California has recently made large strides in solar technology. However, the state also has ambitions in energy storage, becoming the national leader for the deployment of energy storage. Acting on these ambitions, the California Public Utilities Commission (CPUC) has released a proposal to double funding for SGIP, or the Self Generation Incentive Program. This program, started in 2001, has played a huge hand in getting California the energy storage numbers it now boasts. It is an important impetus driving consumer-sited energy storage.

Clean Energy and Conventional Energy

CPUC has been authorized to increase funding for SGIP by as much as 100%. The program offers incentives (payments) to utility customers who also generate their own energy, be it from solar, hydro, wind, and so on. California’s three large investor-owned utilities opposed the doubling of funding, but CPUC’s decision means that they will collect $83 million from ratepayers each year for three years to fund the expansion of SGIP.
SGIP incentivizes renewable energy installations, ranging from solar to fuel cells, hydro, and wind turbines. However, if the proposal to double funding from CPUC goes through, 85% of the new funding will be allocated to energy storage.
This is a result of the commission’s research, which indicates that the shift to renewable energy will be impossible without proper energy storage infrastructure. This is especially true given the state’s mandate to reach 50% renewable energy. Given that SGIP has been effective thus far, it only follows that increasing the budget will also help incentivize the storage components.
SGIP currently allocates 15% of the distributed incentives to residential energy storage systems that store less than 10kW. However, the new funding will not be added to this allocation at all. The California Solar energy Industry Association (CalSEIA) objects strongly to this withholding. Clearly, increasing incentives for residential systems would help the solar industry in California. However, once the existing 15% allocation expires, the residential systems will be able to compete fairly with C&I installations for the additional incentives.
The proposal by CPUC did, however, include some modifications requested by CalSEIA. The goal was to equalize funding levels for energy storage infrastructure projects regardless of whether they received the 30% federal Investment Tax Credit.
SGIP has run into some problems as of late, with reports last year indicating that large firms may be able to game the system. The incentives are rewarded on a first come first serve basis, which means that companies with large technological and computer-power infrastructure can simultaneously apply for incentives within milliseconds, undercutting others who are attempting to access the same incentives.
Moreover, critics have raised issue with SGIP’s support of fuel cells as a type of renewable energy. The carbon emissions from fuel cell technology are barely low enough to qualify for funding from SGIP. Yet despite this, one fuel cell manufacturing company has received $400 million from SGIP’s available $1.4 billion incentive program. There are hopes that transitioning 85% of new funding to energy storage projects will alleviate these concerns, as the incentives will apply to storage units, not new renewable energy projects.
The plans are expected to include a $0.50/Wh incentive for residential systems to begin with, however it is predicted that the incentive will quickly fall to $0.40/Wh as demand will exceed the amount available funding.
The next step is getting the actual approval, which is likely to happen.