Energy Storage

Calif. proposal would boost storage incentives for fire risk areas

A proposal at the California Public Utilities Commission would redirect some funds from the Self Generation Incentive Program (SGIP) toward providing incentives for energy storage projects for customers in areas at risk of outages caused by wildfires or public safety power shutoff (PSPS) events.

The proposed decision would re-allocate $100 million from SGIP’s equity budget funds to an “equity resiliency budget set-aside” for vulnerable households in certain high fire threat districts, critical services facilities serving those districts, and customers in those districts that participate in two low-income solar generation programs. The proposed decision was drafted by PUC Commissioner  Clifford Rechtschaffen.

The proposal would also establish a $10 million budget for SGIP storage incentives to support pilot projects in 11 San Joaquin Valley disadvantaged communities and a $4 million equity budget set-aside for heat pump water heater incentives.

The proposed decision directs the SGIP program administrators -- Pacific Gas and Electric, Southern California Edison, Southern California Gas and the Center for Sustainable Energy -- to transfer $100 million of accumulated funds to the new equity resiliency budget and $4 million in accumulated non-residential storage funds to the equity heat pump water heater budget, and directs PG&E and SCE to transfer $10 million in accumulated non-residential equity budget funds to the San Joaquin Valley budget.

SGIP is California’s leading incentive program for behind-the-meter energy storage, but the equity budget set-aside portion of the program has gone unused since it was established in 2017.

In filed comments, parties, including the California Solar and Storage Association, Tesla and the California Energy Storage Alliance, said the main reason the equity funds were not tapped is because they do not cover enough of the capital costs of energy storage projects.

To address that problem, the PUC proposed a new equity budget incentive rate that would be collected by PAs, increasing the incentive to $0.85 per watt-hour (Wh), from the $0.50/Wh maximum level, for eligible customers.

The PUC explained that existing incentive levels would only cover about 50% of a two-hour residential storage system. The new rate would cover about 83% of costs and for some systems it would cover 100% of costs.

To guard against the possibility that developers or vendors or storage systems would use the higher incentives to increase their profits and not pass on the cost savings to customers, the PUC’s proposed decision would direct PAs not to sell a storage system that “receives incentives for a total price (before incentives) that is greater than the price they sell a comparable system that does not receive incentives.”

The PUC’s proposed decision will be taken up at the soonest at the commission’s Sept. 12 business meeting.