AB740 - Virtual power plants: load shifting: integrated energy policy report.

Enrolled September 15, 2025 Passed IN Senate September 10, 2025 Passed IN Assembly September 11, 2025 Amended IN Senate September 04, 2025 Amended IN Senate August 29, 2025 Amended IN Senate August 18, 2025 Amended IN Assembly April 28, 2025 Amended IN Assembly March 12, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 740 Introduced by Assembly Member Harabedian (Coauthors: Senators Archuleta and Stern) February 18, 2025 An act to add Section 25302.8 to, and to add Chapter 6.6 (commencing with Section 25560) to Division 15 of, the Public Resources Code, relating to energy. LEGISLATIVE COUNSEL'S DIGEST AB 740, Harabedian. Virtual power plants: load shifting: integrated energy policy report. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with specified entities, to adopt a biennial integrated energy policy report containing certain information, including an overview of major energy trends and issues facing the state. This bill would require the Energy Commission, in the next update to the biennial integrated energy policy report after January 1, 2027, and subject to available funding, to adopt a virtual power plant deployment plan. The bill would require the Energy Commission, in developing the plan, to take certain actions, and would require that the plan meet specified requirements. Existing law requires the Energy Commission, in consultation with the Public Utilities Commission and the Independent System Operator, to adopt a goal for load shifting to reduce net peak electrical demand and adjust this target in each biennial integrated energy policy report thereafter. This bill would require each electrical corporation to annually report to the Energy Commission its contribution towards meeting that load-shift goal. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 25302.8 is added to the Public Resources Code, to read: 25302.8. Each electrical corporation, as defined in Section 218 of the Public Utilities Code, shall annually report to the commission its contribution towards meeting the load-shift goal adopted pursuant to Section 25302.7. SEC. 2. Chapter 6.6 (commencing with Section 25560) is added to Division 15 of the Public Resources Code, to read: CHAPTER 6.6. Virtual Power Plants 25560. For purposes of this chapter, all of the following definitions apply: (a) “Smart” means a device or appliance that adjusts its energy use, is internet connected, is able to be controlled remotely, with explicit customer consent, by the consumer, the manufacturer, or an aggregator, provides information about its operating status, and enables the customer to enable or disable the smart features. (b) “Virtual power plant” means an actively coordinated aggregation of behind-the-meter distributed energy resources, including, but not limited to, electric vehicles and chargers, electric water heaters, smart thermostats, smart plugs, smart buildings and their controls, battery storage systems like those installed with rooftop solar systems, and flexible commercial and industrial loads, that are dispatchable and can balance electricity demand and supply and reduce or shift demand. 25561. (a) In the next update to the biennial integrated energy policy report adopted pursuant to Section 25302 after January 1, 2027, and subject to available funding, the commission shall adopt a virtual power plant deployment plan. (b) In developing the plan adopted pursuant to subdivision (a), the commission shall do all of the following: (1) Consult and collaborate with the Public Utilities Commission, the Independent System Operator, and the disadvantaged community advisory group established pursuant to Section 400 of the Public Utilities Code. (2) Hold no less than two public workshops to solicit public input on the development of the plan. (3) Convene stakeholder sessions to solicit input from organizations representing industry, the affected workforce, ratepayer organizations, consumer organizations, load-serving entities, as defined in Section 380 of the Public Utilities Code, and local publicly owned electric utilities, as defined in Section 224.3 of the Public Utilities Code. (c) The commission shall ensure that the plan adopted pursuant to subdivision (a) does all of the following: (1) Identifies the resources, policies, and timelines needed for virtual power plants to help meet the statewide load-shift goals adopted pursuant to Section 25302.7. (2) (A) Identifies the barriers and opportunities for virtual power plant resources to qualify for resource adequacy. (B) Includes an assessment of virtual power plant resources that are currently eligible for resource adequacy pursuant to Section 380 of the Public Utilities Code. (C) Includes recommendations to resolve the barriers identified in subparagraph (A). (D) Estimates the cost of virtual power plants relative to alternative sources of resource adequacy qualifying capacity. (E) Assesses the data needs for state agencies and the Independent System Operator to fully value virtual power plant resources for resource adequacy. (3) (A) Identifies the barriers and opportunities for virtual power plant resources to act as load-modifying resources that reduce a load-serving entity’s resource adequacy obligations. (B) Includes recommendations to resolve the barriers identified in subparagraph (A). (C) Estimates the cost to the load-serving entity of load-modifying virtual power plants relative to the cost of other load-modifying resources to reduce a load-serving entity’s resource adequacy obligations. (D) Identifies which virtual power plant resources are the most cost effective as load-modifying resources. (E) Assesses the data needs for state agencies and the Independent System Operator to fully account for virtual power plant resources to reduce a load-serving entity’s resource adequacy obligations. (4) Assesses the barriers to customer energy data access limiting the operation and value of virtual power plants and recommended ways to address them. (5) (A) Evaluates how the operational configuration of virtual power plants can be optimized to support specific objectives, including maximizing cost savings to participating and nonparticipating ratepayers, and maximizing electrical grid system benefits, such as reduction of greenhouse gas emissions and easing of local congestion. (B) Provides recommendations on how to align incentive structures that maximize both electrical grid system benefits and cost savings to participating and nonparticipating ratepayers. (C) Ensures the recommendations of subparagraph (B) do not result in increased costs for any nonparticipating ratepayers as a result of virtual power plant deployment.