CAISO Would Let Battery Aggregators Export Down to Zero Net Load, a Change Advocates Size at 2 GW
- Grid Services & Demand Response Policy & Markets Regulatory
Marin Holt
- 0
- 8 minutes read
- Behind-the-meter potential: 2 GW
- Draft final proposal posted: July 8, 2026
- Sub-load aggregation points: more than 20
- Comments due: September 4, 2026
- CAISO board decision: October 2026
The California Independent System Operator has proposed treating aggregations of behind-the-meter batteries as discrete market resources. CAISO posted the draft final proposal on July 8, 2026. Under it, an aggregator in California could export power inside its own load zone until the aggregation’s net load reaches zero. Advanced Energy United estimates the change could pull more than 2 GW of behind-the-meter resources into the wholesale market. The proposal is Track 1 of the grid operator’s Demand and Distributed Energy Market Integration initiative. The CAISO board takes it up in October 2026.
The mechanism turns on geography. CAISO splits its footprint into more than 20 sub-load aggregation points, or sub-LAPs. Today a residential or commercial battery that pushes power to a neighbor gets retail credit and no wholesale standing. The proposal would count that export against load inside the same sub-LAP and pay it wholesale value. The credit stops at the point where the aggregation stops consuming on net.
What Changes, and When
The status quo keeps behind-the-meter batteries out of CAISO’s resource adequacy market. The grid operator has questioned whether locally exported power is deliverable where the system needs it. Sub-LAP accounting answers that objection by confining the export to the zone where it happens.
One limit survives. An aggregator that wants to be a net exporter still has to enter the generation interconnection queue. CAISO said the design “enables greater use of behind-the-meter resources while not modifying the fundamental definition of [demand response] as load curtailment.” Full net export at the aggregation level is left to a later round.
The calendar is short. CAISO posted a further paper on August 19, 2026. A working group met on August 21. Stakeholder comments are due September 4, 2026. The board decision is set for the October 26 to 28, 2026 meeting.
Brian Turner is a senior director at Advanced Energy United. He told Utility Dive the proposal floats “a small accounting change [that] could significantly change the battery market in California.” Turner puts a realistic in-service date in the first half of 2027.
A second venue runs in parallel. The California Public Utilities Commission opened rulemaking R.25-09-004 in September 2025 to rebuild demand response policy at the retail level. That proceeding covers valuation, resource adequacy treatment and cost-effectiveness tests. Its less urgent questions run into the fourth quarter of 2026. The backstop deadline is February 2028. Wholesale eligibility from CAISO does not by itself create a retail program to enroll in.
Why It Matters
California has the largest behind-the-meter battery fleet in the country. The state pays for it twice, once through retail incentives and again through wholesale capacity it buys elsewhere. Sub-LAP accounting is the first CAISO design that lets that installed base count toward resource adequacy without new interconnection studies for every participant.
Aggregators and commercial storage owners should check which sub-LAP each site sits in. Comments close September 4. Value under this design is local. Two identical batteries in different sub-LAPs will earn different amounts. A portfolio spread thin across zones captures less than one concentrated in a constrained zone. Site selection now carries market consequences it did not carry before.
Treat the 2 GW figure as an advocate’s estimate rather than a forecast. It comes from Advanced Energy United, whose members sell the aggregation services the rule would enable. The number describes existing hardware that becomes eligible, not hardware anyone has committed to bid. Eligibility and participation are different things, and the gap between them is where most demand response programs have underperformed.
Critical Perspective
CAISO and ISO-NE completed FERC Order 2222 compliance years ago, and behind-the-meter batteries in California still cannot reach the resource adequacy market. That is the measure of this proposal: six years after the order meant to open wholesale markets to distributed resources, the fix on the table is another accounting definition. The carve-out repeats the pattern. An aggregator that wants true net export still has to enter the generation interconnection queue, and queue delay is the constraint that made behind-the-meter batteries attractive in the first place. Sub-LAP localization has its own edge. Value lands where the batteries already sit, which in California means the zones with the most rooftop solar and the wealthiest ratepayers, not necessarily the zones the system is short. The board votes in October and the retail rules at the CPUC are not due until the fourth quarter at the earliest. If wholesale eligibility arrives a year before any retail program exists to enroll in, what exactly does an owner sign up for?
Sources
- Utility Dive: California DER wholesale market participation could grow 2+ GW from CAISO ‘accounting change’ (Aug 5, 2026)
- California ISO: Demand and Distributed Energy Market Integration initiative page and Track 1 schedule
- California ISO: Demand response market participation models
- California Public Utilities Commission: Demand Response and rulemaking R.25-09-004
