On April 6th, the energy storage market received a boost in California when state regulators authorized $196 million in new rebates for customers who install onsite (behind the meter) energy storage systems.

Background

The change occurs under the California Self Generation Incentive Program (“SGIP”). SGIP provides a financial rebate to energy customers who install new qualifying technologies that meet all or a portion of the customer’s on-site electricity needs. Qualifying technologies include wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems.

SGIP was established in 2001 and has been one of the longest-running and most successful distributed generation incentive programs in the country.  As of December 2016, SGIP has funded 2,178 completed projects representing over 450 MW of rated capacity. An additional 312 projects representing over 178 MW of rated capacity are in process towards completion.

A Win for Behind the Meter Storage

In 2016, a new California law authorized an increase in the total SGIP budget from $83 million per year to $166 million per year. On April 6, the California Public Utilities Commission (“CPUC”) formally approved this increase for years 2017, 2018, and 2019, raising the total SGIP incentive budget authorized through 2019 to $566,692,309.

The big winner in the decision was the behind the meter energy storage market. The CPUC allocated 85% of the new funds toward energy storage projects, with the remaining 15% allocated to renewable generation projects. That means the California energy storage market will receive a boost of $196 million over the next three years. In terms of the specific details, 90% of the allocation for energy storage projects must be used for projects greater than 10 kilowatts (“kW”) in capacity, with the remaining 10% available for projects less than or equal to 10 kW.

The win reflects the intent of the SGIP program to facilitate the state’s achievement of climate change goals through driving transformation of the energy system. Specifically, the decision finds that as “the proportion of renewable electricity on the grid increases, energy storage can play an increasingly important role in meeting California’s climate goals… and [i]ncentive programs can help facilitate market transformation.” This type of thinking represents continued leadership by California in the field of energy storage policy.

Next Steps

Applications for the new SGIP funding will be accepted beginning on May 1, 2017. Applications can be submitted through a portal on the SGIP portal page available here.