California Leads Global V2G Revolution with Bold Policy and Market Moves
California is setting a new global benchmark in the electric vehicle (EV) revolution—not just by accelerating vehicle adoption, but by fundamentally redefining the role of EVs in the energy ecosystem. Once seen merely as transportation tools, electric vehicles are now being transformed into dynamic grid assets through an ambitious and coordinated push toward vehicle-to-grid (V2G) and broader vehicle-to-everything (V2X) integration. Backed by pioneering legislation, cutting-edge technical standards, and innovative market mechanisms, California is positioning itself as the world’s first jurisdiction to make bidirectional energy flow from cars to homes, buildings, and the grid not just possible—but mandatory.
The state’s aggressive strategy reflects a deep understanding of the dual challenges it faces: achieving 100% renewable energy by 2045 and ensuring all new vehicles sold are zero-emission by 2035. To meet these goals, California is no longer treating EVs as passive loads. Instead, it is actively turning millions of vehicles into a distributed, mobile battery network capable of stabilizing the grid, absorbing excess solar power during midday peaks, and discharging energy during evening demand surges. This transformation is not a distant vision—it is being implemented through a comprehensive, multi-year roadmap that is already reshaping markets, regulations, and technology standards.
At the heart of this transformation is a powerful legislative framework. In 2019, California passed Senate Bill 676, a landmark piece of legislation that empowered the California Public Utilities Commission (CPUC) to develop a statewide strategy for V2G integration with the goal of achieving full-scale deployment by 2030. This was not just aspirational—it was a mandate. The CPUC responded swiftly, issuing Resolution D.20-12-029 in December 2020, which directed the state’s three major investor-owned utilities—Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)—to begin submitting biannual and annual reports on their V2G progress. More importantly, the resolution required these utilities to collaborate with the California Independent System Operator (CAISO) to design wholesale market mechanisms that would allow aggregated EV resources to participate in energy and ancillary services markets.
But California didn’t stop there. In 2023, the state introduced Senate Bill 233, a groundbreaking proposal that, if enacted, would make California the first region in the world to mandate V2X capabilities in new electric vehicles. SB 233 would grant the California Air Resources Board (CARB) the authority to establish technical standards and enforce compliance, effectively requiring automakers to equip new EVs with bidirectional charging functionality. This move signals a major shift—from incentivizing V2X to requiring it. By placing regulatory authority in the hands of both the CPUC (for grid integration) and CARB (for vehicle standards), California has created a dual-track regulatory system that ensures both the supply side (vehicles) and the demand side (grid infrastructure) evolve in tandem.
The impact of this regulatory clarity cannot be overstated. It provides automakers, charging equipment manufacturers, utilities, and investors with the long-term certainty they need to commit capital and innovation. For automakers, it means designing future vehicle platforms with bidirectional inverters and advanced battery management systems. For charging hardware developers, it means building chargers that can not only draw power but also inject it back into homes or the grid with precise control. For utilities, it means rethinking their role—not just as electricity providers, but as aggregators and grid coordinators of a vast, distributed energy resource.
One of the most tangible outcomes of this policy push has been the launch of large-scale V2X pilot programs. In 2022, the CPUC approved PG&E’s $11.7 million V2X pilot initiative, which aims to deploy bidirectional charging systems across 1,400 vehicles. The program includes three distinct tracks: private passenger vehicles, commercial fleets, and microgrids. Participants in these pilots are not just passive test subjects—they are active contributors to grid stability. For instance, vehicle owners enrolled in the emergency demand response program can automatically reduce charging or even discharge energy back to the grid during peak stress periods, such as heatwaves or wildfires, when the system is most vulnerable.
What makes these pilots particularly impactful is the financial structure. The CPUC has authorized utilities to provide upfront construction and operational subsidies to participants, with the costs recoverable through regulated transmission and distribution rates. This removes a major barrier to adoption—the high initial cost of bidirectional charging equipment. By socializing the cost across ratepayers, California is effectively treating V2X infrastructure as a public good, much like roads or broadband, recognizing its systemic value in enhancing grid resilience and enabling deeper renewable integration.
Beyond financial incentives, California has also tackled critical technical and regulatory hurdles. One of the most significant was the lack of standardized, cost-effective metering for bidirectional energy flow. Traditional utility meters are not designed to handle reverse power flow from EVs, and installing dedicated, high-precision meters can be prohibitively expensive. To solve this, in August 2022, the CPUC approved the nation’s first plug-in electric vehicle submetering protocol. This allows the use of lightweight, low-cost submeters—either standalone or integrated into charging stations—that can accurately track both charging and discharging energy. These submeters can be owned by the utility or by third parties, offering flexibility in deployment models. By decoupling measurement from the main utility meter, California has created a scalable, cost-efficient pathway for millions of behind-the-meter EVs to participate in grid services.
This regulatory innovation is complemented by rapid advancements in technical standards. California has been a global leader in promoting interoperability through open, vendor-neutral protocols. At the vehicle-to-charger level, the state has strongly endorsed the ISO 15118-20 standard, which was finalized in April 2022. This standard represents a quantum leap from its predecessor, ISO 15118-2, by fully supporting bidirectional charging across AC, DC, wireless, and pantograph systems. It introduces advanced grid-support functions such as “grid-following” and “grid-forming” modes, enabling EVs to not only respond to grid signals but actively help stabilize voltage and frequency. Security has also been significantly enhanced, with mandatory TLS 1.3 encryption, mutual authentication, and improved cryptographic agility to defend against future threats.
