The short version
- You can already store, shift, export and get paid for household power — those routes are open and legal.
- You cannot sell retail power to another household. California suspended residential Direct Access in 2001 and has not reopened it.
- The wholesale market is the open part: federal rules let aggregated home batteries bid in. The retail side is the closed part, and it is a state question.
- The 2018 reopening of Direct Access was capped and non-residential — households were explicitly left out.
- Changing this runs through the CPUC and the California Legislature, not through a better app.
The thing everybody asks for
It is the most reasonable-sounding request in energy, and we hear a version of it every week. You have panels. At noon they make more than you can use. Your neighbor gets home at six and runs an oven, an EV charger and an air conditioner. You would like to sell them 50 kWh at 12 cents. The power would travel a few hundred feet down a wire that already exists.
You cannot do this. Not because it is technically hard — it is not — but because retail electric service is a regulated activity, and California does not currently let residential customers choose a competitive supplier. That is the whole answer, and the rest of this page is why, and what would have to change.
What is actually legal today
It is worth being precise, because "you can't sell electricity" is much too broad. A great deal is open. Here is the honest map, sorted by how much freedom you have.
| What you want to do | Status | Why |
|---|---|---|
| Charge a battery when power is cheap, discharge when it is expensive | Open | Physical storage arbitrage is legitimate for an interconnected resource participating under the applicable tariff or market rules. |
| Run flexible load or storage when prices go negative | Open | You are consuming or storing power at hours when the market is paying for consumption. |
| Export household solar and be credited by the utility | Open | SDG&E credits approved exports according to its export-compensation structure. This is the sanctioned route for a residential customer. |
| Trade the gap between day-ahead and real-time prices | Open, regulated | CAISO permits market trading, and appropriately structured convergence positions can arbitrage forecast error — as a registered market participant. |
| Trade price differences between grid locations | Open, regulated | Congestion creates different locational prices, and market participants can trade around them. |
| Buy a generator's output under a PPA and resell it wholesale | Open, regulated | Wholesale power sales can be made at market-based rates with the required FERC authority and market structure. |
| Aggregate thousands of home batteries and bid them into CAISO | Open, regulated | CAISO expressly allows distributed energy resource aggregations to participate in its wholesale market. |
| Sell 50 kWh to another household over the utility's wires | Blocked | Not an open legal market today. California does not currently give residential customers Direct Access to competitive retail suppliers. |
| Pick any generator on an exchange and buy from it directly | Blocked | Not generally available, for the same reason: residential Direct Access is not currently open. |
| Run an open exchange supplying arbitrary residential customers | Blocked | Unauthorized. Retail electric service is regulated; California's Electric Service Provider framework governs competitive retail supply, and current Direct Access availability is capped and non-residential. |
Notice the shape of that table. Everything involving your own equipment or the wholesale market is open. Everything involving selling retail power to another household is closed. The line is not technological. It is jurisdictional.
The line that explains everything: wholesale versus retail
American electricity regulation is split. Wholesale sales and interstate transmission are federal, overseen by the Federal Energy Regulatory Commission. Retail sales to end-use customers are the states' business — in California, the Public Utilities Commission.
This split is why the answers differ so sharply. Selling power into CAISO is a wholesale transaction, so it runs on federal rules that have been deliberately opened up. Selling power to the house next door is a retail transaction, so it runs on California rules that have been deliberately closed since 2001.
Why the retail side closed
California restructured its electricity market in 1996 and, for a few years, residential customers really could choose a competitive supplier. Then came the 2000–01 electricity crisis: wholesale prices spiked, utilities were caught between frozen retail rates and uncapped wholesale costs, one of the largest went into bankruptcy, and the state stepped in to buy power directly.
Emergency legislation passed in the 2001 First Extraordinary Session — commonly cited as AB 1X — suspended the right of retail end-use customers to acquire Direct Access service once the state began purchasing power on their behalf. The CPUC implemented that suspension in September 2001. It was a crisis measure. It is still in force for residential customers a quarter of a century later.
Direct Access did partially reopen, but carefully. Legislation in 2018 — SB 237 — directed the CPUC to raise the Direct Access cap by 4,000 gigawatt-hours. That allocation went to non-residential customers. Households were not included, and the program remains capped rather than open, with demand routinely exceeding the available allocation.
