A new policy roadmap released by GridLab, Kevala, and E3 argues that modernizing demand flexibility programs is essential for stabilizing California's electric grid and lowering electricity costs. The report, titled "Unlocking California's Flexible Load: A Durable Blueprint for Affordability and Reliability," identifies practical steps to integrate customer-owned energy resources, such as electric vehicles (EVs), home batteries, and smart buildings, into grid operations.

The findings were informed by roundtable discussions facilitated by the Energy & Efficiency Institute at University of California Davis. The report builds on a 2024 study by GridLab and The Brattle Group, which estimated that virtual power plants (VPPs) could save California utilities and consumers $550 million annually while meeting more than 15% of the state's peak electricity demand.

What the Numbers Show

The scale of the opportunity lies in the existing infrastructure within homes and driveways. The report highlights that enrolling just 10% of California's projected EVs in vehicle-to-grid (V2G) programs by 2036 could provide approximately 9 GW of 12-hour storage. This figure represents more than one-third of the state's 2036 long-duration storage procurement target, suggesting that distributed resources can significantly offset the need for centralized storage investments.

"The next generation of grid infrastructure is already sitting in our driveways, homes, and businesses," said Ric O'Connell, Executive Director of GridLab. "The question isn't whether California has the resources — it's whether our programs are designed to unlock their full value."

Standardization and Incentives

The report notes that current demand flexibility programs vary across utilities, creating a fragmented customer experience that limits participation. To address this, the authors recommend standardized, interoperable program frameworks that align incentives across utilities. Key recommendations include:

• Standardizing program design to create a consistent customer experience across California.
• Implementing performance-based incentives that reward verified grid services rather than simple participation.
• Expanding participation from EVs, batteries, smart buildings, and other distributed energy resources.
• Improving interoperability and market coordination through consistent program frameworks.
• Paying below avoided costs for robustly measured incremental grid impacts to lower costs for all ratepayers.

Eric Cutter, Partner at E3, emphasized that affordability is central to these recommendations. Drawing on lessons from California's experience with Net Energy Metering (NEM), the report argues that programs must reward customers for measurable grid value without increasing bills for others. "Only by aligning incentives with grid value and verified performance will demand flexibility help lower system costs," Cutter said.

Ed Randolph, former Director of the Energy Division at the California Public Utilities Commission, added that scaling demand flexibility requires making existing programs work better together. "Customers shouldn't have to navigate different rules depending on where they live," he said.

As California continues to electrify transportation, buildings, and industry, the report positions demand flexibility as a foundational grid resource alongside renewable generation and energy storage.

California's existing single-family home sales retreated in July as elevated mortgage rates continued to weigh on buyer demand. Closed escrow sales fell 6.0% from June to a seasonally adjusted annualized rate of 263,170, according to data from the California Association of Realtors (C.A.R.). Despite the monthly decline, sales remained above year-ago levels for the fourth consecutive month, posting a modest 1.1% year-over-year gain.

The statewide median home price softened significantly, dropping 1.9% from $904,640 in June to $887,680 in July. This decline marked the first time the median price had slipped below the $900,000 threshold in four months. On a year-over-year basis, the median price edged up just 0.3%, continuing a pattern of modest annual growth that has slowed considerably from the 3.1% gain recorded in May.

What the Numbers Show

The moderation in the statewide median price reflects both a shift in the mix of homes sold and underlying price softness. The share of million-dollar home sales declined from 36.9% in June to 35.5% in July, down from a record 38.5% reached in May. Simultaneously, the statewide median price per square foot fell 0.5% year-over-year to $434, reversing mild annual gains seen in previous months. This divergence suggests that recent price growth has been relatively weak, driven less by high-end transactions and more by normalization in the broader market.

Inventory and Market Dynamics

Housing inventory loosened slightly from the prior month but remained tighter than a year ago. The Unsold Inventory Index (UII) increased from 3.1 months in June to 3.4 months in July, though it stayed below the 3.7 months recorded in July 2025. Total active listings rose 2.9% from June but slipped 9.3% from their year-ago level, marking the sixth consecutive month of annual declines. The San Francisco Bay Area remained the tightest market in the state at 2.3 months of supply, while the Far North had the highest supply at 5.1 months.

Mortgage rates continued to trend higher throughout July, averaging 6.54% for the month and briefly reaching a 12-month high before pulling back. C.A.R. President Tamara Suminski noted that improved supply conditions combined with recent rate declines could provide relief to buyers as the market transitions into the off-peak season. However, pending home sales also slowed, declining 6.8% from the previous month, although they remained 1.0% above the same month last year.

Regional Performance

Sales activity varied across California's major regions. The Central Coast led all regions with an 11.1% year-over-year increase in sales, while the Central Valley posted a 2.9% gain. Southern California and the San Francisco Bay Area were essentially unchanged from their year-ago levels, with gains and losses of just 0.1% respectively. In contrast, price growth moderated across much of the state, with Southern California leading regional price gains at 2.7% year-over-year. The Central Coast posted the largest annual price decline at 4.1%, followed by the Bay Area, where the median price slipped 1.2%.

Year-to-date sales through the first seven months of 2026 were 1.8% above last year's pace, a slight dip from the 1.9% growth pace recorded in June. Sales remained below the 300,000 benchmark for the 46th consecutive month, underscoring the market's ongoing struggle to build sustainable momentum amid affordability constraints.