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Self-Generation Program Revised in California; Demand Exceeds Funding

Responding to strong customer demand, California regulators on Thursday revised the state's Self-Generation Incentive Program (SGIP), carrying implications for natural gas-assisted onsite generation and helping to counter the effects of the continuing closure of the state's largest underground gas storage facility.

The California Public Utilities Commission (CPUC) relaunched SGIP, effectively May 1, noting that there has been heavy customer demand for the incentives, particularly for energy storage projects. With 130 projects seeking more than $90 million in incentives, the SGIP initial budget was exceeded on the first day of the new program, the CPUC said.

"A total of $50 million was awarded in the first incentive step to projects that include storage paired with solar energy, projects to help offset the impact of reduced gas storage at [Southern California Gas Co.'s] Aliso Canyon, and projects in disadvantaged communities," a CPUC spokesperson said.

“We have successfully revamped SGIP and have reserved rebates for projects across various technologies that will promote reliability and provide clean energy,” said CPUC member Clifford Rechtschaffen, citing the strong customer interest in clean energy solutions. "The market for these technologies is robust and growing.”

On May 1 more than 130 companies submitted applications totaling more than $90 million in available incentives, exceeding the funds reserved for energy storage projects, the CPUC said. In total, hundreds of projects received incentive reservations.

"Initial data from the program reopening indicate that the average cost per watt for storage systems seeking SGIP incentives dropped significantly, falling from $3.33 in 2016 to $2.55 this year," the regulatory spokesperson said.

As one of the nation’s longest running programs of its kind, SGIP provides incentives for customer investment in clean, distributed energy resources, including cogeneration. It provides rebates to support energy resources installed on the customer’s side of the utility meter, including wind turbines, waste heat to power technologies, pressure-reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and energy storage systems.

Last year, the CPUC set the SGIP budget at more than $270 million through 2019, and then earlier this year it increased it to $500 million through 2019. Nearly 80% of that budget is reserved for energy storage projects, with more than $100 million of funds for energy storage projects planned to be made available in June.

As part of the program's first day, about 28% of the incentives reserved by large-scale energy storage projects are in the territories of Pacific Gas and Electric Co. (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) and are for projects sited in selected community census tracts.

As emphasized by the CPUC, the focus is on energy storage projects paired with solar and/or located in the Aliso Canyon-affected areas. For example, 58 of the 66 funded applications in SCE’s large-scale (more than 10 kW in size) energy storage lottery, totaling 15.4 MW, are sited in SCE’s West Los Angeles Local Reliability Area, an area affected by the leak that occurred at Aliso Canyon.

SGIP is funded by the ratepayers of PG&E, SCE, SDG&E and SoCalGas. It is administered by those utilities in their territories, with the exception of SDG&E, the administration of which is managed by the Center for Sustainable Energy.

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