Unlocking California’s Clean Energy Future with Demand Flexibility

On May 22, 2025, the California Energy Commission (CEC), in collaboration with UC Davis and Lawrence Berkeley National Laboratory (LBNL), hosted the 2025 California Demand Flexibility Summit in Davis, CA. The event gathered policymakers, regulators, researchers, technology leaders, and advocates to explore how demand flexibility can play a pivotal role in meeting California’s ambitious clean energy goals. Demand flexibility is the ability to shift or reduce electricity use to times when energy is cleaner, more affordable, and more readily available, rather than during high-demand, high-cost periods. 

Representing Clean Energy Works, Lidiya Kassahun, Senior Associate of Transportation Decarbonization, joined stakeholders from across the country to discuss how California can achieve 7,000 megawatts (MW) of demand flexibility by 2030.

Why is California Focusing on Demand Flexibility?

California has outlined three major decarbonization strategies to address the growing demand on electricity, including:

• Transportation Electrification: Expanding electric vehicle (EV) adoption, deploying widespread charging infrastructure, and integrating EVs with the electric grid.

• Building Electrification: Transitioning to all-electric buildings, retrofitting existing structures, and implementing energy efficiency upgrades.

• Industrial Decarbonization: Electrifying low-temperature industrial processes, using green hydrogen for high-temperature applications, and advancing carbon capture and storage technologies.

Without strategic interventions, California’s major utilities may require up to $26 billion in grid upgrades by 2035. Demand flexibility offers a key solution to ensure grid reliability, accelerate decarbonization, and lower costs for both utilities and customers. It can drive value in three main areas:

• Capacity: Shifts or limits peak load to reduce peak demand charges and create bill savings, while deferring generation, transmission, and distribution upgrades for utilities.
• Energy: Moves energy from high to low cost hours, lowering bills for customers while avoiding the dispatch of high marginal cost resources by utilities. 
• Renewable Integration: Aligns load with renewable production patterns, increasing the value of renewables and reducing the need to export at low compensation, while reducing curtailment and supporting decarbonization.

Leveraging Technology to Achieve California’s Load Shift Goal

California’s Load Shift Goal (LSG) to shift 7,000 MW of load is the first formally adopted demand flexibility procurement target. Achieving this will require full participation and support from regulators, utilities, and third-party providers. Some demand response resources offer additional potential that has yet to be fully realized, such as:

• Modified Proxy Demand Resource (mPDR): This concept offers a promising approach by enabling virtual metering and aggregation of load behind a single meter. The Energy Division initiated a proposal to make more behind-the-meter (BTM) energy storage available for export to help maintain grid reliability.
• Data Level Measurement: To improve the reliability and timeliness of customer data access for third-party DER providers, measuring the performance at the device level can result in more accurate performance measurement, avoid reliance on utility data authorization and access process, and enable simulation participation in multiple DER programs.
• AI Agent: The use of AI has the potential to make significant improvements in load optimization relative to system needs, better aligning energy use with grid needs.

Demand Flexibility Program Design Best Practices for Utilities & Community Choice Aggregators

Effective program design is key to encouraging customer participation. Programs should be designed centrally around the customer, be simple to understand, and require updates to policies and regulations to maintain relevance. They should also be based on real DER capabilities but be technology inclusive, while establishing a single, clear operator across aggregators and DER types to streamline participation.

Pricing is central to transforming electricity technology, implementing it as a way to lower bills. Accurate and responsive dynamic rates should be explored to incentivize meaningful load shifts across large customer segments. Panelists pointed to California’s success with Time-of-Use (TOU) rates, which have already led to significant load shifting without adding costs to ratepayers, as a strong example of what’s possible. 

Utilities should focus on scale as a primary goal when engaging customers. To ensure feasibility of scaling programs, utilities should review existing policies on DERs, customer choice, data access, and baseline methodologies to identify opportunities for improvement. They should also benchmark against leading markets, and analyze DER adoption trends and participation in grid service programs to identify best practices and potential gaps in California’s current approach. For example, leveraging California’s high rates of EV and DER adoption can add capacity for grid services.

 

Ultimately, scaling demand flexibility will help California avoid costs, support decarbonization goals, and empower customers to actively participate in the clean energy transition. The summit made clear that with the right mix of policy, technology, and customer-centered design, California can lead the way in making demand flexibility a core part of its clean energy future.

If you’re passionate about demand flexibility and demand response, let’s connect and continue the conversation! Send us a message at info@cleanenergyworks.org.