A New Bill Would Help VPPs Replace Peaker Plants in California

Why It Matters

SB 913 could reshape California’s grid by replacing costly, polluting peaker plants with distributed clean resources, delivering sizable rate‑payer savings and advancing climate goals.

Key Takeaways

• SB 913 aims to let VPPs count toward resource adequacy
• Peaker plants cost Californians about $1 billion annually
• VPPs could supply >15% of peak demand by 2035
• Potential $550 million yearly savings for utility customers

Pulse Analysis

California’s electricity rates have surged as utilities continue to pay for idle gas‑fired peaker plants that run only during rare demand spikes. Those plants are funded through resource‑adequacy payments, forcing customers to shoulder roughly $1 billion each year for capacity that sits on standby. Virtual power plants—networks of home batteries, electric vehicles, smart thermostats and other distributed assets—offer a lower‑cost alternative by leveraging already‑installed equipment to provide the same reliability services.

Senate Bill 913, introduced by Sen. Josh Becker, seeks to level the playing field by directing the California Public Utilities Commission to create clear pathways for VPPs to count toward resource adequacy. The bill cleared the Senate Energy, Utilities and Communications Committee and now moves toward a full Senate vote, with the Assembly and utilities watching closely. While major utilities have not openly opposed the measure, they have historically resisted policies that could erode guaranteed returns on grid infrastructure, making the bill’s progress uncertain despite broad support from clean‑energy firms and consumer groups.

If enacted, SB 913 could enable VPPs to meet more than 15% of the state’s peak demand by 2035, translating into about $550 million in annual customer savings, according to a 2024 Brattle Group analysis. The Demand‑Side Grid Support program already demonstrated that 100,000 home batteries can deliver 476 MW—enough to replace a typical peaker plant—highlighting the practical viability of distributed resources. By integrating these assets into the resource‑adequacy framework, California could curb utility bills, reduce greenhouse‑gas emissions, and set a national precedent for modernizing the electric grid.