Unlocking Grid Flexibility & Maximizing Ratepayer Savings (Webinar Recap and Recommendations)

Unlocking Grid Flexibility & Maximizing Ratepayer Savings (Webinar Recap and Recommendations)

On April 17, 2025, I presented in a webinar hosted by the SunSpec Alliance on opportunities for grid demand flexibility through flexible service connections. The webinar focused on the underlying technology (power control systems), opportunities for using flexible service connections in the investor-owned utility (IOU) service territories, cyber security concerns, and broader policy implications. 

For context, demand flexibility depends on two key components: a power control system (PCS) to limit the amount of behind-the-meter (BTM) output and a flexible service connection to constrain grid exports based on pre-set schedules or near real-time signals from the grid operator. While flexible service connections are often seen as a way to increase grid imports without triggering upgrades, they can also serve as interim solutions during lengthy upgrades or permanently enable greater grid imports/exports beyond traditional hosting capacity limits.

In the webinar, I examined the broader policy and economic framework surrounding demand flexibility, highlighting how flexible service connections can support California’s electrification goals, grid modernization efforts, and increasing load and generation interconnections. A few key takeaways:

• The staggering cost of distribution grid upgrades in California makes flexible service models highly attractive.
• There are two major value stream categories: resource interconnections and grid services.
• Policy reforms are needed to support value stacking, prioritize grid needs, and ensure equitable grid access.

Value streams from flexible service connections

Today, flexible service connections exist only in pilot programs. For example, PG&E uses them as interim solutions, giving customers partial increased grid access while upgrades are underway. PG&E currently serves about 15 customers using flexible service connections, making it the most active IOU in this space. The results thus far are impressive and groundbreaking, but the potential for widespread use is limited by the inability to determine in advance where flexibility is available/valuable, the lack of a framework to procure distribution grid services, and the absence of monetary compensation for services that benefit the ratepayers. Most importantly, promoting flexible service connections as temporary tools (e.g., bridging solutions) overlooks their potential as permanent solutions to reduce the need for costly grid upgrades and conserve capital.

Why Permanent Flexible Connections Should Be an Option:

Multiple studies estimate California will need to spend between $26-$52 billion in distribution grid upgrades over the next two decades to support full electrification [1]. The lower estimate — $26 billion — assumes strategic siting of electric vehicle charging infrastructure and avoidance of other grid upgrades to reduce ratepayer costs [2]. Distribution upgrade costs are typically covered by the customer, but additional costs are still incurred:

• Grid upgrades may require major capital investments (transformers, lines, substations, etc.) beyond upgrading a secondary distribution feeder.
• Even if a customer pays upfront for some costs, utilities often include long-term upgrades in their rate base, recovering costs (plus a regulated rate of return) from all ratepayers.
• Avoiding distribution upgrades reduces overall utility capital expenditures, lowering growth of the rate base and costs related to incurring debt.

Consider a project that requests an increase in service and can receive 50% of the additional electricity via a flexible service connection. The facility now has two options: 

1. Wait for the utility to complete the upgrade — covering the full cost while operating at limited capacity; or
2. Deploy onsite generation like solar or solar+storage to cover the remaining increase requested, avoiding the need for an immediate grid upgrade and enabling the utility to right size the upgrade further down the line, resulting in a more long-lasting and cost-effective solution. 

Option 2 conserves utility resources, defers costly grid upgrades, and facilitates upgrades elsewhere: all of which are tangible services that benefit the ratepayers. Further, if the facility is allowed to oversize its solar+storage system, it could actively increase hosting capacity on the feeder, adding even more value. This value is particularly important in communities where access to grid infrastructure is already constrained.

Due to existing grid inequities, flexible service connections can be critical in disadvantaged communities, where hosting capacity is often limited. As of 2021, “57 and 59% served by PG&E and SCE, respectively, lack access to 4.5 kW of rooftop PV,” and “64% lack access to level 2 EV charging,” including a higher percentage of grid constraints in disadvantaged communities than non-disadvantaged communities [3].

As more facilities request larger loads, IOUs are already facing significant backlogs. A permanent flexible service connection option is essential to help reduce these backlogs and ensure that the IOUs can efficiently meet customer needs in a timely manner. Providing proper compensation for grid services enabled by flexible service connections will also increase project viability—especially when value stacking is allowed—benefitting both facilities and ratepayers.

Streamlined ICA as a Prerequisite for Streamlined Flexible Connections

Today, customers must request flexible service connections without visibility into whether their location qualifies. Uncertainty is a project killer. What is needed is a clear and accurate way to determine where flexibility is an option given existing grid constraints—a demand flexibility map. California’s existing grid maps, called Interconnection Capacity Analysis (ICA) Maps, show the amount of available hosting capacity on a feeder, based on five criteria (thermal, voltage fluctuation, operational flexibility, steady state voltage, and protection).

Source: PG&E ICA Maps

While ICA maps are intended to provide actionable information for the siting of distributed energy resources (DER) and streamlined interconnection, their accuracy and usability vary by IOU. Once validated and fully integrated into the interconnection process, these maps can be enhanced to show where flexibility is valuable—like the UK’s Piclo Flex platform, which lets utilities post needs and aggregators bid to fulfill them.

A flexibility offering to mitigate a grid constraint in Eversource’s service territory using Piclo’s Flex platform, which connects buyers of flexibility (e.g, the utility) with sellers of flexibility (DER owners). 

Through this model, utilities define the locations and the energy volumes needed, and the aggregators handle customer acquisition and dispatch, dramatically simplifying the complicated process. A streamlined offering tied to flexibility maps can transform flexible service connections from a one-off pilot into scalable grid tools.

Navigating a World Where Flexible Connections Can Create Value for Multiple End-Users

Maximizing flexibility requires coordination, especially when multiple offtakers are involved. For example, if a Community Choice Aggregator is expecting a facility to serve loads with on-site energy during peak hours and the IOU also needs the site to reduce imports to free up distribution capacity during the same period, the alignment between the two goals would enable a flexible service connection to simultaneously provide value to both entities. Conversely, if a demand response company wants to dispatch during the daily ramp-up and the IOU expects the flexibility toward the tail end of the system peak, the conflicting priorities need to be addressed. Making flexible service connections a permanent offering must include a framework for navigating competing value streams to maximize value-stacking opportunities.

While more complicated than a standard interconnection, these discussions can take place between the customer and load-serving entities as well as through the creation of a dedicated dispute resolution process (utilized when direct talks fail). Over time, improved software will improve communication between aggregators and the grid operator, especially as granular and real time information becomes available.

Conclusion

Flexible service connections offer a powerful, underutilized tool for managing grid constraints, accelerating electrification, and delivering ratepayer savings. While current applications remain limited to pilot programs, the benefits—from reducing costly grid upgrades and shortening interconnection timelines to enabling distributed energy resource deployment in disadvantaged communities—make a compelling case for a permanent, scalable offering. Realizing this potential will require policy reform, accurate hosting capacity data, and a streamlined framework for identifying flexibility opportunities. By advancing flexible service connections from a niche solution to standard practice, California can unlock demand-side value, optimize grid investments, and ensure a more equitable energy transition.

[1] Electrification Impacts Study https://www.utilitydive.com/news/california-50b-2035-grid-ders/650242/
[2] 2024 Public Advocates Distribution Grid Electrification Model (DGEM) https://www.publicadvocates.cpuc.ca.gov/press-room/reports-and-analyses/distribution-grid-electrification-model-findings
[3] https://escholarship.org/uc/item/6pc2k2tv