October 3, 2016

California’s New and Improved 2017 Self-Generation Incentive Program (SGIP)

By Edison Energy

It’s almost SGIP time in California.

The Self-Generation Incentive Program (SGIP) is a signature component of California’s effort to catalyze the market for customer-sited energy storage projects. It’s intended to bulldoze a path-to-market for a really useful technology that hasn’t — as of yet — made headway behind-the-meter without incentives.

The California Public Utilities Commission (CPUC) made big changes to program rules in 2016.  As a result, 2017 will be the best chance for commercial and industrial (C&I) customers to obtain substantial incentives for behind-the-meter energy storage. Here is a highlight reel of the changes:

  1. Greater flexibility about the allowable duration of participating batteries. The 2016 program only funded two-hour batteries. Some C&I load profiles are better served by longer or shorter duration batteries, but they were barred from participating under last year’s program rules. All batteries are now welcome, and incentive levels are assigned in $/Wh units rather than $/W to equitably accommodate the change.
  2. Incentive levels step down over time as the program is subscribed. This design feature — based on the California Solar Initiative — will ensure that incentive levels meet (but don’t exceed) the level necessary to close the economic gap for storage projects. This means better “bang-for-the-buck” for California rate-payers and more efficient progress toward a more sustainable electric system.
  3. No more “ready, set, go” application process. A lottery will replace the “first come, first served” selection process that created havoc on the opening day of the 2016 program. For more details about the 2016 opening day debacle, see Greentech Media’s story here. In the event that an incentive step is oversubscribed within one day (count on it, this WILL happen), program administrators will use a lottery to allocate funds among eligible applications.
  4. Projects in LADWP and SCE’s West LA local capacity area will get preferred status in the lottery. Batteries integrated with renewable energy systems will, as well. This offers a significant advantage to C&I customers who can meet these criteria.

What does this mean for C&I companies in California? It means that there’s never been a better time to look at energy storage. Smart energy storage developers now have additional flexibility under SGIP to bring customers highly customized battery proposals that are optimized to their facilities, tariffs and load profiles. This should translate into more savings, particularly for customers who can move quickly enough to have their projects secure funding in Step 1 of the program, when incentive levels are at their peak. Program administrators have not yet announced the opening date, but here at Edison Energy, we are preparing for early in Q1 2017.