If you already have a battery, there are so many opportunities to make revenue that you haven’t thought of.
Several different institutions will pay a commercial battery to help the grid. But, how to get paid is messy at the moment. Here is what each program in CA is, why it exists, and which ones are ready to start generating revenue today.
We’ve talked a bit about Virtual Power Plants (VPPs) in the past, and I’m sure you have begun to see it in the market more, especially with Tesla talking a lot about it. But, a more important distinction is understanding HOW a battery is actually used. Most of the conversations are centered around the savings that can be generated from the battery as it relates to your utility bill. This is known as behind-the-meter (BTM) savings. Even with this approach, we usually see batteries as a really good option for stabilizing energy costs. This is especially true with the new demand for energy and the ever-increasing costs from the utilities that are being passed to the end user.
But what is not talked about as often is your front-of-the-meter (FTM) revenue that can be generated, simply from doing what you already do with your battery. In a lot of cases, you don’t use a lot of your battery to keep the energy flowing in the off hours of business. But, that is exactly the hours when the grid needs that energy the most. The best part, they are willing to pay significant money for that energy. Most of these situations are considered emergencies. But, they can also be when the utility doesn’t want to spend the money, or the time, to turn on a gas turbine peaker plant to meet electricity demand. If there is available energy, it is much easier to pay for energy that is already stored rather than generate and distribute more energy.
Now, this industry is FULL of acronyms. We might be able to solve the energy problem if we had a megawatt for every acronym across the industry. All of these programs that are available are definitely acronyms and fairly complex. But, in order to make it more digestible, this is a distilled version that hopefully explains it much more clearly.
There are three levels of organizations that support this front-of-the-meter (FTM) effort:
The most recognizable one is the utility. These programs are fairly easy to enroll in because it is the one closest to where your energy is generated and stored. Enrollment in these programs go through the utility or the approved aggregator, and you see the revenue on or alongside your utility bill.
The state is the next one, through the California Energy Commission (CEC). They are essentially the backstop for the state that can coordinate energy management across utilities when things get a bit dicey. This is the Demand Side Grid Support (DSGS) program that is funded by the state and their rates are published every year. It pays you just for knowing that you have the capacity if it is ever needed.
The last is the grid operator (CAISO) and they run the wholesale market that power plants actually sell into. Traditionally, these have only been for bigger power plants but, with VPPs becoming a bigger part of the conversation, it now includes those with batteries. While this market has been around for quite some time, the VPP side is fairly new so it is still getting established. However, this is the one that offers the biggest opportunity and also gives access to revenue that was only realized by massive power providers.
The utility programs
Peak Day PricingA rate rather than a program. On somewhere between nine and fifteen event days a year, electricity in the late afternoon carries a large surcharge, and in exchange your summer demand charges are lower all season. A battery that discharges through those windows keeps the discount and avoids the surcharge. Simple to run, and it requires bundled utility service, so community choice and direct access customers are not eligible.
Base Interruptible ProgramYou commit to dropping to a firm level of load when called, and you are paid a published monthly amount per kilowatt for being available whether or not you are ever called. Reliable income, strict terms: response is required in 15 or 30 minutes, calls can run up to six hours, and falling short of your commitment carries a penalty rate on the shortfall.
Capacity Bidding ProgramYou offer a monthly amount of load reduction, usually through an aggregator, and get paid a published capacity price for the months you offer plus a settlement on the energy you actually deliver. The one to four hour product lines up naturally with how a four-hour battery behaves, which makes this the most common comfortable fit. Open to bundled, community choice and direct access customers alike.
CEC programs
Reliability Demand Response ResourceThe wholesale-side wrapper that lets reliability programs be dispatched under real grid emergency conditions and bid day-ahead. Worth understanding because it explains something confusing: for most sites the money arrives through the underlying retail program, typically BIP, rather than as a separate second payment. One economic stream wearing two names.
Demand Side Grid Support, Option 2The state backstop, paid per kilowatt of demonstrated capacity for the season, with a bonus layered on for 2026. Bids or self-schedules have to cover at least three consecutive hours. The important eligibility rule is that only capacity beyond what you have already promised elsewhere counts, so a battery fully committed to another obligation has nothing left to enroll.
Demand Side Grid Support, Option 3The storage-specific route into the same state program, built for batteries aggregated as a virtual power plant. Published nominal rate per kilowatt for the season, with what you actually receive depending on demonstrated capacity and event response. Access in 2026 is the tightest gate on this page: stationary storage generally needed permission to operate in hand by December 31, 2025 and an eligible aggregator to enroll through.
CAISO programs
Emergency Load Reduction ProgramA published emergency rate of $2 per kilowatt-hour for non-residential load reduction during grid emergencies, May through October. Genuinely attractive per unit, genuinely hard to plan around: the events are unpredictable, capped in total hours, and where you are allowed to be in this and another program at once you are only paid for reduction beyond what the other program already obliged you to deliver.
Rule 24 Proxy Demand ResourceThe front door to the wholesale market. Your battery gets registered as a CAISO resource through a scheduling coordinator and sells capacity and energy the way a power plant does. It needs Rule 24 authorization, registration in the grid operator’s system, live telemetry, interval metering and bid compliance. Real and in use today, mostly by portfolios rather than by single buildings.
Proxy Demand Resource, Load Shift ResourceThe newer two-sided version, where the battery is paid for shifting load as well as shedding it, registered as a linked pair of resources so charging and discharging are both visible to the market. The highest ceiling on this page and the newest, which is why it is here: telemetry, state-of-charge control and settlement are all materially more demanding, and the framework for compensating customer-sited batteries that export is still in front of the regulator.
You can’t stack ALL of them, but you can definitely stack quite a few
Some of these programs offer more revenue than others and, usually, batteries are enrolled in more than one of these programs. It seems enticing to go after all of them, but there are some exclusions that prevent it. The positive part, any of these, or multiple, are adding MORE revenue than just the savings provided by a behind-the-meter (BTM) setup on your battery. So, thinking of a battery as more of an asset rather than just a savings tool can drastically change any approach to energy.
In many cases, batteries are sized to the usage of energy of a building. But, with a BTM and FTM approach, more batteries can mean more revenue. There is a law of diminishing returns at a certain point but more (or bigger) batteries could have a decent advantage. A lot of these programs also require a few things like certain battery output requirements, the inverter being able to import/export, telemetry and external control, the rate tariff you are on, and how quickly a battery could be charged again. However, those are all things that can be figured out with a bit of due diligence.
What does this all mean for you?
Put simply, a battery would be a wise decision. The BTM savings is one reason, given the rise of electricity costs and demand (see our other article here). But, having a deep knowledge of what the FTM opportunity already brings and will continue to bring, it is a no brainer. Energy is moving to be a bi-directional, ever-flowing, marketplace that will be needed by everybody. If you think back to some of the technology conversations in the recent years surrounding the software world moving to APIs, and most everybody aware of their token spend using AI, that is just energy. So the first step is a battery and then the second, is making that asset work for you even more than it already does for your building.
Sources: PG&E CPUC California Energy Commission CAISO