Outgoing California Governor Gavin Newsom recently addressed approximately 1,200 bills, including several energy storage and solar-related bills that were either approved or vetoed.
The Governor’s final day to take action on the bills was 30 September. Notably, Newsom signed two virtual power plant (VPP) related bills and a balcony solar bill into law, but vetoed a community solar bill.
VPP bills
As reported by Energy-Storage.news, the VPP related bills, Senate Bill 905 (SB 905) and SB 913 were advanced by the state’s Assembly Appropriations Committee on 13 August.
SB 913 requires the California Public Utilities Commission (CPUC) to create a valuation method for customer-owned battery energy storage systems (BESS) to export power to the grid during periods of high demand.
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SB 905 establishes a grid utilisation metric measuring load factors across distribution network segments to identify circuits and substations that can accommodate more energy without expensive upgrades by shifting usage away from peak hours.
Many circuits currently operate well below capacity most of the time, reaching full capacity only during a few hours annually. With this metric in place, the CPUC can now mandate annual improvements in grid utilisation rates, requiring utilities to create load flexibility programmes that incentivise customers to shift electricity use to off-peak periods whilst achieving net reductions in overall utility costs.
The bill does not prescribe specific programme design requirements. Both measures aim to maximise existing grid infrastructure capacity through customer-sited BESS and demand flexibility rather than costly grid expansion.
Industry group California Solar & Storage Association (CALSSA) executive director Brad Heavner stated of the action, “Gov. Newsom has done his part. Implementation of the bill at the CPUC under the next governor will determine whether customers see lower bills. We look forward to working closely with the next governor and his appointees to quickly harness the power of customer batteries to address our affordability crisis.”
Balcony solar
Newsom also passed SB 868, also known as the Plug and Play Solar Act. The bill allows California residents to install small systems of up to 1,200 watts (AC) to a building’s electrical system and exempts them from having to interconnect the systems to the electrical distribution system.
As reported by our colleagues at PV Tech, the Senate Energy, Utilities and Communications Committee unanimously voted 14-0 (and 3 abstentions) in favour of the bill in March of this year.
Authored by California Senator Scott Wiener, SB 868 establishes safety standards for balcony solar systems and removes utility barriers, creating a low-cost pathway for solar installation.
Approximately 14 million rental units—around 40% of California households—could benefit from balcony solar. Systems must be UL-certified or equivalent and automatically shut down during grid outages to prevent electrical issues.
California joins Utah, Colorado, Maryland, Virginia, Vermont, Connecticut, New Hampshire, and Maine in authorising plug-in solar without utility approval. Other states have pending legislation, though Washington, Oregon, Wyoming, New Mexico, Georgia, and Arizona have blocked similar bills.
In Europe, Germany leads with over one million balcony solar installations as of June 2025, according to BSW Solar. France, Italy, the Netherlands and the UK are also advancing plug-in solar adoption.
Community solar
Newsom vetoed Assembly Bill 1813 (AB 1813), which would have required the CPUC to adopt or modify a customer renewable energy subscription programme by a specified deadline.
The bill aimed to expand community renewable energy programmes by promoting low-income customer participation at levels comparable to customer-generators, providing bill credits to subscribers based on avoided costs if community renewable energy generators qualify as load-modifying resources, capping individual projects at 5MW of generation capacity and 5MW of BESS, and limiting total programme capacity to 4GW or ending new enrolment after 7 years, whichever comes first.
The bill would have required the California Energy Commission (CEC) to evaluate whether community renewable energy generators have load-modifying potential and, if so, identify attributes for CPUC classification as load-modifying resources by 1 December 2027. The CPUC would then have 180 days to adopt or modify the programme accordingly.
The bill also revised reporting requirements, mandating the CPUC to submit annual reports to the Legislature on participating generators and subscribed customers, with the requirement expiring 1 January 2034.
An August study from the University of California, Los Angeles California Centre for Sustainable Communities (UCLA CCSC) explained that CPUC classifies community solar as wholesale generation, compensating projects at wholesale rates only.
This method ignores additional value from avoided distribution and transmission costs, capacity contributions, and grid benefits, making projects financially unviable.
The study further stated that the CPUC refuses to apply its own Avoided Cost Calculator to community solar, denies resource adequacy credits despite evidence of US$4.6 billion in potential savings over 20 years, and assigns zero locational value without measuring actual benefits.
AB 1813 would have required the CPUC to determine whether community solar qualifies as load-modifying and calculate avoided costs using existing methodologies. The study argues California’s framework makes it impossible for community solar to demonstrate value while declining to apply the tools that would reveal it.
Newsom’s veto stated, “(The bill) would effectively require an administratively set price for the generation of power that exceeds the value that generation provides to the grid. This would result in significant upward pressure on consumer energy bills —the independent Public Advocates Office estimates the bill could cost ratepayers an additional US$1.5 billion annually —without delivering reliable, high-performance capacity to the grid at the times we need it.”
The Governor continued, “Fundamentally, this bill would shift costs and work counter to the state’s energy affordability and reliability goals. For these reasons, I cannot sign this bill.”
Newsom also took actions in August that could be argued as counter-intuitive to expanding access to renewables and strengthening grid reliability.
When, as previously mentioned, the two VPP related bills were passed by California’s legislature, Newsom blocked an effort to continue funding the Demand Side Grid Support (DSGS) programme.
DSGS represents California’s existing VPP initiative, which enrolled over 1GW of customer battery capacity in 2025, including systems from Sunrun and Tesla. Governor Newsom had earlier suggested reallocating funding from another expiring programme to sustain DSGS through late 2026.
Programme participants will now shift to the CPUC’s Emergency Load Reduction Programme (ELRP), a five-year pilot designed to compensate electricity users for decreasing consumption or boosting supply during grid emergencies. While ELRP has been welcomed as a critical demand-side response mechanism, some commentators have lamented that only enacting demand turn-down during emergency events, rather than incorporating it in normal operations, is a missed opportunity.
