Putting Money Behind Customer-Sited Energy Storage: CA’s SGIP Incentive Program

Thanks to the Self-Generation Incentive Program (SGIP), many more Californians can now access the benefits of energy storage for themselves. SGIP re-launched in May 2017 with a focus on helping energy users pay for energy storage. It is a declining incentive program, meaning that as funds are awarded, the value of the incentive decreases. It is designed to help energy users save money, provide grid services, help California meet its ambitious environmental goals, and transform the market for this valuable technology. Senate Bill (SB) 700, by State Senator Scott Wiener, would extend energy storage incentives for nearly ten years — long enough to truly transform the market.

Let’s take a step back: energy storage refers to large batteries connected to software. It can work on its own or in tandem with renewable energy technologies like solar to help energy users save money while strengthening and greening the grid.

How Energy Storage Works

Energy storage can help commercial, industrial, and public sector customers save on their electric bills.

  • Energy storage reduces demand charges. When an energy user’s need for electricity is greatest and its demand begins to spike, behind-the-meter energy storage can discharge, allowing the customer to avoid incurring costly demand charges.
  • Energy storage helps adapt to changing time-of-use (TOU) rates. When the California Public Utilities Commission shifts TOU peak periods — which is when electricity is the most expensive — to later in the day, those peaks will align less closely with a solar system’s production. It can help align solar customers’ energy usage with the new price signals: the battery can charge midday when electricity prices are low and solar production is high, and then supply electricity when rates are higher and solar production is low later in the day.

Benefits for Everyone

Energy storage delivers benefits to all ratepayers, not only those who install it behind their own meters.

Energy storage can help the utilities avoid costly infrastructure projects that wind up on its ratepayers’ bills. For example, the California Energy Commission recently found that deploying more distributed energy resources in the San Joaquin Valley could provide $300 million in benefits to SCE ratepayers.

Energy storage can build a more reliable grid. In October 2015, a massive leak was discovered at the Aliso Canyon gas storage facility in northeast Los Angeles County. The loss of natural gas and the facility’s subsequent closure created an urgent resource shortage in the LA area. SCE deployed over 100 megawatts of energy storage capacity to help ensure that its customers continued to receive reliable service.

For many years, California has been forging a path away from the dirty, centralized energy system of the past and towards the more cost-effective, resilient, and sustainable distributed energy system of tomorrow. Commercial, industrial, and public sector energy users have long had access to renewable energy technologies that allow them to generate their power, save money, and reduce their carbon footprints. Thanks to SGIP, customers can double down on these goals by investing in energy storage as well.

Download sample economics for storage + solar project here.

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