Residential battery programs have evolved from pilot projects to integral grid assets—but scaling them sustainably requires more than technology. The next stage of growth depends on customer-centric program design that balances grid needs, manufacturer requirements, and participant experience.
Utilities and regulators have learned that program complexity often stems not from technology but from design gaps—unclear rules, misaligned incentives, and inconsistent data standards. Programs that take the time to define detailed, transparent, and interoperable structures from the start are not only easier to run but also deliver better outcomes for everyone involved: utilities, DERMS platforms, OEMs, customers, and regulators alike.
Align Incentives with Program Design
Define how the fleet is meant to provide value, and then structure incentives that reinforce that purpose. Pay-for-performance (P4P) models are the most equitable across stakeholders and the most cost-effective for utilities.
But simply adopting a P4P structure doesn’t guarantee success. Incentives must align with the program’s actual use case(s). Consider a daily load-shifting program that relies on a historical baseline measured with AMI data: after repeated daily dispatches, customers would have no remaining baseline to compare against and could be assessed as delivering zero kW—earning nothing despite consistent participation.
While this example is extreme, many real programs run into subtler forms of misalignment. Common issues include:
- Daily load-shift incentives that conflict with time-of-use rates, forcing participants to trade off bill savings for program payments.
- Capacity-focused programs that ignore export limitations and set dollar per kW incentives based on a battery’s rated output rather than what the system can actually deliver result in the underpayment of customers.
- Feeder-relief programs that dispatch some homes far more often than others, but offer no mechanism to compensate higher-utilization participants for their additional contribution.
Programs succeed when incentive structures are grounded in how the batteries will actually be dispatched.
Measure Performance at the Source
In most program designs, OEM telemetry provides the most accurate and complete data for settlement. Utilities are already shifting this direction, with battery telemetry increasingly replacing AMI data as the primary source for measurement, verification, and incentive qualification.
For example, if a battery islands a home for a four-hour dispatch during a peak shaving program, the utility meter may show zero usage even as household load ramps up when customers return home. The battery is actually working harder and discharging more energy to cover those spikes, but the meter can’t see it. Telemetry can. It captures the real discharge behavior that AMI-based methods miss.
To realize this value at scale, programs need the ability to ingest telemetry from many different OEMs. That requires shared standards around what data is required, how it is formatted, how frequently it is reported, and how it is validated. Programs that establish these requirements during design—and maintain strong validation and communication practices—ensure data integrity and accurate incentives from the beginning.
Plan to Accommodate Real-World Constraints
Residential battery performance is influenced by factors beyond simple dispatch signals. Weather, export settings, and customer safety modes all influence how much capacity a fleet can actually deliver. Extended cloudy periods can leave solar-charged batteries under-recovered. Export-limited systems may only serve the onsite load, reducing capacity available to the grid. Inclement weather can trigger storm or backup-reserve modes that can temporarily block dispatch altogether.
Rather than treating these as operational nuisances, strong operational frameworks anticipate them, and good program operators push vendors to be better by requiring clear visibility into these constraints. That means forecasting around weather-driven variability, understanding which systems can export, and building rules that respect customer safety settings while still enabling accurate capacity planning. Programs that proactively incorporate these real-world constraints are fairer for customers, more predictable for operators, and more resilient as fleets scale.
Clarity Is the Cornerstone of Participation
The path from installation to enrollment typically spans several checkpoints including local permitting, interconnection approval, and data exchange setup with DERMs or other program partners. Each step must be completed before a customer can actively participate in a battery demand response program. Without clearly defined processes and communication, navigating all these checkpoints can result in participation delays or even missed enrollments.
Equally important is aligning program documentation to the realities of different ownership models. Clear Terms & Conditions that spell out eligibility, performance obligations, and how payments flow—whether the system is customer-owned, leased, or aggregator-managed—eliminate ambiguity about who is responsible for what. When participants and partners know exactly how the program works and how value is shared, enrollment becomes smoother, trust increases, and participation expands.
What’s Next for BESS Programs?
The technology is ready. The next opportunity lies in building programs that scale through clarity, fairness, and customer empowerment. Programs designed around these principles reduce friction for all stakeholders, accelerate enrollment, and enhance the resilience of the grid.
By centering the customer experience and designing for interoperability from day one, utilities can transform residential battery participation from a pilot into a durable, trusted partnership between households and the grid.