On the charger-to-grid communication side, California has championed the Open Charge Point Protocol (OCPP), particularly version 2.0.1. While earlier versions of OCPP supported basic smart charging, OCPP 2.0.1 enables true external control by third-party energy management systems (EMS). This allows utilities, virtual power plant operators, or aggregators to send dynamic charging schedules to fleets of EVs, optimizing their operation based on real-time grid conditions, electricity prices, or renewable generation forecasts. The protocol also facilitates seamless integration with ISO 15118, ensuring end-to-end interoperability from the vehicle battery to the grid control center.
Perhaps most importantly, California has established a comprehensive “vehicle-to-charger-to-grid” (V2X) interconnection standard framework. This multi-layered system ensures safety, reliability, and performance across all components. At the grid level, IEEE 1547-2018 defines the technical requirements for distributed energy resources, including V2X systems, covering voltage and frequency ride-through, anti-islanding protection, and power quality. For communication, IEEE 2030.5 has been adopted as the default protocol under Rule 21, California’s interconnection standard for distributed energy.
On the equipment side, Underwriters Laboratories (UL) has updated its UL 1741 standard to cover DC V2X devices, which are treated as stationary inverters. A supplementary document, UL 1741-SC, is under development to address AC V2X systems, where the inverter is mobile and integrated into the vehicle. This is a critical gap, as most current EVs use onboard chargers for AC charging. To close it, the Society of Automotive Engineers (SAE) is revising its J3072 standard to ensure that onboard chargers comply with IEEE 1547 grid support requirements. Together, these standards form a robust, interlocking framework that ensures any V2X system deployed in California will be safe, reliable, and interoperable.
California’s efforts are not confined to state borders. Recognizing that V2X is a national challenge, the state has partnered with the U.S. Department of Energy (DOE) and industry leaders to launch a national V2X collaboration. This initiative brings together 17 national laboratories to accelerate R&D, testing, and commercialization. It aims to produce a national V2X roadmap by 2024, establish shared testbeds, and develop cybersecurity best practices. By aligning state and federal efforts, California is helping to create a unified national ecosystem that can scale V2X beyond pilot projects into mainstream deployment.
The ultimate success of V2X, however, depends not just on technology and regulation—but on economics. California understands that drivers will only participate if they are fairly compensated. To that end, the state is overhauling both retail and wholesale market mechanisms. On the retail side, the CPUC has approved a real-time pricing pilot for commercial EVs, where electricity costs are calculated based on marginal energy cost, deviation cost, and marginal generation capacity cost (MGCC). The MGCC component is particularly innovative—it reflects the true cost of adding generation capacity to meet peak demand, creating strong price signals during critical hours. This encourages EVs to charge when power is cheap and abundant, and to discharge when the grid is stressed and prices are high.
Even more groundbreaking is California’s move to establish the nation’s first V2G export rate. In October 2022, PG&E announced it would offer commercial EV owners compensation for energy they feed back into the grid. This marks a historic shift—EVs are no longer just consumers of electricity, but producers. By integrating V2X into the Net Energy Metering (NEM) framework, California is extending the same principles that drove rooftop solar adoption to electric vehicles.
At the wholesale level, California is preparing for EVs to participate in CAISO’s energy markets through the Distributed Energy Resource Aggregator (DERA) model, developed in response to FERC Order 2222. Under this model, EVs and other distributed resources can be aggregated into DERA units of 0.1 to 20 MW, located within the same sub-load aggregation point. These units can bid into the market as either energy injectors or demand reducers, with independent clearing and settlement. Crucially, the rules prevent “double counting”—a resource cannot be paid twice for the same energy in both retail and wholesale markets. This ensures market integrity while enabling new business models for aggregators and fleet operators.
The implications of California’s V2X strategy extend far beyond the state. As the world’s fifth-largest economy and a trendsetter in environmental policy, California’s actions often ripple across the globe. Automakers that design vehicles for the California market will likely deploy similar technology worldwide. Charging equipment manufacturers will align their products with California’s standards to access this lucrative market. Other states and countries will study California’s regulatory and market designs as they develop their own V2X frameworks.
For China, which leads the world in EV production and deployment, California’s experience offers valuable lessons. While China has included V2G in its national development plans, it still faces challenges in policy coordination, technical standards, and market mechanisms. California’s model demonstrates the importance of strong top-down leadership, cross-sectoral collaboration, and a phased approach that combines pilots, standards, and economic incentives. By studying California’s journey, China—and other nations—can avoid pitfalls and accelerate their own V2X transitions.
In conclusion, California is not just building a smarter grid—it is building a new energy paradigm. By treating electric vehicles as mobile power plants, the state is unlocking a vast, underutilized resource that can enhance grid reliability, reduce emissions, and empower consumers. The policies, standards, and market reforms underway are not isolated initiatives—they form a coherent, integrated strategy that is setting the global pace for the future of transportation and energy. As the world watches, California is proving that the car of the future won’t just drive—it will power our homes, our cities, and our clean energy future.
Li Lili, Zhang Jian, Liu Yuwei, Liu Xiaonan, Zu Guoqiang, Department of Electrical Engineering, Tsinghua University; Key Laboratory of Smart Power Grids, Tianjin University; State Grid Tianjin Electric Power Company; State Grid Tianjin Electric Power Research Institute. Published in Automation of Electric Power Systems, Vol. 48 No. 7, Apr. 10, 2024. DOI: 10.7500/AEPS20230621005