Demand Side Grid Support (DSGS)

Join us to help prevent power outages this summer!

The California Energy Commission (CEC) Demand Side Grid Support (DSGS) Program is part of California’s Strategic Reliability Reserve, a suite of programs to alleviate tight energy supplies on the grid caused by heatwaves, wildfires, and other ongoing impacts of climate change. DSGS offers incentives to electric customers that provide load reduction and backup generation to support the state’s electrical grid during extreme events from May to October, reducing the risk of rotating power outages. The DSGS Program is open to eligible DSGS providers and participants and has four participation options to choose from. Participation Option 1 is suspended for the 2026 program year due to budget constraints. For Option 3, due to budget constraints, participation in the 2026 program season is limited to storage VPP aggregations that participated in October 2025, except for VPP aggregators of bi-directional EVSEs.

How DSGS Works

Enrollment

DSGS providers (retail suppliers, Federal Power Marketing Administrations, and aggregators) register with the California Energy Commission (CEC)
Customers enroll with DSGS providers (or directly with the CEC in limited circumstances) to participate
DSGS providers report participation to the CEC

Participation

Participants participate through one of the following Participation Options:

Payment

DSGS providers submit claims to CEC for incentives
CEC validates claims and pays DSGS providers incentives
DSGS providers pay incentives to their participants

Eligibility Requirements

DSGS Provider

Providers are entities that manage groups of participants in the DSGS Program. Eligible DSGS providers include:

A retail supplier as defined in Public Utilities Code (PUC) Section 398.2
A Federal Power Marketing Administration (FPMA)
An aggregator of customers

Additional DSGS Provider eligibility requirements apply for Participation Options 2, 3, and 4. For more information about DSGS provider responsibilities and additional requirements, reference the FAQ or the Program Guidelines.

DSGS Participant

Participation Option 1 is suspended for the 2026 program year due to budget constraints.

Participants are customers enrolled in DSGS through a provider, or in limited circumstances, directly with the CEC. Eligible DSGS participants include:

A customer of a Publicly Owned Utility (POU) or a FPMA
A customer of a tribal utility
A customer of a Community Choice Aggregator (CCA), energy service provider, or electrical corporation AND
- Participating with backup generator(s), or
- Participating through Participation Option 2 or Option 3, or Option 4
- A water agency, which includes water utilities, wastewater facilities, and irrigation districts.

Additionally, participants are not eligible to enroll in DSGS and receive compensation for incremental performance* (also referred to as “demonstrated capacity”, as defined in the guidelines for DSGS participation option 3 & 4, and “incremental demonstrated capacity”, as defined in the guidelines for DSGS participation option 2) attributed to the participant’s load-reduction resource enrolled in DSGS, if their load reduction resource:

Is also enrolled in the Emergency Load Reduction Program, the Base Interruptible Program, or the Agricultural Pump Interruptible Program
Receives compensation including for the same incremental performance through any other utility, CCA, LSE, or state program designed to procure demand response, net load reduction, or grid services during an interval that coincides or overlaps with the DSGS event interval, except the utility, CCA, or LSE rate plan applicable to the load reduction resource.
A cogeneration facility with a power purchase agreement**

Refer to the FAQ or the Program Guidelines for additional eligibility requirements that apply to each Participation Option. DSGS providers may include additional eligibility requirements for their participants.

Participants can enroll in DSGS through a Provider in any eligible option. Alternatively, non-residential participants can enroll directly with the CEC, but only under Participation Option 1 and only if enrollment through the participant’s load serving entity (LSE) is not possible, such as if the LSE is not enrolled as a DSGS provider or is not offering DSGS Program participation for that type of customer or load reduction resource.

*Performance could be achieved through reduction in electricity consumption or increase in energy export, as applicable

**If a participant has a power purchase agreement for a renewable generator at the same site as a cogeneration facility, but not one for the cogeneration facility, this does not make the participant ineligible to participate.

Participation Options

The DSGS Program has four participation options. DSGS providers may limit which participation options are available to their participants. Participants may select a different participation option and a different provider for each of their load reduction resources located at the same site provided each load-reduction resource has dedicated or distinctly identifiable metering. A load reduction resource cannot be enrolled in more than one participation option. All load reductions that would not have occurred in the absence of the DSGS Program, including those that result in negative load at the meter (that is, exports), are eligible for compensation.