The strange part: the wholesale door is already open
While the retail side stayed shut, the federal side spent a decade opening up, specifically to let small distributed resources participate.
- FERC Order 841 (2018)Required the organized wholesale markets to establish participation models for electric storage resources, so a battery could compete on comparable terms rather than being shut out by rules written for power plants.
- FERC Order 2222 (2020)Required those markets to let aggregations of distributed energy resources participate — the order that makes "a virtual power plant made of home batteries" a market participant rather than a metaphor.
- CAISO's aggregation modelCAISO created a distributed energy resource provider role, letting an aggregator pool resources across a defined area and bid the combined capability into the wholesale market.
So here is the position we are actually in. A company may lawfully aggregate ten thousand household batteries and sell their combined output into the wholesale market. The same household may not sell a single kilowatt-hour to the house across the street. The power flows through the same wires either way.
We do not think that is a considered policy outcome. We think it is what is left over after a 2001 emergency was never revisited.
The other half: what exports are worth
There is a second, quieter constraint. When you export power under California's current net-billing structure — the Solar Billing Plan, adopted by the CPUC in December 2022 for new solar customers — you are credited based on the value of that energy in that hour.
That has a sharp consequence, and it is one people discover after installing: midday exports are worth very little, because midday is exactly when the grid is drowning in solar. Evening exports are worth multiples more. This is defensible as economics — it is roughly what the power is actually worth — but it changes the economics of a solar-only system substantially, and it is the single strongest argument for pairing panels with storage. Our guide to net metering and its successors goes through the mechanics, and whether a battery is worth it works the numbers.
What we are asking for
These are our positions. They are not pending legislation, and we are not going to dress them up as such.
- Reopen residential Direct Access on a phased scheduleWith the consumer protections the 2001 experience actually justifies: real disclosure of contract terms, limits on teaser pricing and early-termination fees, a guaranteed right to return to bundled utility service, and procurement obligations so competitive suppliers cannot free-ride on the utility's reliability planning.
- Authorize a supervised peer-to-peer pilotBounded to a single utility territory, capped in size, metered and settled through the utility so nobody is bypassing the wires charges that pay for the grid. The point of a pilot is to find out whether the consumer-protection concerns are real at small scale before anyone argues about them at large scale.
- Make export compensation locational as well as hourlyExports already vary by hour. They should also vary by where you are, because a kilowatt-hour exported into a constrained pocket is genuinely worth more than one exported into a saturated one — and paying that difference would put storage where the grid needs it.
- Fix the metering and settlement plumbingSub-hourly, customer-authorized data access with a standard interface. None of the above is implementable if the underlying interval data cannot be read and settled against reliably.
Where these decisions actually get made
Most advocacy energy gets aimed at the wrong venue. For this specific set of questions:
| Body | Decides | How to reach it |
|---|---|---|
| California Public Utilities Commission | Direct Access rules and caps, export compensation, interconnection, pilots | Formal proceedings take public comment. Anyone may file a comment in an open rulemaking, and they are read. |
| California Legislature | The statutory suspension itself. The CPUC cannot simply undo what a statute did. | Your Assemblymember and State Senator. Committee hearings on energy bills take public testimony. |
| FERC | Wholesale market rules, storage and aggregation participation | Already the permissive part. Dockets accept public comment. |
| Congress | The federal/state jurisdictional line itself, and federal incentives | Relevant to the wholesale side and to tax credits; retail supply remains a state question. |
What you can do
- Comment in the proceedingCPUC rulemakings on Direct Access, net billing and distributed resources accept public comment, and comments from actual customers carry weight precisely because most filings come from utilities and trade groups.
- Write to your state legislators, not to CongressThe residential suspension is California statute. This is the single most common misdirection of effort on this issue.
- Do the legal things in the meantimeStorage arbitrage, load shifting and evening export are open to you right now, and under an hourly export structure they are where the money actually is.
- Be skeptical of anyone selling you the blocked versionIf a company offers to let you sell power directly to other households in California today, ask what authority they hold. There is not currently a residential answer to that question.
One honest caveat
We have an interest here. A marketplace we operate is more valuable in a world where residential customers can transact freely, so read our policy positions with that in mind.
We would rather say that plainly than pretend to neutrality. The factual half of this page — what is legal, what is not, and which body decides — is checkable, and we would rather you checked it than took our word for it. Where we are arguing rather than reporting, we have tried to label it.