Energy storage moves front and center under California’s SGIP

Last Thursday, California regulators issued a decision modifying the Self Generation Incentive Program (SGIP), a 2001 program which provides incentives for energy storage and behind-the-meter generation. Under the new rules, 75% of the SGIP budget will be allocated to energy storage.

Additionally SGIP will move to a declining block grant incentive system, similar to the California Solar Initiative (CSI), with incentives for most systems starting at US$.50 per watt-hour (Wh) in the first step and declining to $0.30 per Wh in the fifth. Large-scale energy storage projects which receive the federal Investment Tax Credit (ITC) will start at $0.36 per Wh and decline to $0.16 per Wh.

Residential projects will be eligible for 15% of total incentives, and priority will be given to energy storage paired with renewable energy. For the remaining 25% of the program dealing with generation, 40% of the program will be dedicated to renewable energy.

GTM Research notes that these changes are in line with the intent of 2014 legislation which drove the regulatory change to spur greenhouse gas reduction as well as peak shaving. GTM Research Director of Energy Storage Ravi Manghani says that he expects impact on the market to be positive overall.

"Two areas that could benefit the most are – residential segment through special carve out, as well as long duration storage technologies," Manghani told pv magazine. "Under the previous version of SGIP incentives, incentives were $/W based, and by changing the incentive metric to $/Wh, it can spur deployments of storage technologies with 2+ hours discharge duration."

In both portions of the program, the previous limitation on products by one manufacturer receiving 40% of incentives has been lifted, and in its place there is a cap whereby no developer can claim more than 20% of annual incentives.

Energy Freedom Coalition of America (EFCA) also issued a statement applauding the decision. "Today, the CPUC made a decision that keeps California at the forefront of distributed energy, and the development of the clean energy products that will make the world a better place," said Genevieve Dufau-McCarthy, of EFCA member company SolarCity.

Correction: This article was corrected at 1:35 PM Eastern Time (U.S.) on June 27. An earlier version of the article incorrectly identified the incentive as being on a dollar per watt basis, when instead the incentive will work on a dollar per watt-hour basis. Additionally commentary from GTM Research has been included.