Should we get excited about California’s latest virtual power plant?

This is California Wire, a weekly newsletter from Jeff St. John on the state’s clean energy transition. Subscribe to get it every Wednesday via Substack.

Hi, everyone! Let’s pick up a theme from last week’s newsletter: how California has yet to take full advantage of rooftop solar, backup batteries, and other home devices to create virtual power plants (VPPs) that can help its stressed-out grid — even though it has more of those distributed energy resources than any other state.

Earlier this month, utility Pacific Gas & Electric launched its latest effort to improve on that poor record via an ambitious partnership with friendly neighborhood tech giant Google and pro-electrification nonprofit Rewiring America.

PG&E will recruit more than 20,000 customers with Sunrun or Tesla solar-charged batteries or Renew Home smart thermostats who are willing to let the utility control those resources to help the grid for an as-yet-unspecified reward. 

Google and Rewiring America, meanwhile, will work to get new smart devices into people’s homes, with discounts of $5,000 — or $10,000 for the first 25 customers — on Carrier’s new battery-equipped HVAC units.

Importantly, the costs of the program, dubbed Smart Home Assets for Reliability and Efficiency (SHARE), won’t fall on PG&E customers. Instead, Google has pledged to pay for all of it, starting with about $14 million for the first phase, according to Rewiring America.

That’s a big deal for the nonprofit, which has been pushing tech giants to finance VPPs to offset rising energy costs caused by data centers. It’s an approach that Google has taken a lead on in other parts of the country — so it would be logical to assume that Google is doing the same now with PG&E.

Here’s the weird thing, though: Both Google and PG&E insist SHARE has nothing to do with offsetting data center costs, even as both face increasing scrutiny over a 250-megawatt ​“cloud research and testing facility” that Google plans to build in San Jose. In fact, Google insists it’s not a ​“data center” at all, although neighbors aren’t convinced.

PG&E says SHARE is about ​“unlocking additional capacity on the regional electric transmission system.” So you’d think it might acknowledge that it could use this VPP to reduce costs that critics say are tied to Google’s 250-MW project. But maybe the utility would prefer to put those grid upgrades on its own books. That way, it can pass on the costs to customers and keep profiting from its grid-expansion investments.

My take

I don’t mean to sound cynical, but PG&E has a history of trotting out VPP pilot programs and then canceling them. It’s been enabled by the California Public Utilities Commission, which has failed to follow through on state mandates to make utilities do more with these customer-owned resources. That’s all while utilities in Massachusetts, Puerto Rico, Utah, and Vermont have steadily built VPP networks from far more modest starting points.

Jigar Shah, the clean energy investor, Biden-era Energy Department loan office czar, and VPP booster, is likewise skeptical, going so far as to say in a LinkedIn post that the SHARE program is ​“not a success story” but ​“an indictment.”

Shah explained to me that he’s not mad at Google, but rather at PG&E. ​“There are gigawatt-hours’ worth of behind-the-meter batteries in PG&E’s territory,” Shah said. But ​“none of those gigawatt-hours have a standard way to help their neighbors make the grid more efficient.”

To be fair, PG&E has been upping its efforts lately to test how home batteries, smart electrical panels, EV chargers, and smart meters can defer costly grid investments. ​“SHARE adds a complementary, near-term pathway” to that work, Trevor Udwin, PG&E’s VPP and grid optimization manager, told Canary Media in an email.

But there’s a big difference between launching another pilot project and building a VPP that actually takes concrete steps to ease grid costs. We’ll have to wait and see if the utility turns Google’s VPP money into something bigger and better than another one-off experiment.

What else I’m watching

California Gov. Gavin Newsom (D) has signed dozens of bills into law this week and last week. But as of this writing, he hasn’t yet touched the clean energy or utility affordability bills I covered in the first edition of California Wire.

Newsom did sign a slew of bills that take aim at data centers, however — including several measures to set new requirements on large-scale computing facilities like the one Google is planning in San Jose.

Senate Bill 886, from state Sen. Steve Padilla (D), and Assembly Bill 2383, from Assemblymember Rick Chavez Zbur (D), task the California Public Utilities Commission with imposing new cost-recovery rules on data centers of at least 25 MW served by the state’s three major utilities. Data centers will have to pay a ​“reasonable share” of the grid upgrades and additional generation needs that they trigger, as well as a proportional share of the public services like wildfire mitigation and environmental programs that make up a part of everyday utility bills.

PG&E and the trade group Data Center Coalition opposed these bills. But given the growing public backlash against data centers, most politicians wouldn’t dare take a stand against laws that aim to control their costs. And if data centers want to go above and beyond to make nice with their neighbors, SB 887, also from Padilla, offers them a set of grid and environmental stretch goals that can win them expedited review and permitting.

Not another battery fire

Like a recurring bad dream, the Moss Landing battery complex, which owner Vistra is in the midst of demolishing after a devastating 2025 fire, burst into flame once again, spurring shelter-in-place orders for the beleaguered nearby communities. Thankfully, as Canary Media’s Julian Spector has exhaustively explained, Moss Landing is obsolete in terms both of battery chemistry and site design — which means its propensity to catch fire isn’t a sound indicator of risk for the country’s rapidly growing grid battery fleet. 

By the numbers

Let’s close this newsletter where we started, with more virtual power plant news — in fact, the biggest VPP news yet. Earlier this month, Tesla and Sunrun broke last year’s record for the largest home-battery VPP dispatch in California history: 580 MW of peak power delivered from more than 110,000 home batteries. Unfortunately, one of the programs that has enrolled these batteries is set to be defunded next year — just in time for what’s expected to be among the hottest summers on record. This map pulled from Tesla’s VPP site shows the scale of grid resources the state might be losing out on as a result — unless California can figure out a way to keep these resources in play. 

Tesla’s map of California homes with Powerwall batteries available for VPP service

One more thing

I’m lucky to work from home, which means that I have as a constant companion my fierce guard dog. Behold Lily, the keeper of the front door.