2018 Overview

It was a busy summer between tariffs and rate reform debates, but California Senate ended the summer on a positive note for solar installers by passing S.B. 700. S.B. 700--still needs the governor's signature--extends Self Generation Incentive Program (SGIP) to 2026 and adds $800M to SGIP’s budget.  

This is important because SGIP was set to expire at the end of 2019.  SGIP has funded and reserved about 315 mW (about $330M) of storage capacity in California. The SGIP budget had about $130M of unallocated funds, and it is safe to say SGIP has had a significant impact on advancing energy storage in California and U.S. If Governor Brown signs S.B. 700, SGIP will allocate another $620 million to fund storage projects and since storage costs are decreasing precipitously this will add gWhs of storage capacity to CA grid.  

There are still some key unknowns with S.B 700.  We don’t know if each step will be refreshed. It’s unclear about the allocation of funds to the different IOUs and the high priority areas. We also don’t know if there will be reservations for residential projects.  However, since there’s still more than $100M of funds remaining and each utility is in Step 2, there’s plenty of time to answer these questions.

Even if SGIP stays at Step 2, this still significantly lowers the cost for an average residential storage project.  If an installer is using an LG Chem 9.6 kWh the rebate would be around $4,000 (assuming 6 KW DC array).  As battery cost continue to decline this rebate will offset more project cost.

While residential installs have been relatively flat in California, residential storage deployments tripled in Q2 and 72% of that growth was in CA and Hawaii and residential storage will continue to grow in California. One widely cited factor is the shift to NEM 2.0 in California and the change to the Time-Of-Use (TOU) rates.  NEM 3.0 is coming in 2019 and it is expected TOU peak rates will shift later in the day, so having storage will be important for maintaining solar’s economics. Then, in 2020 the solar on new home mandate goes into effect in California and it is expected homebuilders will include storage to help comply with the requirement.  Due to the policy landscape, change in tariffs, and improvement in technology, passing S.B. 700--and extending SGIP--will help storage and solar continue to proliferate in California.

What is SGIP?

SGIP stands for Self Generation Incentive Program. The CPUC has budgeted $270M (75%, $202.6 for energy storage) through 2019 for rebates that support existing and new distributed energy resources for behind the meter projects.  The California IOUs are administering the rebates:  

Rebate Budget Administration

Energy Storage has been included since 2009 (program started in 2001) and SGIP has supported over 280 energy storage projects totaling over 22 MW of capacity.    

How much are the rebates?

The incentive for the customer is based on the project’s Power Capacity (KW), Energy Storage Capacity (kWh), System Duration, and SGIP Step. The following table shows the incentives based on steps:

SGIP Rebate Schedule

The rebate will decline based on the system’s capacity and discharge duration. Systems larger than 2 mWh will have a reduced incentive for the capacity over 2 mWh, but the first 2 mWh will receive the full rebate in the step.
The IOUs will allocate 15% of each step’s funds to residential projects, projects less than 10 kW.  Residential projects will get the “No Investment Tax Credit (ITC)” rebate regardless if they take the ITC or not. In other words, homeowners can receive both the full rebate amount for their SGIP step and 30% federal tax credit (ITC). Residential systems must discharge 52 times per year while non-residential must discharge at least 130 times per year.

Capacity

Similar to the system capacity, the longer the duration the more the rebate’s base will be reduced. The first 2 hours get the full rebate and then hours 2-4 receive 50% of the rebate’s base and 25% of the base for hours 4 to 6. To figure out the system’s duration, divide the Energy Storage Capacity (kWh) by the Power Capacity (kW). For example, a 50 kWh energy storage system with a 10 kW power capacity would have a system duration of 5 hours.   

Duration

Other Considerations

• Projects can qualify for ITC if 70% of the project’s budget is PV and the PV must charge at least 75% of the energy storage system. The customer cannot use the grid or fossil fuels to power the energy storage system.

• If a step is fully subscribed within 10 days, the next step’s rebate will decline by $.10/wh.  For example, if Step 1 is fully subscribed Step 2’s rebate would be $.40/wh with no ITC and $.26/wh w/ ITC. Fully subscribed means all funds available for each of 4 IOUs are reserved. See the expected rebate table below.

• There would then be a minimum 20 calendar day pause period.  After 10 days you should hear if your application was accepted and if not you should have 10 days or more to decide if you would like to re-apply for the next step. For example, if Step 1 is fully subscribed on May 1st, Step 2 applications would have to be resubmitted on May 21st.  It is expected that Steps 1 and 2 will be fully subscribed within a 24 hour period.

• A single developer is capped at 20% of the rebate per each step.

• CA suppliers will receive an additional 20% incentive and this requires additional paperwork in the application.  The list of 2017 CA suppliers will change dramatically with the new supplier requirements, the 2016 list of CA supplier will stay in effect until June 22nd, after which the new requirements will go into effect.  Any project not completed and collecting the funds by Mid June that is claiming the CA supplier incentive will risk losing that funding if not completed on that date.

• The lottery will go into effect after a step is fully subscribed to settle the last 23 hours of applications.  This will occur only for projects that were submitting on the day that the step was fully subscribed. There will be separate lotteries for utilities and C&I and residential projects. .  

• The application is refundable and it will be 5% of the requested SGIP rebate. If there any clear violation of the Handbook guidelines, the deposit could be held and not refunded.

• Qualifying energy storage systems installed within the last 12 months can apply for the SGIP.

• At the time of this publication, the CPUC has approved increased funding so allocated amounts for steps will increase and IOU allocations could increase as well. Once there is more information, we will update this article.

Expected Rebate Table, w/ adjusted steps (.07/Wh step on Large ITC subscribed in <10 days)

SGIP Rate Schedule

What will my rebate be?

Let’s look at an example. A residential system with 8 kW Power Capacity and 48 kWh energy storage capacity with a step 2 rebate ($.40) would have a total rebate of $11,200.

This system has a 6 hour duration (48 kWh / 8 kW) and the capacity per hour is 8 kWh (48 kWh / 6 hours; the rebate will receive a reduction from hours 2 through 6. The first 16 kWh (8 kWh @ 2 hours) will get the full 100% rebate while kWh from 2 to 4 and 4 to 6 hours the rebate will be cut by 50% and 25%.

Application Process

All applications need to be associated with a registered developer, and get a developer key associated with the application.  More information is available here. Contact your Greentech Renewables Account Manager for more information about SGIP application process or designing a solar + storage project.