Is Your Home the New Power Plant?
California’s experiment in paying customers to feed the grid could reshape how we think about energy bills.
When the Biden administration rolled out tax credits for rooftop solar and home batteries, thousands of households jumped at the chance to invest in clean energy. Those upfront incentives may have shifted under new policies, but in California, early adopters — and new participants — are finding another way to cash in. Through a state program that pays residents to feed stored energy back into the grid, homes are no longer just consuming power; they’re earning from it. And the model could be one the rest of the nation follows.
The Demand Side Grid Support program, or DSGS, is California’s experiment in turning homes into part of the state’s power supply. Launched in 2023 by the California Energy Commission, the program pays customers who agree to let their home batteries — or eventually their electric vehicles — send electricity back to the grid during peak demand.
Participation is simple enough: through a mobile app, households can join what’s known as a “virtual power plant” — a network of small, connected energy resources that together behave like a full-scale power station. For residents, it means compensation for sharing energy they’ve already stored. For the grid, it means a cheaper, cleaner, and more resilient way to keep the lights on.
The Payoff and the Pushback
In just two years, the results are hard to ignore.
In a July 2025 test, more than 100,000 households discharged 539 megawatts of stored electricity into California’s grid — about the same as firing up a large natural gas plant, but without burning a single molecule of fuel.
A new analysis from the Brattle Group estimates that, if sustained, the program could save between $28 million and $206 million for ratepayers by 2028. And with 1.8 gigawatts of residential battery capacity already installed statewide, the untapped potential is enormous.
But the program’s future is far from secure. In June, Gov. Gavin Newsom approved a state budget that cut $18 million from DSGS rather than expanding it — a move advocates warn could leave the program out of money by the end of the year. A coalition of clean energy groups, from Sunrun and Tesla to the California Solar & Storage Association, is pressing lawmakers to restore at least $75 million in multi-year funding to keep the effort alive and give private investors confidence it won’t disappear overnight.
A Look Forward
California has long been a testing ground for energy ideas that later shape the nation — from rooftop solar incentives to electric vehicle adoption. If the Demand Side Grid Support program holds steady and scales as designed, it could serve as the first real case study of how virtual power plants work at utility scale.
The lessons are clear: households can be reliable partners in stabilizing the grid, and the economics make sense.
Nationwide, that could mean billions in avoided system costs, fewer blackouts during extreme weather, and a shift in how we see our energy bills. Instead of a one-way expense, energy could become a two-way transaction — where consumers aren’t just paying for power, they’re getting paid for it. What California is proving in real time could become a blueprint for the next era of the American grid.