TerraVerde Energy closely tracks the status of the Self Generation Incentive Program (SGIP) program and the CPUC’s allocation of funding for the program. This blog post describes the current status of the various incentive categories, and highlights the imbalance of funding allocations that is impacting many public agencies throughout the State, including municipalities, water agencies, and school districts that desire to leverage SGIP incentives to implement battery storage projects and to achieve resiliency (back-up power) capability for their critical operations and facilities wherever feasible.
In recent CPUC decisions (September of 2019 and January of this year) regarding SGIP for energy storage technologies, four categories of incentives for non-residential (commercial) energy storage projects were defined and funded (the decision also defined residential incentive categories and budgets, which are not described here):
- Equity Budget incentives for facilities located in and/or serving a disadvantaged community (DAC) and/or low-income census tracts (LI). Incentive value: $0.85/Whr.
- Equity/Resiliency Budget incentives for “critical” facilities located in and/or serving a DAC or LI and within a tier 2 or tier 3 high fire threat zone (HFTZ), or impated by at least two Public Safety Power Shutoff (PSPS) events. Incentive value: $1.00/Whr.
- The Resiliency Adder incentive for “critical” facilities located in and/or serving a HFTZ or impacted by at least two PSPS events, but not located in DAC or LI. Incentive value: $0.15/Whr added to the base SGIP incentive for non-residential large-scale (>10kW) energy storage projects, currently valued at $0.35 to $0.40/Whr (depending on IOU territory), for a total of $0.50 to $0.55/Whr.
- Large-scale (>10kW) base incentive, currently at Step 3 for SCE and SDG&E territories ($0.35/Whr), and Step 2 for PG&E ($0.40/Whr).
The January CPUC decision described the funding allocations made available from SB 700 for the various SGIP incentive categories. For energy storage, $675M was earmarked to support the SGIP incentive categories over a five-year period as follows:
This funding was expected to be allocated to each IOU’s SGIP program (including So Cal Gas) in time to be used for the May 2020 application submittal window for the Equity-only and the Equity/Resiliency incentive categories. However, in April the SGIP Program Administrators filed an advice letter with the CPUC stating the SB 700 funding cannot be allocated per the CPUC’s January decision until the SGIP Handbook is updated to reflect the new funding allocations. This work is on-going and expected to be completed in July/August timeframe. The May 2020 application submittal window was not postponed to allow completion of the Handbook updates, and was run with the then current level of funding for the Equity-only and Equity/Resiliency incentive categories (see table below).
On May 12, 2020, the SGIP Program Administrators for each IOU (and So Cal Gas) began accepting applications for incentive reservations for the Equity-only and the Equity/Resiliency incentive categories. Within a short period of time the total value of the submitted applications became greater than the available amount of funding, causing the incentive categories to be oversubscribed, which triggered a lottery selection process per SGIP Handbook rules for selecting applications under such conditions. The applications that were not selected in the lottery were placed on a waitlist (pending additional funding). The quantity of non-residential Equity-only waitlisted applications for shovel-ready battery storage projects number in the hundreds; over $120M in total incentive value for the waitlisted projects in PG&E and SDG&E territories, and approximately $150M in incentive value for waitlisted projects in SCE territory.
In many cases, when integrated with an existing solar PV system (or new solar PV system), the robust incentive values for the Equity-only ($0.85/Whr) and the Equity/Resiliency ($1.00/Whr) incentive categories will cover 100% of the installed cost of a battery storage and microgrid control system, which provides the operational resiliency many public agencies and municipal governments are seeking to mitigate PSPS events and other grid outages (without dependence on diesel or natural gas fired emergency generators).
TerraVerde assists public agenies and municipalities in performing feasibility assessments and project development for battery projects with the goal of providing cost effective renewable energy sourced resiliency capability for critical operations/facilities using the Equity/Resiliency and Equity-only SGIP incentives. Virtually all of the applications submitted for Equity-only incentives on behalf of our public sector clients in May have been waitlisted. These projects propose to use Equity-only SGIP incentives because they are not otherwise eligible for the Equity/Resiliency incentives. In some cases, eligibility for Equity/Resiliency incentives is impacted by critical facilities residing just outside the boundary line of a tier 2 or tier 3 HFTZ as determined by the CPUC’s HTFZ map (possibly by 1,000 yards or less). As climate change continues to increase wildfire threat, critical facilities that reside adjacent to current HFTZ boundary lines will be impacted by PSPS events and wildfire-related grid outages in the future.
Currently, there is no defined or planned allocations from the SB 700 funds to re-fund the Equity-only incentive category; thus, all waitlisted shovel-ready battery storage projects will remain in limbo until/unless the CPUC takes action (i.e.: reallocates some of the SB 700 funds from the Equity/Resiliency budget to the Equity-only budget).
TerraVerde is providing this information to clients and stakeholders to promote awareness of the imbalance in SGIP funding, and to promote/support communication directly to the CPUC regarding the lack of Equity-only SGIP incentives needed to support a substantial backlog of shovel-ready waitlisted energy storage projects, many of which are designed to provide resiliency in addition to utility bill savings from demand reduction.
The CPUC’s January decision states “the Energy Division assigned ALJ or Commissioner may propose modification of funding allocations in this, or subsequent SGIP rulemaking at any time”. TerraVerde encourages all stakeholders to communicate their concerns regarding the imbalance of SGIP funding allocations to the CPUC, and request actions to support the reallocation of existing funding to the Equity incentive budget, which will help facilitate implementation of shovel-ready battery energy storage projects that are currently waitlisted.
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