Option 1. Emergency Dispatch
Participation Option 1 is suspended for the 2026 program year due to budget constraints.
Resources enrolled Participation Option 1 are dispatched to reduce electric load in response to Energy Emergency Alert (EEA) Watch, EEA-1, EEA-2, or EEA-3 notices issued by a California balancing authority. Participants enrolled in Participation Option 1 are eligible to receive the following payments:
Energy Payment: Participants will earn an incentive of $2 for each kilowatt-hour (kWh) of verified incremental load reduction relative to their resource’s typical energy usage during DSGS dispatch events.
Standby Payment: Participants using combustion resources that provide a standby commitment identifying their available combustion capacity, subsequent to a standby event notice and prior to the start of the event hour, are eligible for a standby payment of $0.25 per kWh. For more information about how the Standby Payment is calculated, reference the FAQ or the Program Guidelines.
Reimbursement for Increased Customer Demand Charges: Participants can also be reimbursed for incremental increases in customer demand charges that result from participation in the program and are incurred during the billing period in which a DSGS Program event occurred, if any.

Option 2. Market-Integrated Demand Response Incremental Capacity Pilot

Participation Option 2 is available for DSGS providers or their authorized third party acting as demand response (DR) providers. Third-party DR aggregators and POUs are eligible to serve as DR providers. DR providers must be operating within the California ISO balancing authority area and must have at least one proxy demand resource (PDR) registered to participate under the incremental market-integrated DR capacity pathway.
DR providers administering Option 2 receive performance-based capacity payments based on a PDR’s demonstrated capacity in excess of its resource adequacy capacity commitments, if applicable. For example, if a DR provider has a PDR portfolio RA capacity commitment of 10 MW and demonstrates capacity of 12 MW, the incremental demonstrated capacity is 2 MW. Incremental demonstrated capacity is calculated based on resource availability and performance during a defined availability window. The DSGS incremental DR capacity prices vary by month and day-type selection, ranging from $7,200 to $19,200. Reference the FAQ or the Program Guidelines for the monthly prices. DR providers shall allocate the performance-based capacity payments between the DR provider and its participants pursuant to the terms and conditions agreed upon by the DR provider and participant.
Bonus Payment: DR providers will be awarded an additional 30 percent bonus applied to capacity incentives for program year 2026. Additional bonuses in future years may be provided at CEC discretion.

Option 3. Market-Aware Storage Virtual Power Plant Pilot

For Option 3, due to budget constraints, participation in the 2026 program season is limited to storage VPP aggregations that participated in October 2025, except for VPP aggregations of bi-directional EVSEs.
Participation Option 3 is available for DSGS providers, or their authorized third party, acting as storage VPP aggregators. Third-party battery providers, including third-party vehicle-to-load or grid (V2X) service providers, POUs, and CCAs are eligible to serve as storage VPP aggregators.
VPP aggregators administering Option 3 can be dispatched between 4 to 9 PM, seven days a week based on California ISO day-ahead locational marginal prices (LMP) for the default load aggregation point (DLAP), or the Path 15 zone of the host UDC if a DLAP is not available. Aggregators receive performance-based capacity payments based on demonstrated capacity of an aggregated VPP. Different levels of capacity prices are available for VPPs of varying durations (i.e., 2, 3, or 4 hours). Aggregators are eligible for a payment for demonstrated capacity at the varying monthly rates based on the capacity (kW) and duration (hours) demonstrated by the aggregator in each month. Reference the FAQ or the Program Guidelines for the monthly prices. VPP aggregators shall allocate incentive payments between the VPP aggregator and its participants pursuant to the terms and conditions agreed to between the VPP aggregator and participant.
Bonus Payment: VPP aggregators will be awarded an additional 30 percent bonus applied to capacity incentives for program year 2026. Additional bonuses in future years may be provided at CEC discretion.

Option 4. Emergency Load Flexibility Virtual Power Plant Pilot

Participation Option 4 is available for DSGS providers, or their authorized third party, acting as load flexibility virtual power plant VPP aggregators. Third-party load flexibility providers, POUs, and CCAs, are eligible to serve as load flexibility VPP aggregators.
LoLoad flexibility VPP aggregators administering Option 4 can be dispatched between 4 p.m. and 10 p.m., seven days a week in response to Energy Emergency Alert (EEA) Watch, EEA-1, EEA-2, or EEA-3 notices issued by a California balancing authority. Load flexibility capacity payments will be made to load flexibility VPP aggregators based on the performance of each aggregation relative to its monthly committed capacity nomination. Reference the FAQ or the Program Guidelines for monthly prices. Load flexibility VPP aggregators shall allocate incentive payments between the aggregator and its participants pursuant to the terms and conditions agreed to between the aggregator and participant.

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Have questions?

FAQ

The DSGS Program Guidelines, Fifth Edition are now available.