and the grid reliable, the May budget revision maintains the proposal to end the Demand Side Grid Support (DSGS) program, sending a clear signal that the state is failing to prioritize affordable, reliable, and clean energy leadership.

This represents a significant setback for the state’s clean energy leadership and raises serious questions about the state’s commitment to delivering a modern, flexible, and affordable energy system. DSGS has proven its value as a fast, scalable resource that reduces peak load, supports the grid during heat waves and other grid emergencies, and lowers energy costs for all consumers during times of extreme demand.

“While we appreciate the funding proposed for 2026, we have serious concerns about transferring the program to the CPUC due to the higher administration costs and lower enrollment capacity,” said Brandon Garcia, California Director at Advanced Energy United. “This program is one of the most cost-effective tools California has to reduce peak demand, has proven to be scalable, and keeps the lights on during grid emergencies.”

At the same time, the proposal continues critical investments in the zero-emission vehicle sector, which is essential for California to clean up its air, advance ambitious policy goals, and offer consumers a pathway to reduce vehicle fuel costs.

Advanced Energy United hopes to work with the legislature and the Governor’s office to ensure funding in the final budget and stability for the program in 2027-28.