California Price Response Potential Study

California's upcoming hourly dynamic price offerings are evaluated in this study through bottom-up modeling of six end uses (space cooling, space heating, water heating, crop irrigation, pool pumps, and EV charging) across residential, commercial, and agricultural sectors. Using novel price-response algorithms applied to Phase 4 California DR Potential load shapes, forecasted 2030 prices are analyzed under two price forecasts (low and high) and three tariff designs—Full (100% dynamic allocation), Medium (50% dynamic), and Mild (20% dynamic)—assuming universal enrollment and symmetric, fully volumetric pricing.

The results indicate substantial technical potential for price response: 4.3-5.6 GW of effective shed DR (load reduction averaged across several peak hours) is enabled, depending on price design, with load reduction in the single peak hour reaching 8.4-8.7 GW. Though customer bill savings vary widely with tariff design, ranging roughly from $1.3 to $12.1 billion, the majority of the resource can be enabled for price responsiveness across all scenarios, though automation costs remain uncertain.

Additional optimization analyses explore the costs of optimized charging of individual EVs and dispatch of behind-the-meter batteries, with significant potential benefits to customers found for both technologies. Limitations to the analysis include the assumption of symmetric, fully volumetric tariff structures, load response modeling using aggregated cluster load shapes, and lack of consideration of customer enrollment and participation dynamics that will limit the amount of load response that is realistic. Despite these limitations, this study offers a first comprehensive analysis of the technical potential and cost effectiveness of customer response to hourly dynamic prices across key sectors and end uses in California.