Increased contributions from wind and solar power resources are necessary to meet California?s goal to use 33 percent renewable energy by 2020. Using these renewable resources, however, will substantially increase the variability and uncertainty in electricity generation resources available to California?s electricity grid operators. Automated demand response and energy storage systems can help reduce this variability and uncertainty through energy buying and selling (arbitrage) in day-ahead markets that would levelize loads and prices throughout the day. They could also provide load-following capability through bids in the real-time market and system management (or regulation) services to the system operator. The project identified policies, technologies (energy storage), and control methods (demand response) that could reduce the cost and improve the reliability of electric power for California ratepayers. Data and assumptions describing energy storage and demand response resources were provided by the Electric Power Research Institute, the California Energy Storage Alliance, and the Demand Response Research Center. The California Independent System Operator provided the production simulation model and supporting data.